<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SCUDDER VARIABLE LIFE INVESTMENT FUND
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Declaration of Trust)
- --------------------------------------------------------------------------------
(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 identify 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> 2
LOGO September 1997
SCUDDER VARIABLE LIFE INVESTMENT FUND
IMPORTANT NEWS
While we encourage you to read the full text of the enclosed Proxy
Statement, here's a brief overview of some matters affecting your Fund which
require a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Scudder, Stevens & Clark, Inc. ("Scudder"), your Fund's investment manager,
has agreed to form an alliance with Zurich Insurance Company ("Zurich").
Zurich is a leading international insurance and financial services
organization. As a result of the proposed alliance, there will be a change
in ownership of Scudder. In order for Scudder to continue to serve as
investment manager of your Fund, it is necessary for the Fund's shareholders
to approve a new investment management agreement. The following pages give
you additional information on Zurich and the proposed new investment
management agreement and certain other matters. The most important matters
to be voted upon by you are approval of the new investment management
agreement and the election of Trustees. THE BOARD MEMBERS OF YOUR FUND,
INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE FUND OR SCUDDER, RECOMMEND
THAT YOU VOTE FOR THESE PROPOSALS.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT
AGREEMENT?
A. The Investment Company Act of 1940, which regulates investment companies
such as your Fund, requires a vote whenever there is a change in control of
a fund's investment manager. Zurich's alliance with Scudder will result in
such a change of control and requires shareholder approval of a new
investment management agreement with your Fund.
Variable Life
<PAGE> 3
Q. HOW WILL THE SCUDDER-ZURICH ALLIANCE AFFECT ME AS A FUND SHAREHOLDER?
A. Your Fund and your Fund's investment objective will not change. You will
still own the same shares in the same Fund. The terms of the new investment
management agreement are the same in all material respects as the current
investment management agreement. Similarly, the other service arrangements
between your Fund and Scudder will not be affected. You should continue to
receive the same level of investment management services that you have come
to expect from Scudder over the years. If shareholders do not approve the
new investment management agreement, the current investment management
agreement will terminate upon the closing of the transaction and the Board
of Trustees will take such action as it deems to be in the best interests of
your Fund and its shareholders.
Q. WHY HAS SCUDDER DECIDED TO ENTER INTO THIS ALLIANCE?
A. Scudder believes that the Scudder-Zurich alliance will enable Scudder to
enhance its capabilities as a global asset manager. Scudder further believes
that the alliance will enable it to enhance its ability to deliver the level
of services currently provided to you and your Fund, fulfill its obligations
under the new investment management agreement and operate its business in a
manner consistent with current practices.
Q. WILL THE INVESTMENT MANAGEMENT FEES BE THE SAME?
A. Yes, the investment management fees paid by your Fund will remain the same.
Q. WILL I CONTINUE TO BE ABLE TO PURCHASE SHARES WITHOUT ANY SALES LOAD?
A. Yes, you will be able to continue to purchase shares of your Fund without
any sales load.
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A. In order to save your Fund the expense of a subsequent meeting, a vote is
also being sought for granting the Trustees discretionary authority to
convert the Fund into a "master/feeder" structure, for the amendment and
restatement of the Declaration of Trust applicable to your Fund, and for the
revision of certain fundamental investment policies. You are also being
asked to vote for the ratification of the Board's selection of the Fund's
accountants.
(continues on inside back cover)
<PAGE> 4
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund, including those
who are not affiliated with the Fund or Scudder, recommend that you vote in
favor of all the proposals on the enclosed proxy card.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Shareholder Communications Corporation, your Fund's information
agent, at 1-800-733-8481, ext. 488.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED WITH
THIS TRANSACTION?
A. No, Scudder will bear these costs.
ABOUT THE PROXY CARD
If you have more than one account in a Fund in your name at the same
address, you will receive separate proxy cards for each account but only one
proxy statement for the Fund. Please vote all issues on each proxy card that you
receive.
THANK YOU FOR MAILING YOUR PROXY CARD(S) PROMPTLY.
<PAGE> 5
LOGO
For more information, please call Shareholder Communications Corporation, your
Fund's information agent, at 1-800-733-8481, ext. 488.
Variable Life
<PAGE> 6
Two International Place
Boston, Massachusetts 02110
SCUDDER VARIABLE LIFE INVESTMENT FUND
September 2, 1997
Dear Shareholder:
On June 26, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") entered into
an agreement with Zurich Insurance Company ("Zurich") pursuant to which Scudder
and Zurich have agreed to form an alliance. Under the terms of the agreement,
Zurich will acquire a majority interest in Scudder, and Zurich Kemper
Investments, Inc., a Zurich subsidiary, will become part of Scudder. Scudder's
name will be changed to Scudder Kemper Investments, Inc. As a result of this
transaction, it is necessary for the shareholders of each of the funds for which
Scudder acts as investment manager, including your Fund, to approve a new
investment management agreement.
The following important facts about the transaction are outlined below:
- The transaction has no effect on the number of shares you own or the
value of those shares.
- The advisory fees and expenses paid by your Fund will not increase as a
result of this transaction. As is now the case, you will not pay sales
loads on purchases of shares of your Fund.
- The investment objective of your Fund will remain the same.
- The Non-interested Trustees of your Fund have carefully reviewed the
proposed transaction, and have concluded that the transaction should
cause no reduction in the quality of services provided to the Fund and
should enhance Scudder's ability to provide such services.
Shareholders are also being asked to approve certain other matters that
have been set forth in the Fund's Notice of Meeting. THE BOARD MEMBERS OF YOUR
FUND BELIEVE THAT EACH OF THE PROPOSALS SET FORTH IN THE NOTICE OF MEETING FOR
YOUR FUND IS IMPORTANT AND RECOMMEND THAT YOU READ THE ENCLOSED MATERIALS
CAREFULLY AND THEN VOTE FOR ALL PROPOSALS.
Since all of the funds for which Scudder acts as investment manager are
required to conduct shareholder meetings, if you own shares of more than one
fund, you will receive more than one proxy card. Please sign and return each
proxy card you receive.
<PAGE> 7
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your executed proxy card(s) after a reasonable amount of time you may receive a
telephone call from our proxy solicitor, Shareholder Communications Corporation,
reminding you to vote your shares.
Respectfully,
/s/ David B. Watts
David B. Watts
President
SHAREHOLDERS ARE URGED TO SIGN THE PROXY CARD(S) AND RETURN IT IN THE
POSTAGE-PAID ENVELOPE TO ENSURE A QUORUM AT THE SPECIAL MEETING. YOUR VOTE IS
IMPORTANT REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
<PAGE> 8
SCUDDER VARIABLE LIFE INVESTMENT FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Please take notice that a Special Meeting of Shareholders (the "Special
Meeting") of Scudder Variable Life Investment Fund (the "Trust"), the series of
which are the Money Market Portfolio, the Bond Portfolio, the Balanced
Portfolio, the Growth and Income Portfolio, the Capital Growth Portfolio, the
Global Discovery Portfolio and the International Portfolio (each a "Fund" and
collectively, the "Funds"), is to be held at the offices of Scudder, Stevens &
Clark, Inc., 13th Floor, Two International Place, Boston, Massachusetts 02110,
on October 24, 1997, at 10:30 a.m., Eastern time, for the following purposes:
(1) To approve or disapprove a new investment management agreement
between each Fund and Scudder Kemper Investments, Inc.;
(2) To elect Trustees;
(3) To approve or disapprove the Board's discretionary authority to
convert each Fund to a master/feeder fund structure through a
sale or transfer of assets or otherwise;
(4)(A) To approve or disapprove certain provisions of a proposed Amended
and Restated Declaration of Trust requiring a two-thirds vote of
shareholders;
(B) To approve or disapprove certain other provisions of a proposed
Amended and Restated Declaration of Trust requiring a majority
vote of shareholders;
(5) To approve or disapprove the revision of certain fundamental
investment policies of each Fund; and
(6) To ratify or reject the selection of Coopers & Lybrand L.L.P. as
independent accountants for each of the Funds' current fiscal
years.
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournments thereof.
Holders of record of shares of beneficial interest of each Fund at the
close of business on August 25, 1997 are entitled to vote at the Special Meeting
and at any adjournments thereof.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Special
Meeting with respect to the Trust or, where applicable, one or more Funds, the
persons named as proxies may propose one or more adjournments of the Special
Meeting in accordance with applicable law, to permit further solicitation of
proxies. Any such adjournment as to a matter requiring, respectively, a Trust-
wide or a Fund by Fund vote will require the affirmative vote of the holders of
a
<PAGE> 9
majority of the Trust's (for a Trust-wide vote) or, where applicable, the Fund's
(for a Fund by Fund vote), shares present in person or by proxy at the Special
Meeting. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor and will vote against any
such adjournment those proxies to be voted against that proposal.
By order of the Board of Trustees,
[Thomas F. McDonough signature]
Thomas F. McDonough
Secretary
September 2, 1997
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN IT
IN THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR
YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE SPECIAL
MEETING. IF YOU CAN ATTEND THE SPECIAL MEETING AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
<PAGE> 10
SCUDDER VARIABLE LIFE INVESTMENT FUND
TWO INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Board") of Scudder Variable Life
Investment Fund (the "Trust"), the series of which are the Money Market
Portfolio, the Bond Portfolio, the Balanced Portfolio, the Growth and Income
Portfolio, the Capital Growth Portfolio, the Global Discovery Portfolio and the
International Portfolio (each a "Fund" and collectively, the "Funds"), for use
at the Special Meeting of Shareholders, to be held at the offices of Scudder,
Stevens & Clark, Inc. ("Scudder"), 13th Floor, Two International Place, Boston,
Massachusetts 02110, on October 24, 1997 at 10:30 a.m., Eastern time, and at any
and all adjournments thereof (the "Special Meeting"). (In the descriptions of
the various proposals below, the word "fund" is sometimes used to mean
investment companies or series thereof in general, and not the Funds whose proxy
statement this is.)
This Proxy Statement, the Notice of Special Meeting and the proxy card are
first being mailed to shareholders on or about September 2, 1997 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
Trust (c/o Scudder, Stevens & Clark, Inc., Two International Place, Boston,
Massachusetts 02110)), or in person at the Special Meeting, by executing a
superseding proxy or by submitting a notice of revocation to the Trust. All
properly executed proxies received in time for the Special Meeting will be voted
as specified in the proxy or, if no specification is made, for each proposal
referred to in the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of a majority of the shares entitled to be cast of the Trust (for a
Trust-wide vote) or a Fund (for a Fund by Fund vote) shall be necessary and
sufficient to constitute a quorum for the transaction of business requiring,
respectively, Trust-wide or Fund by Fund voting. In the event that the necessary
quorum to transact business or the vote required to approve or disapprove any
proposal is not obtained at the Special Meeting with respect to one or more
Funds, the persons named as proxies may propose one or more adjournments of the
Special Meeting in accordance with applicable law to permit further solicitation
of proxies with respect to any proposal which did not receive the vote necessary
for its passage or to obtain a quorum. With respect to those proposals for which
there is represented a sufficient number of votes in favor, actions taken at the
Special Meeting will be effective irrespective of any adjournments with respect
to any other proposals. Any such adjournment as to a matter
<PAGE> 11
requiring, respectively, a Trust-wide or a Fund by Fund vote will require the
affirmative vote of the holders of a majority of the Trust's (for a Trust-wide
vote) or Fund's (for a Fund by Fund vote) shares present in person or by proxy
at the Special Meeting. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor 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 Special 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.
Proposals 1 and 5 each requires the affirmative vote of a "majority of the
outstanding voting securities" of each Fund. The terms "majority of the
outstanding voting securities" as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), and as used in this Proxy Statement, means: the
affirmative vote of the lesser of (1) 67% of the voting securities of each Fund
present at the meeting if more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding shares
of each Fund. Approval of Proposal 2 requires the affirmative vote of a
plurality of the shares of the Trust voting. The requisite vote for Proposals 3,
4(A) and 4(B) is governed by the Declaration of Trust. Approval of Proposal 3
requires the affirmative vote of a majority of the shares of each Fund. Approval
of Proposal 4(A) requires the affirmative vote of two-thirds of the shares of
the Trust outstanding and entitled to vote, while approval of Proposal 4(B)
requires the affirmative vote of a majority of the outstanding voting
securities, as defined above, of the Trust. Approval of Proposal 6 requires the
affirmative vote of a majority of the shares of each Fund voting.
Abstentions will have the effect of a "no" vote on all proposals. Broker
non-votes will have the effect of a "no" vote for Proposals 1, 3 and 5, which
require the approval of a specified percentage of the outstanding shares of each
Fund and Proposals 4(A) and 4(B), which require the approval of a specified
percentage of the outstanding shares of the Trust, if such vote is determined on
the basis of obtaining the affirmative vote of more than 50% of the outstanding
shares of the Fund. Broker non-votes will not constitute "yes" or "no" votes,
and will be disregarded in determining the voting securities "present" if such
vote is determined on the basis of the affirmative vote of 67% of the voting
securities of the Fund, or the Trust, as the case may be, present at the Special
Meeting with respect to Proposals 1, 4(B) and 5. Broker non-votes will not be
counted in favor of, but will have no other effect on the vote for Proposals 2
and 6, which require the approval of a plurality of the shares of the Trust and
a majority of the shares of each Fund, respectively, voting at the Special
Meeting.
2
<PAGE> 12
Shareholders of each Fund will vote separately with respect to each of
Proposals 1, 3, 5, and 6; and shareholders of the Trust will vote together on
proposals 2, 4(A) and 4(B).
The following table summarizes those voting requirements:
<TABLE>
<CAPTION>
SHAREHOLDERS ENTITLED VOTE REQUIRED
TO VOTE FOR APPROVAL
---------------------- ----------------------
<S> <C> <C>
Proposal 1 Shareholders of each Approved by a "major-
(Approval of new Investment Fund vote separately ity of the outstanding
Management Agreement) voting securities" of
each Fund
Proposal 2 Shareholders of all Each nominee must be
(Election of Trustees) Funds vote together elected by a plurality
for each nominee as a of the shares of the
single class Trust voting at the
Special Meeting
Proposal 3 Shareholders of each Approved by a majority
(Approval of discretionary Fund vote separately of the shares of each
authority to convert to Fund
master/feeder fund structure)
Proposal 4(A) Shareholders of all Approved by the vote
(Approval of a portion of the Funds vote together as of two-thirds of the
Amended and Restated a single class shares of the Trust
Declaration of Trust) outstanding and
entitled to vote
Proposal 4(B) Shareholders of all Approved by a "major-
(Approval of a portion of the Funds vote together as ity of the outstanding
Amended and Restated a single class voting securities" of
Declaration of Trust) the Trust
Proposal 5 Shareholders of each Approved by a "major-
(Approval of the revision of Fund vote separately ity of the outstanding
certain fundamental voting securities" of
investment policies) each Fund
Proposal 6 Shareholders of each Approved by a majority
(Ratification of selection of Fund vote separately of the shares of each
Accountants) Fund voting at the
Special Meeting
</TABLE>
3
<PAGE> 13
Holders of record of the shares of beneficial interest of each Fund at the
close of business on August 25, 1997 (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 Special Meeting. The table below sets forth the number of shares
outstanding for each Fund as of June 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES OUTSTANDING
NAME OF FUND AS OF JUNE 30, 1997
- ------------------------------------------------ ----------------------------
<S> <C>
Money Market Portfolio 106,757,049
Bond Portfolio 9,843,683
Balanced Portfolio 8,344,085
Growth and Income Portfolio Class A 11,815,252
Growth and Income Portfolio Class B 114,306
Capital Growth Portfolio Class A 29,934,111
Capital Growth Portfolio Class B 6,327
Global Discovery Portfolio Class A 2,613,391
Global Discovery Portfolio Class B 159,101
International Portfolio Class A 59,763,371
International Portfolio Class B 5,618
</TABLE>
Each Fund provides periodic reports to all 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
each Fund and a copy of any more recent semi-annual report, if any, without
charge, by calling 800-225-2470 or writing the Fund, c/o Scudder, Stevens &
Clark, Inc., Two International Place, Boston, Massachusetts 02110.
PROPOSAL 1: APPROVAL OF NEW
INVESTMENT MANAGEMENT AGREEMENTS
INTRODUCTION
Scudder acts as the investment manager for each Fund pursuant to investment
management agreements entered into by each Fund and Scudder (each a "Current
Investment Management Agreement" and collectively, the "Current Investment
Management Agreements"). (Scudder is sometimes referred to in this proxy
statement as the "Investment Manager.") On June 26, 1997, Scudder entered into a
Transaction Agreement (the "Transaction Agreement") with Zurich Insurance
Company ("Zurich") pursuant to which Scudder and Zurich have agreed to form an
alliance. Under the terms of the Transaction Agreement, Zurich will acquire a
majority interest in Scudder, and Zurich Kemper Investments, Inc. ("ZKI"), a
Zurich subsidiary, will become part of Scudder. Scudder's name will be changed
to Scudder Kemper Investments, Inc. ("Scudder Kemper"). The foregoing are
referred to as the "Transactions." ZKI, a Chicago-based investment adviser and
the adviser to the Kemper funds, has approximately $80 billion under management.
The headquarters of Scudder Kemper will be in New York. Edmond D. Villani,
Scudder's Chief Executive Officer, will
4
<PAGE> 14
continue as Chief Executive Officer of Scudder Kemper and will become a member
of Zurich's Corporate Executive Board.
Consummation of the Transactions would constitute an "assignment," as that
term is defined in the 1940 Act, of each Fund's Current Investment Management
Agreement with Scudder. As required by the 1940 Act, each Current Investment
Management Agreement provides for its automatic termination in the event of its
assignment. In anticipation of the Transactions, a new investment management
agreement (each, a "New Investment Management Agreement" and collectively, the
"New Investment Management Agreements," together with the Current Investment
Management Agreements, the "Investment Management Agreements") between each Fund
and Scudder Kemper is being proposed for approval by shareholders of each Fund.
A copy of the master form of the New Investment Management Agreement is attached
hereto as Exhibit A. THE NEW INVESTMENT MANAGEMENT AGREEMENT FOR EACH FUND IS ON
THE SAME TERMS IN ALL MATERIAL RESPECTS AS THE CORRESPONDING CURRENT INVESTMENT
MANAGEMENT AGREEMENT. Conforming changes are being recommended to the New
Investment Management Agreements in order to promote consistency among all of
the funds currently advised by Scudder and to permit ease of administration. The
material terms of each Current Investment Management Agreement are described
under "Description of the Current Investment Management Agreement" below.
BOARD OF TRUSTEES' RECOMMENDATION
On August 6, 1997, the Board of the Trust, including the Trustees who are
not parties to such agreement or "interested persons" (as defined under the 1940
Act) (the "Non-interested Trustees") of any such party, voted to approve the New
Investment Management Agreements and to recommend their respective approval to
shareholders.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Trustees' Evaluation" below.
The Board of the Trust recommends that its shareholders vote in favor of
the approval of the New Investment Management Agreement for each Fund.
BOARD OF TRUSTEES' EVALUATION
On June 26, 1997, representatives of Scudder advised the Non-interested
Trustees of the Trust by means of a telephone conference call that Scudder had
entered into the Transaction Agreement. At that time, Scudder representatives
described the general terms of the proposed Transactions and the perceived
benefits for the Scudder organization and for its investment advisory clients.
Scudder subsequently furnished the Non-interested Trustees with additional
information regarding the proposed Transactions, including information regarding
the terms of the proposed Transactions, and information regarding the Zurich and
ZKI organizations. In a series of subsequent telephone conference
5
<PAGE> 15
calls and in-person meetings, the Non-interested Trustees discussed this
information among themselves and with representatives of Scudder and Zurich.
They were assisted in their review of this information by their independent
legal counsel and also consulted with a representative of the Funds' independent
auditors and with an independent consultant knowledgeable in mutual fund
industry matters.
In the course of these discussions, Scudder advised the Non-interested
Trustees that it did not expect that the proposed Transactions would have a
material effect on the operations of the Funds or their shareholders. Scudder
has advised the Non-interested Trustees that the Transaction Agreement, by its
terms, does not contemplate any changes in the structure or operations of the
Funds. Scudder representatives have informed the Trustees that Scudder currently
intends to maintain the separate existence of the funds that Scudder and ZKI
manage in their respective distribution channels. Scudder has also advised the
Non-interested Trustees that although it expects that various portions of the
ZKI organization would be combined with Scudder's operations, the senior
executives of Scudder overseeing those operations will remain largely unchanged.
It is possible, however, that changes in certain personnel currently involved in
providing services to the Funds may result from future efforts to combine the
strengths and efficiencies of both firms. In their discussions with the
Trustees, Scudder representatives also emphasized the strengths of the Zurich
organization and its commitment to provide the new Scudder Kemper organization
with the resources necessary to continue to provide high quality services to the
Funds and the other investment advisory clients of the new Scudder Kemper
organization.
The Board of the Trust was advised that Scudder intends to rely on Section
15(f) of the 1940 Act, which provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of the investment adviser's
affiliated persons (as defined under the 1940 Act) to receive any amount or
benefit in connection with a change in control of the investment adviser so long
as two conditions are met. First, for a period of three years after the
transaction, at least 75% of the board members of the investment company must
not be "interested persons" of the investment company's investment adviser or
its predecessor adviser. On or prior to the consummation of the Transactions,
the Board, assuming the election of the nominees that you are being asked to
elect in "Proposal 2: Election of Trustees," would be in compliance with this
provision of Section 15(f). (See "Proposal 2: Election of Trustees"). Second, an
"unfair burden" must not be imposed upon the investment company as a result of
such transaction or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" is defined in Section 15(f) to
include any arrangement during the two-year period after the transaction whereby
the investment adviser, or any interested person of any such adviser, receives
or is entitled to receive any compensation, directly or indirectly, from the
investment company or its shareholders (other than fees for bona fide investment
advisory or other services) or from any person in connection with
6
<PAGE> 16
the purchase or sale of securities or other property to, from or on behalf of
the investment company (other than bona fide ordinary compensation as principal
underwriter for such investment company). No such compensation agreements are
contemplated in connection with the Transactions. Scudder has undertaken to pay
the costs of preparing and distributing proxy materials to, and of holding the
meeting of, the Funds' shareholders as well as other fees and expenses in
connection with the Transactions, including the fees and expenses of legal
counsel and consultants to the Funds and the Non-interested Trustees.
During the course of their deliberations, the Non-interested Trustees
considered a variety of factors, including the nature, quality and extent of the
services furnished by Scudder to the Funds; the necessity of Scudder's
maintaining and enhancing its ability to retain and attract capable personnel to
serve the Funds; the investment record of Scudder in managing the Funds; the
increased complexity of the domestic and international securities markets;
Scudder's profitability from advising the Funds; possible economies of scale;
comparative data as to investment performance, advisory fees and other fees,
including administrative fees, and expense ratios; the risks assumed by Scudder;
the advantages and possible disadvantages to the Funds of having an adviser of
the Funds which also serves other investment companies as well as other
accounts; possible benefits to Scudder from serving as manager to the Funds and
from affiliates of Scudder serving the Funds in various other capacities;
current and developing conditions in the financial services industry, including
the entry into the industry of large and well capitalized companies which are
spending and appear to be prepared to continue to spend substantial sums to
engage personnel and to provide services to competing investment companies; and
the financial resources of Scudder and the continuance of appropriate incentives
to assure that Scudder will continue to furnish high quality services to the
Funds.
In addition to the foregoing factors, the Non-interested Trustees gave
careful consideration to the likely impact of the Transactions on the Scudder
organization. In this regard, the Non-interested Trustees considered, among
other things, the structure of the Transactions which affords Scudder executives
substantial autonomy over Scudder's operations and provides substantial equity
participation and incentives for many Scudder employees; Scudder's and Zurich's
commitment to Scudder's paying compensation adequate to attract and retain top
quality personnel; Zurich's strategy for the development of its asset management
business through Scudder; information regarding the financial resources and
business reputation of Zurich; and the complementary nature of various aspects
of the business of Scudder and the Zurich Kemper organization and the intention
to maintain separate Scudder and Kemper brands in the mutual fund business.
Based on the foregoing, the Non-interested Trustees concluded that the
Transactions should cause no reduction in the quality of services provided to
the Funds and believe that the Transactions should enhance Scudder's ability to
provide such services. The Non-interested Trustees considered the foregoing
factors with respect to each of the Funds.
7
<PAGE> 17
On August 6, 1997, the Trustees of the Trust, including the Non-interested
Trustees of the Trust, approved the New Investment Management Agreement.
INFORMATION CONCERNING THE TRANSACTIONS AND ZURICH
Under the Transaction Agreement, Zurich will pay $866.7 million in cash to
acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will then transfer a
9.6% fully diluted equity interest in Scudder Kemper to a defined contribution
plan for the benefit of Scudder and ZKI employees, as well as cash and warrants
on Zurich shares for award to Scudder employees, in each case subject to
five-year vesting schedules. After giving effect to the Transactions, current
Scudder stockholders will have a 29.6% fully diluted equity interest in Scudder
Kemper and Zurich will have a 69.5% fully diluted interest in Scudder Kemper.
Scudder's name will be changed to Scudder Kemper Investments, Inc.
The purchase price for Scudder or for ZKI in the Transactions is subject to
adjustment based on the impact to revenues of non-consenting clients, and will
be reduced if the annualized investment management fee revenues (excluding the
effect of market changes, but taking into account new assets under management)
from clients at the time of closing, as a percentage of such revenues as of June
30, 1997 (the "Revenue Run Rate Percentage"), is less than 90%.
At the closing, Zurich and the other stockholders of Scudder Kemper will
enter into a Second Amended and Restated Security Holders Agreement (the "New
SHA"). Under the New SHA, Scudder stockholders will be entitled to designate
three of the seven members of the Scudder Kemper board of directors and two of
the four members of an Executive Committee, which will be the primary
management-level committee of Scudder Kemper. Zurich will be entitled to
designate the other four members of the Scudder Kemper board and the other two
members of the Executive Committee.
The names, addresses and principal occupations of the initial Scudder-
designated directors of Scudder Kemper are as follows: Lynn S. Birdsong, 345
Park Avenue, New York, New York, Managing Director of Scudder; Cornelia M.
Small,345 Park Avenue, New York, New York, Managing Director of Scudder; and
Edmond D. Villani, 345 Park Avenue, New York, New York, President, Chief
Executive Officer and Managing Director of Scudder.
The names, addresses and principal occupations of the initial Zurich-
designated directors of Scudder Kemper are as follows: Lawrence W. Cheng,
Mythenquai 2, Zurich, Switzerland, Chief Investment Officer for Investments and
Institutional Asset Management and the corporate functions of Securities and
Real Estate for Zurich; Steven M. Gluckstern, Mythenquai 2, Zurich, Switzerland,
responsible for Reinsurance, Structured Finance, Capital Market Products and
Strategic Investments, and a member of the Corporate Executive Board of Zurich;
Rolf Hueppi, Mythenquai 2, Zurich, Switzerland, Chairman of the Board
8
<PAGE> 18
and Chief Executive Officer of Zurich; and Markus Rohrbasser, Mythenquai 2,
Zurich, Switzerland, Chief Financial Officer and member of the Corporate
Executive Board of Zurich.
The initial Scudder-designated Executive Committee members will be Messrs.
Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.
The New SHA requires the approval of a majority of the Scudder-designated
directors for certain decisions, including changing the name of Scudder Kemper,
effecting an initial public offering before April 15, 2005, causing Scudder
Kemper to engage substantially in non-investment management and related
business, making material acquisitions or divestitures, making material changes
in Scudder Kemper's capital structure, dissolving or liquidating Scudder Kemper,
or entering into certain affiliated transactions with Zurich. The New SHA also
provides for various put and call rights with respect to Scudder Kemper stock
held by current Scudder employees, limitations on Zurich's ability to purchase
other asset management companies outside of Scudder Kemper, rights of Zurich to
repurchase Scudder Kemper stock upon termination of employment of Scudder Kemper
personnel, and registration rights for stock held by continuing Scudder
stockholders.
The Transactions are subject to a number of conditions, including approval
by Scudder stockholders; the Revenue Run Rate Percentages of Scudder and ZKI
being at least 75%; Scudder and ZKI having obtained director and shareholder
approvals from U.S.-registered funds representing 90% of assets of such funds
under management as of June 30, 1997; the absence of any restraining order or
injunction preventing the Transactions, or any litigation challenging the
Transactions that is reasonably likely to result in an injunction or
invalidation of the Transactions, and the continued accuracy of the
representations and warranties contained in the Transaction Agreement. The
Transactions are expected to close during the fourth quarter of 1997.
The information set forth above concerning the Transactions has been
provided to the Trust by Scudder, and the information set forth below concerning
Zurich has been provided to the Trust by Zurich.
Founded in 1872, Zurich is a multinational, public corporation organized
under the laws of Switzerland. Its home office is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services,
and have branch offices and subsidiaries in more than 40 countries throughout
the world. Zurich Insurance Group is particularly strong in the insurance of
international companies and organizations. Over the past few years, Zurich's
global presence, particularly in the United States, has been strengthened by
means of selective acquisitions.
9
<PAGE> 19
DESCRIPTION OF THE CURRENT INVESTMENT MANAGEMENT AGREEMENTS
Under each Current Investment Management Agreement, Scudder provides each
Fund with continuing investment management services. The Investment Manager also
determines which securities shall be purchased, held, or sold, and what portion
of each Fund's assets shall be held uninvested, subject to each Fund's
Declaration of Trust, By-Laws, investment policies and restrictions, the
provisions of the 1940 Act, and such policies and instructions as the Trustees
may determine.
Each Current Investment Management Agreement provides that the Investment
Manager will provide portfolio management services, place portfolio transactions
in accordance with policies expressed in each Fund's registration statement,
and, with respect to Global Discovery Portfolio only, pay the Fund's office
rent, render significant administrative services on behalf of the Fund (not
otherwise provided by third parties) necessary for the Fund's operating as an
open-end investment company including, but not limited to, preparing reports to
and meeting materials for the Trust's Board of Trustees and reports and notices
to Fund shareholders; supervising, negotiating contractual arrangements with, to
the extent appropriate, and monitoring the performance of various third-party
and affiliated service providers to the Fund (such as the Fund's transfer and
pricing agents, fund accounting agent, custodian, accountants and others) and
other persons in any capacity deemed necessary or desirable to Fund operations;
preparing and making filings with the Securities and Exchange Commission (the
"SEC" or the "Commission") and other regulatory and self-regulatory
organizations, including but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration Statement, semi-annual
reports on Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act;
overseeing the tabulation of proxies by the Fund's transfer agent; assisting in
the preparation and filing of the Fund's federal, state and local tax returns;
preparing and filing the Fund's federal excise tax returns pursuant to Section
4982 of the Internal Revenue Code of 1986, as amended; providing assistance with
investor and public relations matters; monitoring the valuation of portfolio
securities and the calculation of net asset value; monitoring the registration
of shares of the Fund under applicable federal and state securities laws;
maintaining or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to the extent
such books, records and reports and other information are not maintained by the
Fund's custodian or other agents of the Fund; assisting in establishing
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
10
<PAGE> 20
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Fund in the conduct of its business, subject to the
direction and control of the Trust's Board of Trustees.
Under each Current Investment Management Agreement, each Fund is
responsible for other expenses, including organizational expenses (including
out-of-pocket expenses, but not including the Investment Manager's overhead or
employee costs); brokers' commissions or other costs of acquiring or disposing
of any portfolio securities of each Fund; legal, auditing and accounting
expenses; payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; taxes and governmental fees;
the fees and expenses of each Fund's transfer agent; expenses of preparing share
certificates and any other expenses, including clerical expenses, of issuance,
offering, distribution, sale, redemption or repurchase of shares; the expenses
of and fees for registering or qualifying securities for sale; the fees and
expenses of Non-interested Trustees; the cost of printing and distributing
reports, notices and dividends to current shareholders; and the fees and
expenses of each Fund's custodians, subcustodians, accounting agent, dividend
disbursing agents and registrars. Each Fund may arrange to have third parties
assume all or part of the expenses of sale, underwriting and distribution of
shares of each Fund. Each Fund is also responsible for expenses of shareholders'
and other meetings, the cost of responding to shareholders' inquiries, and its
expenses incurred in connection with litigation, proceedings and claims and the
legal obligation it may have to indemnify officers and Trustees of the Trust
with respect thereto. Each Fund is also responsible for the maintenance of books
and records which are required to be maintained by each Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; any fees, dues and expenses incurred by each Fund in
connection with membership in investment company trade organizations; expenses
of printing and mailing prospectuses and statements of additional information of
each Fund and supplements thereto to current shareholders; costs of stationery;
fees payable to the Investment Manager and to any other Fund advisors or
consultants; expenses relating to investor and public relations; interest
charges, bond premiums and other insurance expense; freight, insurance and other
charges in connection with the shipment of each Fund's portfolio securities; and
other expenses.
The Investment Manager is responsible for the payment of the compensation
and expenses of all Trustees, officers and executive employees of each Fund
(including each Fund's share of payroll taxes) affiliated with the Investment
Manager and making available, without expense to each Fund, the services of such
Trustees, officers and employees as may duly be elected officers of the Trust,
subject to their individual consent to serve and to any limitations imposed by
law. Each Fund is responsible for the fees and expenses (specifically including
travel expenses relating to Fund business) of Trustees not affiliated
11
<PAGE> 21
with the Investment Manager. Under each Current Investment Management Agreement,
the Investment Manager also pays each Fund's share of payroll taxes, as well as
expenses, such as travel expenses (or an appropriate portion thereof), of
Trustees and officers of the Trust who are directors, officers or employees of
the Investment Manager, except to the extent that such expenses relate to
attendance at meetings of the Board of Trustees of the Trust, or any committees
thereof or advisers thereto, held outside Boston, Massachusetts or New York, New
York. During each Fund's most recent fiscal year, no compensation, direct or
otherwise (other than through fees paid to the Investment Manager), was paid or
became payable by the Trust to any of its officers or Trustees who were
affiliated with the Investment Manager.
In return for the services provided by the Investment Manager as investment
manager, and the expenses it assumes under each Current Investment Management
Agreement, each Fund pays the Investment Manager a management fee which is
accrued daily and payable monthly. The management fee rate for each Fund is set
forth in the table below. As of the end of each Fund's last fiscal year, each
Fund had net assets and paid an aggregate management fee to the Investment
Manager during such period as set forth below.
<TABLE>
<CAPTION>
AGGREGATE
NET MANAGEMENT MANAGEMENT
FUND FISCAL YEAR ASSETS FEE RATE+ FEE PAID
- -------------------- ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Money Market
Portfolio 12/31/96 $ 97,785,626 .37% $ 325,791
Bond Portfolio 12/31/96 $ 65,769,421 .475% $ 291,740
Balanced Portfolio 12/31/96 $ 88,342,837 .475% $ 372,176
Growth and Income
Portfolio 12/31/96 $ 91,091,547 .475% $ 326,033
Capital Growth
Portfolio 12/31/96 $440,481,308 .475% $1,870,361
Global Discovery
Portfolio 12/31/96 $ 16,757,264 .975% $ 12,607*
International
Portfolio 12/31/96 $726,038,527 0.85% to $500 $5,590,601
million 0.75%
thereafter
</TABLE>
* After waivers and/or expense limitations.
+ The management fee rates shown above are for each Fund's most recently
completed fiscal year, unless otherwise noted. For each Fund's current
management fee rate, see Exhibit B attached to this proxy statement.
Each Current Investment Management Agreement further provides that the
Investment Manager shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund in connection with matters to which
such agreement relates, except a loss resulting from willful misfeasance, bad
12
<PAGE> 22
faith or gross negligence on the part of the Investment Manager in the
performance of its duties or from reckless disregard by the Investment Manager
of its obligations and duties under such agreement.
Each Current Investment Management Agreement may be terminated without
penalty upon sixty (60) days' written notice by either party. Each Fund may
agree to terminate its Current Investment Management Agreement either by the
vote of a majority of the outstanding voting securities of the Fund, or by a
vote of the Board of Trustees. As stated above, each Current Investment
Management Agreement automatically terminates in the event of its assignment.
Scudder has acted as the Investment Manager for each Fund since each Fund
commenced operations as shown below. Also shown below is the date of each
Current Investment Management Agreement, the date when each Current Investment
Management Agreement was last approved by the Trustees and the shareholders of
each Fund and the date to which each Current Investment Management Agreement was
last continued. Each Current Investment Management Agreement was last submitted
to shareholders prior to its becoming effective, as required by the 1940 Act.*
<TABLE>
<CAPTION>
DATE OF
CURRENT
INVESTMENT LAST LAST
COMMENCED MANAGEMENT APPROVED BY APPROVED BY DATE
NAME OF FUND OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS CONTINUED TO
- ------------------- --------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Money Market
Portfolio 7/16/85 11/14/86 8/6/97 7/1/85 9/30/98
Bond Portfolio 7/16/85 11/14/86 8/6/97 7/1/85 9/30/98
Balanced
Portfolio........ 7/16/85 11/14/86 8/6/97 7/1/85 9/30/98
Growth and Income
Portfolio 5/1/94 5/1/94 8/6/97 4/29/84 9/30/98
Capital Growth
Portfolio 7/16/85 8/4/97 8/6/97 7/1/85 9/30/98
Global Discovery
Portfolio 5/1/96 5/1/96 8/6/97 4/29/96 9/30/98
International
Portfolio 5/1/87 8/9/97 8/6/97 4/30/87 9/30/98
</TABLE>
- ------------------------------
* An Investment Management Agreement which is changed from a prior agreement
solely to reduce the fee payable by the Fund does not require shareholder
approval prior to becoming effective. In those cases, the date shown for
shareholder approval may be earlier than the effective date and may relate to
the previous management agreement.
THE NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreement for each Fund will be dated as of
the date of the consummation of the Transactions, which is expected to occur in
the fourth quarter of 1997, but in no event later than February 28, 1998. Each
New Investment Management Agreement will be in effect for an initial
13
<PAGE> 23
term ending on the same date as would the corresponding Current Investment
Management Agreement but for the Transactions, and may continue thereafter from
year to year only if specifically approved at least annually by the vote of "a
majority of the outstanding voting securities" of each Fund, or by the Board
and, in either event, the vote of a majority of the Non-interested Trustees cast
in person at a meeting called for such purpose. In the event that shareholders
of each Fund do not approve the New Investment Management Agreement, the
corresponding Current Investment Management Agreement will remain in effect
until the closing of the Transactions at which time it would terminate. In such
event, the Board will take such action, if any, as it deems to be in the best
interests of the Fund and its shareholders. In the event the Transactions are
not consummated, Scudder will continue to provide services to each Fund in
accordance with the terms of each Current Investment Management Agreement for
such periods as may be approved at least annually by the Board, including a
majority of the Non-interested Trustees.
DIFFERENCES BETWEEN THE CURRENT AND NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreements are substantially the same as the
Current Investment Management Agreements in all material respects. The principal
changes that have been made are summarized below. The New Investment Management
Agreements reflect conforming changes that have been made in order to promote
consistency among all funds currently advised by Scudder and to permit ease of
administration. For example, the New Investment Management Agreements would
update the list of types of services that may be provided by the Investment
Manager to include the monitoring of accounting agents. In addition, each New
Investment Management Agreement specifies that the Investment Manager is not
responsible for payment of the fees and expenses of its accounting agent. Each
Fund would add "accounting agents" to the list of service providers to which the
Investment Manager must provide information in connection with the payment of
dividends and distributions. In addition, the New Investment Management
Agreements would clarify that purchase and sale opportunities, which are
suitable for more than one client of the Investment Manager, will be allocated
by the Investment Manager in an equitable manner.
Further, the New Investment Management Agreements for each Fund (except
Global Discovery Portfolio, the Current Investment Management Agreement which
already included such provision) with respect to Scudder would clarify the scope
of the licensing provisions governing the use of the Scudder name. Specifically,
the New Investment Management Agreements identify Scudder Kemper as the
exclusive licensee of the rights to use and sublicense the names "Scudder,"
"Scudder Kemper Investments, Inc.," and "Scudder, Stevens & Clark, Inc."
(together the "Scudder Marks"). Under this license, each Fund has the
non-exclusive right to use and sublicense the Scudder name and marks as part of
its name, and to use the Scudder Marks in
14
<PAGE> 24
the Fund's investment products and services. This license continues only as long
as a New Investment Management Agreement is in place, and only as long as
Scudder Kemper continues to be a licensee of the Scudder Marks from Scudder
Trust Company, which is the owner and licensor of the Scudder Marks. As a
condition of the license, each Fund undertakes certain responsibilities and
agrees to certain restrictions, such as agreeing not to challenge the validity
of the Scudder Marks or ownership by Scudder Trust Company and the obligation to
use the name within commercially reasonable standards of quality. In the event
an agreement is terminated, a Fund must not use a name likely to be confused
with those associated with the Scudder Marks.
Other conforming changes in each New Investment Management Agreement
include: deletion of the Investment Manager's potential responsibility for
monitoring the calculation and payment of distributions to shareholders and the
inclusion of a provision clarifying that each New Investment Management
Agreement supersedes all prior agreements.
Lastly, the New Investment Management Agreement for each Fund, except
Global Discovery Portfolio, contains an additional provision that the Investment
Manager will provide administrative services at no additional cost to the Fund;
the Current Investment Management Agreement for Global Discovery Portfolio
already provides for the Investment Manager's provision of administrative
services.
INVESTMENT MANAGER
Scudder is one of the most experienced investment counsel firms in the
United States. It was established in 1919 as a partnership and was restructured
as a Delaware corporation in 1985. The principal source of Scudder's income is
professional fees received from providing continuing investment advice. Scudder
provides investment counsel for many individuals and institutions, including
insurance companies, endowments, industrial corporations and financial and
banking organizations.
As stated above, Scudder is a Delaware corporation. Daniel Pierce* is the
Chairman of the Board of Scudder, Edmond D. Villani# is President and Chief
Executive Officer of Scudder, Stephen R. Beckwith#, Lynn S. Birdsong#, Nicholas
Bratt#, E. Michael Brown*, Mark S. Casady*, Linda C. Coughlin*, Margaret D.
Hadzima*, Jerard K. Hartman#, Richard A. Holt@, John T. Packard+, Kathryn L.
Quirk#, Cornelia M. Small#, and Stephen A. Wohler* are the other members of the
Board of Directors of Scudder (see footnote for symbol key).+
- ------------------------------
+
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
+ 101 California Street, San Francisco, California
@ Two Prudential Plaza, 180 North Stetson, Suite 5400, Chicago, Illinois.
15
<PAGE> 25
The principal occupation of each of the above named individuals is serving as a
Managing Director of Scudder.
All of the outstanding voting and nonvoting securities of Scudder are held
of record by Stephen R. Beckwith, Juris Padegs#, Daniel Pierce and Edmond D.
Villani in their capacity as the representatives of the beneficial owners of
such securities (the "Representatives"), pursuant to a Security Holders'
Agreement among Scudder, the beneficial owners of securities of Scudder and such
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocations will be at net book value in cash
transactions. All Managing Directors of Scudder own voting and nonvoting stock
and all Principals of Scudder own nonvoting stock.
Directors, officers and employees of Scudder from time to time may enter
into transactions with various banks, including each Fund's custodian bank. It
is Scudder's opinion that the terms and conditions of those transactions will
not be influenced by existing or potential custodial or other Fund
relationships.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder,
computes net asset value for each Fund. Scudder Service Corporation ("SSC"),
also a subsidiary of Scudder, is the transfer, shareholder servicing and
dividend-paying agent for each Fund. The table below sets forth for each Fund
the fees paid to SFAC during the last fiscal year of each Fund. SSC receives no
fees from the Funds.
<TABLE>
<CAPTION>
AGGREGATE FEE PAID
TO SFAC DURING
NAME OF FUND LAST FISCAL YEAR
--------------------------------------- ------------------
<S> <C>
Money Market Portfolio $ 30,073
Bond Portfolio $ 37,590
Balanced Portfolio $ 39,830
Growth and Income Portfolio $ 42,366
Capital Growth Portfolio $ 70,071
Global Discovery Portfolio $ 33,383
International Portfolio $335,822
</TABLE>
SFAC and SSC will continue to provide fund accounting, transfer agency,
subaccounting and recordkeeping services to the Funds under the current
arrangements if the New Investment Management Agreements are approved.
16
<PAGE> 26
Exhibit B sets forth the fees and other information regarding other
investment companies advised by Scudder.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
To the maximum extent feasible, Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc., Two International Place,
Boston, Massachusetts 02110 (the "Distributor")(a corporation registered as a
broker/dealer and a subsidiary of Scudder), which in turn places orders on
behalf of the Funds with issuers, underwriters or other brokers and dealers. In
selecting brokers and dealers with which to place portfolio transactions for a
Fund, Scudder will not consider sales of shares of funds currently advised by
ZKI, although it may place such transactions with brokers and dealers that sell
shares of funds currently advised by ZKI. The Distributor receives no
commissions, fees or other remuneration from the Funds for this service.
Allocation of portfolio transactions is supervised by Scudder.
REQUIRED VOTE
Approval of the New Investment Management Agreement for any Fund requires
the affirmative vote of a "majority of the outstanding voting securities", as
defined above, of the Fund. The Trustees of the Trust recommend that the
shareholders of each Fund vote in favor of this Proposal 1.
PROPOSAL 2: ELECTION OF TRUSTEES
At the Special Meeting, five Trustees are to be elected to constitute the
Board of the Trust. For election of Trustees at the Special Meeting, the Board
of Trustees has approved the nomination of the following individuals: Dr.
Kenneth Black, Jr., Dr. Rosita P. Chang, Peter B. Freeman, Dr. J. D. Hammond and
Daniel Pierce.
The persons named as proxies on the enclosed proxy card will vote for the
election of the nominees named above unless authority to vote for any or all of
the nominees is withheld in the proxy. Each Trustee so elected will serve as a
Trustee of the Trust until the next meeting of shareholders, if any, called for
the purpose of electing Trustees and until the election and qualification of a
successor or until such Trustee sooner dies, resigns or is removed as provided
in the Declaration of Trust of the Trust.
Each of the nominees has indicated that he or she is willing to serve as a
Trustee. 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 Trustees may recommend. The
following table sets forth certain information concerning the current Trustees
and the nominees. Unless otherwise noted, each of the Trustees and nominees has
engaged in the principal occupation listed in the following table for more than
five years, but not necessarily in the same capacity.
17
<PAGE> 27
NOMINEES:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST
(DATE NOMINEE BECAME TRUSTEE),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
DR. KENNETH BLACK, JR. (72) Trustee (1985). Regents' Professor Emeritus, Georgia State
University; Editor, Journal of American Society of CLU & ChFC;
Trustee, Educational Foundation, Inc.; Vice Chairman and
Director, International Insurance Seminars, Inc.; Former
Director, USLIFE Corporation. Former Director, Alexander and
Alexander Services, Inc.; and Former Director, Haverty
Furniture Cos., Inc.
DR. ROSITA P. CHANG (42) Trustee (1995). Professor of Finance, University of Rhode
Island.
PETER B. FREEMAN (65) Trustee (1985). Director, The A.H. Belo Company; Trustee,
Eastern Utilities Associates (electric utility holding
company); Director, AMICA Life Insurance Co.; Director AMICA
Insurance Co. Formerly: President, Fields Point Management Co.
and Goelet Estate Co. (private investment management
companies); Former Director, The Providence Journal Company
(multi-media company). Mr. Freeman serves on the Boards of an
additional 9 Trusts or Corporations whose Funds are advised by
Scudder.
DR. J. D. HAMMOND (63) Trustee (1985). Dean, Smeal College of Business Administration,
Pennsylvania State University; Member of the Board, The
Atlantic Mutual Insurance Co. Former Trustee, President Mutual
Life Insurance Company. Dr. Hammond serves on the Board of an
additional 1 Trust whose Funds are advised by Scudder.
DANIEL PIERCE* (63) Vice President and Trustee (1985). Chairman of the Board and
Managing Director of Scudder, Stevens & Clark, Inc. Director,
Fiduciary Trust Company (bank and trust company) and Fiduciary
Company Incorporated (bank and trust company). Mr. Pierce
serves on the Boards of an additional 18 Trusts or Corporations
whose Funds are advised by Scudder.
</TABLE>
- ------------------------------
* Trustee considered by the Trust and its counsel to be an "interested person"
(as defined in the 1940 Act) of the Trust or of its investment manager because
of his employment by the Investment Manager and holding office with the Trust.
CURRENT TRUSTEE NOT STANDING FOR RE-ELECTION:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST
(DATE BECAME TRUSTEE),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
DAVID B. WATTS* (62) President and Trustee (1985). Managing Director of Scudder,
Stevens & Clark, Inc.
</TABLE>
- ------------------------------
* Trustee considered by the Trust and its counsel to be an "interested person"
(as defined in the 1940 Act) of the Trust or of its investment manager because
of his employment by the Investment Manager and holding office with the Trust.
As of June 30, 1997, the nominees to and the Trustees of the Board of
Trustees owned directly or beneficially none of the outstanding shares of any
18
<PAGE> 28
Fund. The information as to beneficial ownership is based on statements
furnished to the Trust by each Trustee and nominee.
As of June 30, 1997, 46.60% of the outstanding shares of International
Portfolio were held in the name of Aetna Life Insurance & Annuity Co., 242
Trumbull Street, Hartford, CT 06103, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1997, 6.80% of the outstanding shares of Balanced Portfolio,
5.30% of Growth and Income Portfolio and 6.70% of Global Discovery Portfolio
were held in the name of Banner Life Insurance Co., 1701 Research Boulevard,
Rockville, MD 20850, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 52.70% of the outstanding shares of Money Market
Portfolio, 31.70% of Bond Portfolio, 57.80% of Balanced Portfolio, 83.80% of
Growth and Income Portfolio, 24.50% of Capital Growth Portfolio, 87.50% of
Global Discovery Portfolio and 12.40% of International Portfolio were held in
the name of Charter National Life Insurance Co., 8301 Maryland Avenue, St.
Louis, MO 63105, who may be deemed to be beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 7.50% of the outstanding shares of Balanced Portfolio
were held in the name of Lincoln Benefit Life Insurance Co., 206 South 13th
Street, Lincoln, NE 68508, who may be deemed to be beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 41.40% of the outstanding shares of Bond Portfolio,
57.00% of Capital Growth Portfolio and 23.00% of International Portfolio were
held in the name of Mutual of America Life Insurance Co., 320 Park Avenue, New
York, NY 10022, who may be deemed to be beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 10.00% of the outstanding shares of Bond Portfolio and
8.30% of Growth and Income Portfolio were held in the name of Provident Mutual
Life and Annuity Co. of America, 1205 Westlakes Drive, Berwyn, PA 19312, who may
be deemed to be beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1997, 8.80% of the outstanding shares of Bond Portfolio and
5.60% of Capital Growth Portfolio were held in the name of Washington National
Life Insurance Co., One Presidential Parkway, Kokomo, IN 46904, who may be
deemed to be beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1997, 27.40% of the outstanding shares of Balanced Portfolio
were held in the name of Safeco Life Insurance Co., 15411 N.E. 51st Street,
Redmond, WA 98052, who may be deemed to be beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
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<PAGE> 29
As of June 30, 1997, 41.90% of the outstanding shares of Money Market
Portfolio, 6.40% of Capital Growth Portfolio and 8.10% of International
Portfolio were held in the name of The Union Central Life Insurance Co., 1876
Waycross Road, Cincinnati, OH 45240, who may be deemed to be beneficial owner of
certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 5.80% of the outstanding shares of Global Discovery
Portfolio were held in the name of United of Omaha Life Insurance Co., Mutual of
Omaha Plaza, 3301 Dodge Street, Omaha, NE 68131, who may be deemed to be
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
To the best of the Trust's knowledge, as of June 30, 1997, no person owned
beneficially more than 5% of any Fund's outstanding shares, except as stated
above.
RESPONSIBILITIES OF THE BOARD--BOARD AND COMMITTEE MEETINGS
The Board of Trustees of the Trust is responsible for the general oversight
of Fund business. A majority of the Board's members are not affiliated with
Scudder. These Non-interested Trustees have primary responsibility for assuring
that each Fund is managed in a manner consistent with the best interests of its
shareholders.
The Board of Trustees meets at least quarterly to review the investment
performance of the Funds and other operational matters, including policies and
procedures designed to assure compliance with various regulatory requirements.
At least annually, the Non-interested Trustees review the fees paid to the
Investment Manager and its affiliates for investment advisory services and other
administrative and shareholder services. In this regard, they evaluate, among
other things, each Fund's investment performance, the quality and efficiency of
the various other services provided, costs incurred by the Investment Manager
and its affiliates, and comparative information regarding fees and expenses of
competitive funds. They are assisted in this process by the Funds' independent
public accountants and by independent legal counsel selected by the Non-
interested Trustees. In addition, the Non-interested Trustees from time to time
have established and served on task forces and subcommittees focusing on
particular matters such as investment, accounting and shareholder service
issues. The Board of Trustees met four times during fiscal year 1996.
The Board of the Trust has both an Audit Committee and a Committee on
Independent Trustees, the responsibilities of which are described below.
AUDIT COMMITTEE
The Board of the Trust has an Audit Committee consisting of the Non-
interested Trustees. The Audit Committee reviews with management and the
independent accountants for each Fund, among other things, the scope of the
audit and the controls of each Fund and its agents, reviews and approves in
20
<PAGE> 30
advance the type of services to be rendered by independent accountants,
recommends the selection of independent accountants for each Fund to the Board
and, in general, considers and reports to the Board on matters regarding each
Fund's accounting and bookkeeping practices. The Audit Committee met once during
fiscal year 1996.
COMMITTEE ON INDEPENDENT TRUSTEES
The Board of the Trust has a Committee on Independent Trustees consisting
of all the Non-interested Trustees. The Committee is charged with the duty of
making all nominations for Non-interested Trustees and consideration of other
related matters. Shareholders' recommendations as to nominees received by
management are referred to the Committee for its consideration and action.
The Committee on Independent Trustees met once during fiscal year 1996.
In addition to the Board and committee meetings listed above, the Trustees
attended various other meetings on behalf of the Trust during the year,
including meetings with their independent legal counsel and informational
meetings.
EXECUTIVE OFFICERS
In addition to Messrs. Pierce and Watts, Trustees who are also officers of
the Trust, the following persons are Executive Officers of Scudder Variable Life
Investment Fund:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
TRUST;
NAME (AGE) PRINCIPAL OCCUPATION OR YEAR FIRST BECAME
----------- EMPLOYMENT(1) AN OFFICER(2)
-------------------------- -----------------
<S> <C> <C>
Stephen L. Akers (45) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1996
Thomas S. Crain (57) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1992
Carol Franklin (44) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1996
William F. Gadsden (42) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1996
</TABLE>
21
<PAGE> 31
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
TRUST;
NAME (AGE) PRINCIPAL OCCUPATION OR YEAR FIRST BECAME
----------- EMPLOYMENT(1) AN OFFICER(2)
-------------------------- -----------------
<S> <C> <C>
Jerard K. Hartman (64) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1986
Robert T. Hoffman (38) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1996
Richard A. Holt (55) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1992
William M. Hutchinson (49) Vice President; Principal
of Scudder, Stevens &
Clark, Inc. 1996
Thomas W. Joseph (58) Vice President; Principal
of Scudder, Stevens &
Clark, Inc. 1986
David S. Lee (63) Vice President; Managing
Director of Scudder
Stevens & Clark, Inc. 1987
Valerie F. Malter (39) Vice President; Principal
of Scudder, Stevens &
Clark, Inc. Formerly,
Portfolio Manager with
Chancellor LGT Asset
Management (1992-95). 1996
Steven M. Meltzer (38) Vice President; Managing
Director of Scudder
Stevens & Clark, Inc. 1989
Gerald J. Moran (58) Vice President; Principal
of Scudder, Stevens &
Clark, Inc. 1996
Thomas F. McDonough (50) Vice President and
Secretary; Principal of
Scudder, Stevens & Clark,
Inc. 1985
Pamela A. McGrath (43) Vice President and
Treasurer; Managing
Director of Scudder,
Stevens & Clark, Inc. 1990
Edward J. O'Connell (52) Vice President and
Assistant Treasurer;
Principal of Scudder,
Stevens & Clark, Inc. 1990
Kathryn L. Quirk (44) Vice President and
Assistant Secretary;
Managing Director of
Scudder, Stevens & Clark,
Inc. 1985
</TABLE>
22
<PAGE> 32
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
TRUST;
NAME (AGE) PRINCIPAL OCCUPATION OR YEAR FIRST BECAME
----------- EMPLOYMENT(1) AN OFFICER(2)
-------------------------- -----------------
<S> <C> <C>
Randall K. Zeller (42) Vice President; Managing
Director of Scudder
Stevens & Clark, Inc. 1995
</TABLE>
- ------------------------------
(1) Except for Ms. Malter, unless otherwise stated, all of the Executive
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 Trust.
COMPENSATION OF TRUSTEES AND OFFICERS
The Trust pays each Non-interested Trustee an annual Trustee's fee plus
specified amounts for Board and committee meetings attended and compensates him
or her for expenses related to Trust business.
Scudder supervises each Fund's investments, pays the compensation and
certain expenses of its personnel who serve as Trustees and officers of the
Trust and receives a management fee for its services. Several of the Trust's
officers and Trustees are also officers, Directors, employees or stockholders of
Scudder and participate in the fees paid to that firm, although such Trust makes
no direct payments to them other than for reimbursement of travel expenses in
connection with their attendance at Trustees' and committee meetings.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Trustees who receive compensation from the Trust.
Column (2) Aggregate compensation received by each Trustee of the
Trust during the calendar year 1996.
Column (3) Total compensation received by each Trustee from funds
managed by Scudder (collectively, the "Fund Complex") during the calendar
year 1996.
The Trustees do not receive any pension or retirement benefits from any
Trust in the Fund Complex.
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<PAGE> 33
COMPENSATION TABLE
<TABLE>
<CAPTION>
(3)
TOTAL COMPENSATION
FROM THE
(1) (2) TRUST AND FUND COMPLEX
NAME OF TRUSTEE AGGREGATE COMPENSATION PAID TO TRUSTEE
- ------------------------ ---------------------- ----------------------
<S> <C> <C>
Dr. Kenneth Black, Jr. $ 26,233 $ 26,233 (7 Funds)
Dr. Rosita P. Chang $ 26,233 $ 26,233 (7 Funds)
Peter B. Freeman $ 16,483 $ 131,734 (33 Funds)
Dr. J. D. Hammond $ 26,233 $ 26,233 (7 Funds)
</TABLE>
REQUIRED VOTE
Election of each of the listed nominees for Trustee requires the
affirmative vote of a plurality of the votes of the Trust cast at the Special
Meeting in person or by proxy. This means that the five nominees receiving the
largest number of votes will be elected. The Trustees of the Trust recommend
that the shareholders of the Trust vote in favor of each of the nominees listed
in this Proposal 2.
PROPOSAL 3: APPROVAL OR DISAPPROVAL OF
THE BOARD'S DISCRETIONARY AUTHORITY TO
CONVERT EACH FUND TO A MASTER-FEEDER STRUCTURE
If this Proposal 3 is approved by shareholders, the Board could determine
that the objectives of a Fund would be achieved more efficiently, while
retaining its current distribution arrangements, by investing in a master fund
in a master/feeder fund structure as described below, and in that case cause the
Fund to do so without further approval by shareholders.
A master/feeder fund structure is one in which a fund (a feeder), instead
of investing directly in a portfolio of securities, invests all of its
investment assets in another investment company (the master) with substantially
the same investment objectives and policies as the feeder. Such a structure
permits the pooling of assets of two or more feeder funds in the master fund in
an effort to achieve possible economies of scale and efficiencies in portfolio
management, while preserving separate identities, management and distribution
channels at the feeder level. An existing investment company could convert to a
feeder by selling all of its investments, which involves brokerage and other
transaction costs and the realization of taxable gain or loss, or by
contributing its assets to the master and avoiding transaction costs and, if
proper procedures are followed, the realization of taxable gain or loss.
Under the Trust's Declaration of Trust, the affirmative vote of a majority
of the shares of a Fund is required to sell or transfer substantially all of the
assets of the Fund. One way to convert a Fund to a master/feeder fund structure
is through a sale or transfer of assets. Thus, approval of the Board's
discretionary authority to convert a Fund to a master/feeder fund structure
through a sale or
24
<PAGE> 34
transfer of assets requires, under a conservative interpretation of the Trust's
Declaration of Trust, the affirmative vote of a majority of the shares of the
Fund.
A master fund must have the identical investment objective and
substantially the same investment policies as its feeder funds. This means that
the assets of the master fund are invested in the same types of securities in
which its feeder funds are authorized to invest.
Management of the Trust believes that, generally, the larger the pool of
assets being managed the more efficiently and cost-effectively it can be
managed. Because a master fund pools the assets of multiple feeder funds, it
provides an effective means of creating larger asset pools. Whether the Board
would exercise its discretionary authority to convert a Fund to a master/feeder
fund structure would depend upon the existence of appropriate opportunities to
pool the Fund's assets with those of other feeder funds. The primary motivation
for considering a master/feeder fund structure is to seek to achieve possible
economies of scale and efficiencies in portfolio management, while preserving
separate identities, management and distribution channels at the feeder fund
level. The Trustees' decision to convert a Fund would be based upon their
determination that it would be in the best interests of both the Fund and its
shareholders after consideration of all relevant factors, including the relative
fund expenses associated with a master/feeder fund structure.
A feeder fund can withdraw its investment in a master fund at any time if
its board determines that it is in the best interests of the shareholders to do
so or if the investment policies or restrictions of the master fund were changed
so that they were inconsistent with the policies and restrictions of the feeder
fund. Upon any such withdrawal, the board of the fund would consider what action
might be taken, including the investment of all of the assets of the fund in
another pooled investment entity having substantially the same investment
objectives and policies as the fund or the investment of the fund's assets
directly in a portfolio of investments in accordance with its investment
objective and policies.
REQUIRED VOTE
Shareholders of each Fund will vote separately with respect to this
Proposal 3. Approval of this Proposal 3 by a Fund requires the affirmative vote
of the holders of a majority of the shares of the Fund. The Trustees of the
Trust recommend that shareholders of each Fund vote in favor of this Proposal 3.
PROPOSAL 4: APPROVAL OR DISAPPROVAL OF
AN AMENDED AND RESTATED DECLARATION OF TRUST
Changes and regulatory developments in the investment company industry have
occurred since the current form of the Trust's Declaration of Trust was adopted.
Because consummation of the Transactions described in Proposal 1 requires the
holding of this Special Meeting, the Trustees of the Trust have
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<PAGE> 35
determined to seek at the same time shareholder approval of an Amended and
Restated Declaration of Trust ("Restated Declaration") designed to reflect those
changes and developments. The Restated Declaration also includes other changes
of a minor or clarifying nature. The principal changes in the current
Declaration of Trust which would be effected by shareholder approval of the
Restated Declaration are described below. A copy of the principal changes to the
Declaration of Trust is attached to this proxy statement as Exhibit C.
PROPOSAL 4(A): CHANGES TO THE TRUST'S CURRENT DECLARATION OF TRUST THAT REQUIRE
A VOTE OF TWO-THIRDS OF SHARES OF THE TRUST OUTSTANDING AND ENTITLED TO VOTE
Master/Feeder Structure. A new Section 2.2(i) would be added to give the
Trustees the express power to accomplish each Fund's objective by investing all
or a portion of its assets in another investment company in a "master/feeder"
fund structure, by transferring assets of the Fund to the other investment
company or otherwise, without further shareholder approval. This section of the
Restated Declaration would grant to the Trustees power which is similar to that
included in Proposal 3, but differs from it as described in the next paragraph.
A master/feeder fund structure is described in Proposal 3. Management of
the Trust believes the Trustees currently have the power to enter into a
master/feeder fund structure, although a conservative interpretation of the
current Declaration of Trust is that shareholder approval is required for the
transfer of substantially all of a Fund's assets to a master fund to accomplish
that objective. Such a vote is not required to sell all of the Fund's portfolio
securities and to purchase its interest in the master fund with the proceeds.
The express grant to the Trustees of the power in the Restated Declaration to
enter into a master/feeder fund structure would remove any doubt as to the
Trustees' power to transfer assets to a master fund without shareholder
approval, and differs from the approval of entry into a master/feeder fund
structure sought in Proposal 3 primarily in that a power contained in any
trust's declaration of trust is effective in perpetuity unless the declaration
of trust is amended or terminated. Thus, if Proposal 3 is approved but if it
were concluded in the future that the approval had lapsed due to the passage of
time, the power of the Trustees to enter into a master/feeder fund structure
would nevertheless continue under proposed Section 2.2(i) of the Restated
Declaration, if approved.
Shareholder Voting. Under the Restated Declaration, shareholders would
continue to have the same rights as they now have to elect and remove Trustees,
to further amend the Restated Declaration and to vote on certain other matters.
Section 5.9 would be amended to eliminate shareholder voting under the
Declaration with respect to investment advisory or management contracts; this
matter must be voted on under provisions of the 1940 Act or the rules
thereunder, and a separate requirement in the Trust's governing instrument is
unnecessary. The Restated Declaration would also eliminate shareholder voting on
a merger, consolidation, sale of assets or incorporation of the Trust. Although
26
<PAGE> 36
the Trustees ordinarily would not expect to take such an action without
shareholder approval, there are situations, as with a very small, uneconomical
fund, a sufficient number of whose shareholders cannot be located, where Trustee
action alone would be in the best interest of shareholders.
REQUIRED VOTE
Approval of this Proposal 4(A) with respect to the Trust requires the vote
of two-thirds of the shares of the Trust outstanding and entitled to vote. If
the shareholders of the Trust fail to approve this Proposal 4(A), neither the
Restated Declaration, if approved, nor the Trust's current Declaration of Trust
would be amended as described in this Proposal 4(A). The Trustees of the Trust
recommend that the shareholders of the Trust vote in favor of this Proposal
4(A).
PROPOSAL 4(B): CHANGES TO THE TRUST'S CURRENT DECLARATION OF TRUST THAT REQUIRE
A MAJORITY VOTE
Different Classes of Shares. The Restated Declaration would include a new
Section 5.13 which clarifies and makes express the Trustees power to divide the
shares of the Funds into different classes. Division of the shares into classes
permits shares of different classes to be distributed by different methods.
Shareholders of different classes might bear different expenses in connection
with such methods of distribution. Each Fund, except the Money Market Fund,
currently has two classes of shares, Class A and Class B. Class B shares are
subject to a Distribution Plan which provides that the Trust, on behalf of each
Fund, shall pay the Distributor in its capacity as principal underwriter for the
shares, a fee of up to 0.25% of the average daily net assets of a Fund
attributable to its Class B shares. Shareholders of different classes of a
particular Fund continue to have an interest in the same portfolio of assets.
Minimum Account Size. Under Section 6.6 of the Restated Declaration, the
Trustees would be permitted to fix minimum account sizes for the Funds. As
currently set forth in the Declaration of Trust, if the value of a shareholder's
account within a Fund falls below the minimum size of $1,000 the Trustees have
the authority to cause that account to be redeemed and the proceeds sent to the
shareholder. The Restated Declaration would permit the Trustees to fix the
minimum account size without seeking shareholder approval of an amendment to the
Declaration of Trust.
The Trustees currently have no intention of changing the minimum account
size of $1,000. However, if the Trustees determine that the cost to a Fund of
servicing accounts above the current minimum account size outweighs the benefits
to the Fund of such accounts, they may determine that it is in the Fund's best
interest to increase the minimum account size. Because the Trust's record
shareholders consist of insurance companies with account sizes substantially in
excess of $1,000, this provision is not expected to have any impact on the
operations of the Trust.
27
<PAGE> 37
Currency and Futures Contracts. Under Section 2.2(c) of the Restated
Declaration, the Trustees would have the express power to enter into forward
foreign currency exchange contracts, to purchase and sell futures contracts on
securities, securities indices and foreign currencies, to purchase or sell
options on such contracts, foreign currency contracts, and foreign currencies
and to engage in all types of hedging and risk management transactions.
Plans of Distribution. Under Section 2.2(h) of the Restated Declaration,
the Trustees would have the express power to enter into a plan of distribution
and related agreements in order to finance activities intended to result in the
sale of shares.
Indemnification. Under Sections 4.1 and 4.3 of the Restated Declaration,
provisions relating to the indemnification of the Trustees, officers and
shareholders of the Funds would be modified to conform to current industry
practice and positions taken by the SEC concerning such indemnification.
Shareholder Communications. Under Section 5.7 of the Restated Declaration,
any communication to shareholders would not need to be sent to a shareholder if
certain previous mailings to such shareholder had been returned as
undeliverable.
Removal of Trustees. Under Section 5.9 of the Restated Declaration,
shareholders would have the express power to vote for the removal of Trustees.
Merger, Consolidation and Sale of Assets. Under Section 5.9 of the
Restated Declaration, shareholder approval for the merger, consolidation or sale
of assets of the Trust or any Fund would no longer be required. Under the
Restated Declaration, a majority of the Trustees would have the power to
authorize such a sale, merger or consolidation.
Additional Proposed Amendments. All other minor and clarifying changes
which would be effected by approval of the Restated Declaration are included in
this Proposal 4(B).
REQUIRED VOTE
Approval of this Proposal 4(B) with respect to the Trust requires the
affirmative vote of a "majority of the outstanding voting securities" of the
Trust, as defined above. The Trustees of the Trust recommend that the
shareholders of the Trust vote in favor of this Proposal 4(B).
If this Proposal 4(B) is approved with respect to the Trust, the Restated
Declaration will be adopted for the Trust. The Restated Declaration (or the
current Declaration of Trust) of the Trust will include new Section 2.2(i) and
certain amendments to Section 5.9 as described in Proposal 4(A) only if Proposal
4(A) is also adopted for the Trust.
28
<PAGE> 38
PROPOSAL 5: APPROVAL OR DISAPPROVAL OF
THE REVISION OF CERTAIN FUNDAMENTAL
INVESTMENT POLICIES
The 1940 Act requires an investment company to have adopted certain
specified investment policies which can be changed only by a shareholder vote.
Those policies are often referred to as "fundamental" policies. In the past,
fundamental policies were adopted by the Trust on behalf of its Funds, and in
some cases amended by vote of the shareholders of the affected Fund, in order to
reflect regulatory, business or industry conditions which were in effect at the
time the particular action was taken. Because of the opportunity afforded by
this Special Meeting, there has been a review of each Fund's fundamental
policies with the goal of simplifying, modernizing and making consistent as far
as possible the fundamental policies of all open-end investment companies
managed by Scudder.
This Proposal seeks shareholder approval of changes which are intended to
accomplish that goal. The proposed changes to each Fund's fundamental policies
are discussed in detail below. Please refer to the proposed policies as set
forth in Exhibit D. Each Fund's current fundamental investment policies are set
forth in Exhibit E.
Each of the fundamental policies proposed for adoption with respect to each
Fund is in an area in which the 1940 Act requires that the Fund adopt a
fundamental policy. The policies with respect to diversification, the issuance
of senior securities, and the underwriting of securities issued by others differ
from the current policies of each Fund in that the requirements of the 1940 Act,
which of course apply, are not spelled out in detail. Under such new policies,
the limitation on each Fund would, therefore, be determined by reference to the
provisions of the 1940 Act, the rules thereunder, and applicable interpretations
of the Commission or its staff rather than the express terms of the policies.
Shareholders will be asked to vote on each proposed fundamental policy
separately on the enclosed proxy card.
PROPOSAL 5.1: DIVERSIFICATION
Each Fund is a "diversified" fund under the 1940 Act. Under its current
diversification policy, each Fund, with respect to 75% of the value of its total
assets, may not purchase more than 10% of the voting securities of any one
issuer or invest more than 5% of the value of its total assets in the securities
of any one issuer, with exceptions for U.S. Government securities and, in the
case of the Global Discovery Portfolio, securities of closed end investment
companies. This restriction is substantially similar to the definition of a
diversified fund under the 1940 Act. Accordingly, the proposed statement that
each Fund has elected to be classified as a diversified Fund represents no
substantive change in the current diversification policy for any of the Funds.
29
<PAGE> 39
PROPOSAL 5.2: BORROWING
The current policy of each Fund, except for the Global Discovery Portfolio,
prohibits borrowing money except from banks as a temporary measure for
extraordinary or emergency purposes provided that a Fund maintains asset
coverage of 300% for all borrowings and prohibits purchases of securities for a
Fund while borrowings of that Fund exceed 5% of its assets. The current policy
of the Global Discovery Portfolio prohibits borrowing money, except as a
temporary measure for extraordinary or emergency purposes and except in
connection with reverse repurchase agreements, provided that the Fund maintains
asset coverage of 300% for all borrowings. Under the proposed policy, each Fund
would not be limited to borrowing from banks for temporary or emergency
purposes; however, if the Trustees determine with respect to any Fund to borrow
for other purposes, which they currently do not intend to do, the applicable
Fund's disclosure documents would be amended to disclose that fact. Although the
Trustees do not currently intend to borrow for investment leverage purposes,
such borrowings would increase the Fund's volatility and the risk of loss in a
declining market. Borrowings under reverse repurchase agreements are now
permitted for the Global Discovery Portfolio, and would be permitted for each
Fund under the proposed policy. In addition, under the proposed policy, each
Fund would not be prohibited from purchasing securities while a Fund has
outstanding borrowings exceeding 5% of assets; management of the Trust believes
that elimination of this restriction will provide greater investment flexibility
when, in the opinion of management, borrowings are necessary or appropriate. The
1940 Act requires borrowings to have 300% asset coverage, which requirement
would, therefore, remain unchanged under the proposed policy, except to the
extent that reverse repurchase agreements would not be subject, under the
proposed policy, to the 300% asset coverage requirement. Consequently, the
proposed policy would permit a Fund to engage in reverse repurchase agreements
to a greater extent than under the current policy.
PROPOSAL 5.3: SENIOR SECURITIES
The current policy of each Fund prohibits the issuance of senior securities
(i.e., securities which are obligations or instruments evidencing indebtedness),
except in connection with permitted indebtedness and except in connection with
the issuance of separate series of shares and, in the case of Global Discovery
Portfolio, provided that collateral arrangements with respect to various
derivatives transactions were not considered to be senior securities. The
current policy, therefore, specifically excepts from the prohibition on the
issuance of senior securities certain practices which, under the current
policies of the Commission or its staff, are not deemed to involve the issuance
of senior securities. Accordingly, management of each Trust believes that it is
not necessary to specify those exceptions in the Funds' fundamental policies
with regard to senior securities because they are permitted under the 1940 Act.
30
<PAGE> 40
PROPOSAL 5.4: CONCENTRATION
Each Fund's current policy in effect prohibits the purchase of securities
if it would result in more than 25% of the market value of the Fund's total
assets being invested in securities of one or more issuers having their
principal business activities in the same industry. There are exceptions for
U.S. Government securities and what constitutes an industry for the purposes of
this restriction is included in the policy itself. While the 1940 Act does not
define what constitutes "concentration" in an industry, the staff of the
Commission takes the position that investment of more than 25% of a fund's
assets in an industry constitutes concentration. If a fund concentrates in an
industry, it must at all times have more than 25% of its assets invested in that
industry, and if its policy is not to concentrate, as is the case with each of
the Funds, it may not invest more than 25% of its assets in the applicable
industry, unless, in either case, the fund discloses the specific conditions
under which it will change from concentrating to not concentrating or vice
versa. A fund is permitted to adopt reasonable definitions of what constitutes
an industry, or it may use standard classifications promulgated by the
Commission, or some combination thereof. Because a fund may create its own
reasonable industry classifications, management of the Trust believes that it is
not necessary to include such matters in the fundamental policy of a Fund.
PROPOSAL 5.5: PURCHASE OF COMMODITIES
Each Fund's current policy prohibits the purchase or sale of commodities or
commodities contracts except debt securities futures contracts and securities
index futures contracts and related options and, in the case of the
International Fund, foreign currency futures contracts. Under the proposed
policy, each Fund would be prohibited from purchasing physical commodities or
contracts relating to physical commodities.
PROPOSALS 5.6, 5.7 AND 5.8: OTHER POLICIES -- UNDERWRITING OF SECURITIES,
INVESTMENT IN REAL ESTATE AND LENDING
Each of the other proposed fundamental policies regarding underwriting of
securities (Policy 5.6), investment in real estate (Policy 5.7) and the making
of loans (Policy 5.8) is not materially different from the current comparable
policy of each Fund except that these policies have been reworded or clarified.
ELIMINATION OF CERTAIN POLICIES:
PROPOSAL 5.9: MARGIN PURCHASES AND SHORT SALES
Each Fund is currently prohibited from making purchases on margin or making
short sales, unless the fund has the right to obtain securities equivalent in
kind and amount to those sold. In the past certain state securities laws
required funds to adopt such restrictions. If elimination of this restriction is
approved, each Fund's potential use of margin transactions beyond transactions
in futures and options and for the clearance of purchases and sales of
securities including the use of margin in ordinary securities transactions, is
generally limited by the current position taken by
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<PAGE> 41
the staff of the SEC that margin transactions with respect to securities are
prohibited under Section 18 of the 1940 Act because they create senior
securities. "Margin transactions" involve the purchase of securities with money
borrowed from a broker, with cash or eligible securities being used as
collateral against the loan. Each Fund's ability to engage in margin
transactions is also limited by its borrowing policies, which permit a Fund to
borrow money in limited circumstances.
PROPOSAL 5.10: PARTICIPATION IN JOINT TRADING ACCOUNTS
The current policy of each Fund generally prohibits the participation of
each Fund on a joint or a joint and several basis in a trading account in
securities except for the purpose of achieving better net results on portfolio
transactions or lower brokerage commissions a Fund may join with other funds or
accounts managed by Scudder in the purchase or sale of securities. In the past
certain state securities laws required funds to adopt such a restriction. In the
interest of simplicity and uniformity, management of the Trust believes that
elimination of this policy is appropriate.
PROPOSAL 5.11: PURCHASES OF SECURITIES OF RELATED ISSUERS
The current policy of each Fund prohibits the purchase of securities of
issuers any of whose officers, directors, trustees or security holders is an
officer or Trustee of the Fund or officer, directors, trustee or security holder
of Scudder if one or more of such individuals owns more that 1/2 of one percent
of the shares or securities of such issuer or own collectively more than 5% of
the shares or securities of such issuer. In the past certain state securities
laws required funds to adopt such a restriction. Transactions between each Fund
and affiliated persons of a Fund are currently regulated under the 1940 Act.
Management of the Trust believes that such transactions are sufficiently
regulated under the 1940 Act and that the elimination of such policy will
provide the Funds with greater investment flexibility in the future.
PROPOSAL 5.12: PLEDGING OF ASSETS
Each Fund, other than the Global Discovery Portfolio, is prohibited from
pledging, mortgaging or hypothecating assets except that in order to secure
borrowings, each Fund may pledge securities having a market value not exceeding
15% of the value of a Fund's assets and except in connection with writing
covered call options and the purchase or sale of futures contracts and options
on futures contracts. In the past certain state securities laws required funds
to adopt such a restriction. Management of the Trust believes that, in the
interest of simplicity and uniformity of investment restrictions, elimination of
the restriction on pledging of assets is appropriate and will provide the Funds
with greater investment flexibility in the future.
PROPOSAL 5.13: RESTRICTED AND ILLIQUID SECURITIES
Each Fund, other than the Global Discovery Portfolio, is prohibited from
entering into repurchase agreements or purchasing securities if, as a result,
more
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<PAGE> 42
than 10% of a Fund's total assets would be invested in illiquid securities,
restricted securities or repurchase agreements maturing in more than seven days.
In the past certain state securities laws required funds to adopt such a
restriction. If the policy is eliminated, under the 1940 Act and applicable
interpretations of the SEC or its staff, each Fund is currently prohibited from
investing more than 15% of its net assets in illiquid securities, including
restricted securities which are deemed to be illiquid. In the case of the Money
Market Portfolio, management of the Trust believes that the purchase of illiquid
or restricted securities generally is inconsistent with the management of money
market funds which are regulated under a rule of the SEC under the 1940 Act.
Accordingly, management of the Trust believes that such transactions are
sufficiently regulated under the 1940 Act and that the elimination of such
policy will provide the Funds with greater investment flexibility in the future.
PROPOSAL 5.14: PURCHASES OF VOTING SECURITIES
Each Fund, other than the Global Discovery Portfolio, is prohibited with
respect to 100% of its assets from purchasing more than 10% of the voting
securities of a single issuer. In the past certain state securities laws
required funds to adopt such a restriction. Each Fund is currently limited by
its policy of diversification to purchasing, with respect to 75% of its assets,
no more than 10% of the voting securities of a single issuer. Management of the
Trust believes that, in the interest of simplicity and uniformity of investment
restrictions, elimination of the 10% restriction on investment in an issuer's
voting securities is appropriate and will provide the Funds with greater
investment flexibility in the future.
PROPOSAL 5.15: PURCHASES OF OPTIONS
Each Fund, other than the Global Discovery Portfolio, is currently
prohibited from purchasing or selling options with exceptions for purchases and
sales of options on futures contracts on debt securities, options on securities
indexes and securities index futures contracts and writing of covered call
options on securities owned by a Fund and engaging in closing purchase
transactions; and except that the International Portfolio may also purchase and
sell options on foreign currency and on foreign currency futures contracts.
Management of the Trust believes that elimination of the current policy will
provide the Funds with greater investment flexibility to enter into derivatives
transactions in the future.
REQUIRED VOTE
Approval of the proposed fundamental policies with respect to any Fund
requires the affirmative vote of a "majority of the outstanding voting
securities", as defined above, of that Fund. If the shareholders of any Fund
fail to approve any proposed fundamental policy, the current such policy will
remain in effect. The Trustees of the Trust recommend that the shareholders of
each Fund vote in favor of such item in this Proposal 5.
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<PAGE> 43
PROPOSAL 6: RATIFICATION OR REJECTION
OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Trustees of the Trust, including a majority of the Non-
interested Trustees, has selected Coopers & Lybrand L.L.P. to act as independent
accountants for each Fund for the Funds' current fiscal year. Coopers & Lybrand
L.L.P. are independent accountants and have advised the Funds that they have no
direct financial interest or material indirect financial interest in the Funds.
One or more representatives of Coopers & Lybrand L.L.P. are expected to be
present at the Special 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.
REQUIRED VOTE
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes of each Fund cast at the Special
Meeting in person or by proxy. The Trustees of the Trust recommend that the
shareholders of each Fund vote in favor of this Proposal 6.
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice 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, will be paid by Scudder. In
addition to solicitation by mail, certain officers and representatives of the
Trust , officers and employees of Scudder 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.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Special Meeting date approaches, certain
shareholders of each Fund may receive a telephone call from a representative of
SCC if their vote has not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of each Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Trustees believe that these procedures are reasonably designed to
ensure that the identity of the shareholder casting the vote is accurately
determined and that 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
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<PAGE> 44
behalf of an entity, such as a corporation), and the number of shares owned and
to confirm that the shareholder has received the proxy statement card 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 listed on the proxy card, and ask for the shareholder's
instructions on each proposal. The SCC representative, although he or she is
permitted to answer questions about the process, 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 the shareholder wishes to participate in the Special Meeting, but does
not wish to give his or her proxy by telephone, 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 1-800-733-8481, ext.
488. Any proxy given by a shareholder, whether in writing or by telephone, is
revocable.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Trust, c/o Scudder, Stevens &
Clark, Inc., Two International Place, Boston, MA 02110 within a reasonable time
before the solicitation of proxies for such meeting. The timely submission of a
proposal does not guarantee its inclusion.
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<PAGE> 45
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
The Board of Trustees is not aware of any matters that will be presented
for action at the Special 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 each Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
[Thomas F. McDonough signature]
Thomas F. McDonough
Secretary
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<PAGE> 46
EXHIBIT A
[NAME OF FUND]
TWO INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
, 199
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF SERIES]
Ladies and Gentlemen:
[Name of Trust] (the "Trust") has been established as a Massachusetts
business Trust to engage in the business of an investment company. Pursuant to
the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees has divided the Trust's shares of
beneficial interest, par value $ per share, (the "Shares") into
separate series, or funds, including [name of series] (the "Fund"). Series may
be abolished and dissolved, and additional series established, from time to time
by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the sole
investment manager of the Fund and to provide certain other services, as more
fully set forth below, and you have indicated that you are willing to act as
such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust on behalf of the Fund
agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner and in
accordance with the investment objectives, policies and restrictions
specified in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information (the "SAI") relating to the Fund
included in the Trust's Registration Statement on Form N-1A, as amended
from time to time, (the "Registration Statement") filed by the Trust under
the Investment Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents referred to in
the preceding sentence have been furnished to you by the Trust. The Trust
has also furnished you with copies properly certified or authenticated of
each of the following additional documents related to the Trust and the
Fund:
(a) The Declaration dated , 19 , as amended to date.
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<PAGE> 47
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders
of the Fund selecting you as investment manager and approving the form
of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial
Interest dated , 19 relating to the Fund.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee
of the rights to use and sublicense the use of the "Scudder" and ["Scudder
Kemper Investments, Inc."/"Scudder, Stevens & Clark, Inc."] trademarks
(together, the "Scudder Marks"), you hereby grant the Trust a nonexclusive
right and sublicense to use (i) the "Scudder" name and mark as part of the
Trust's name (the "Fund Name"), and (ii) the Scudder Marks in connection
with the Trust's investment products and services, in each case only for so
long as this Agreement, any other investment management agreement between
you and the Trust, or any extension, renewal or amendment hereof or thereof
remains in effect, and only for so long as you are a licensee of the
Scudder Marks, provided however, that you agree to use your best efforts to
maintain your license to use and sublicense the Scudder Marks. The Trust
agrees that it shall have no right to sublicense or assign rights to use
the Scudder Marks, shall acquire no interest in the Scudder Marks other
than the rights granted herein, that all of the Trust's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and
licensor of the Scudder Marks (the "Trademark Owner"), and that the Trust
shall not challenge the validity of the Scudder Marks or the Trademark
Owner's ownership thereof. The Trust further agrees that all services and
products it offers in connection with the Scudder Marks shall meet
commercially reasonable standards of quality, as may be determined by you
or the Trademark Owner from time to time, provided that you acknowledge
that the services and products the Trust rendered during the one-year
period preceding the date of this Agreement are acceptable. At your
reasonable request, the Trust shall cooperate with you and the Trademark
Owner and shall execute and deliver any and all documents necessary to
maintain and protect (including but not limited to in connection with any
trademark infringement action) the Scudder Marks and/or enter the Trust as
a registered user thereof. At such time as this Agreement or any other
investment management agreement shall no longer be in effect between you
(or your successor) and the Trust, or you no longer are a licensee of the
Scudder Marks, the Trust shall (to the extent that, and as soon as, it
lawfully can) cease to use the Fund Name or any other name indicating that
it is advised by, managed by or otherwise
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<PAGE> 48
connected with you (or any organization which shall have succeeded to your
business as investment manager) or the Trademark Owner. In no event shall
the Trust use the Scudder Marks or any other name or mark confusingly
similar thereto (including, but not limited to, any name or mark that
includes the name "Scudder") if this Agreement or any other investment
advisory agreement between you (or your successor) and the Fund is
terminated.
3. Portfolio Management Services. As manager of the assets of the
Fund, you shall provide continuing investment management of the assets of
the Fund in accordance with the investment objectives, policies and
restrictions set forth in the Prospectus and SAI; the applicable provisions
of the 1940 Act and the Internal Revenue Code of 1986, as amended, (the
"Code") relating to regulated investment companies and all rules and
regulations thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to policies and
instructions adopted by the Trust's Board of Trustees. In connection
therewith, you shall use reasonable efforts to manage the Fund so that it
will qualify as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder. The Fund shall have the benefit of
the investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range investment policy
generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you
shall be entitled to receive and act upon advice of counsel to the Trust or
counsel to you. You shall also make available to the Trust promptly upon
request all of the Fund's investment records and ledgers as are necessary
to assist the Trust in complying with the requirements of the 1940 Act and
other applicable laws. To the extent required by law, you shall furnish to
regulatory authorities having the requisite authority any information or
reports in connection with the services provided pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable laws and
regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts
relating to investments to be purchased, sold or entered into by the Fund
and place orders with broker-dealers, foreign currency dealers, futures
commission merchants or others pursuant to your determinations and all in
accordance with Fund policies as expressed in the Registration Statement.
You shall determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should be held
uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on
the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such
additional
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<PAGE> 49
reports and information as the Trust's officers or Board of Trustees shall
reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense
for the use of the Fund such office space and facilities in the United
States as the Fund may require for its reasonable needs, and you (or one or
more of your affiliates designated by you) shall render to the Trust
administrative services on behalf of the Fund necessary for operating as an
open-end investment company and not provided by persons not parties to this
Agreement including, but not limited to, preparing reports to and meeting
materials for the Trust's Board of Trustees and reports and notices to Fund
shareholders; supervising, negotiating contractual arrangements with, to
the extent appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers,
insurers and other persons in any capacity deemed to be necessary or
desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC") and other regulatory and
self -regulatory organizations, including, but not limited to, preliminary
and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices
pursuant to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the preparation and
filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund under
applicable federal and state securities laws; maintaining or causing to be
maintained for the Fund all books, records and reports and any other
information required under the 1940 Act, to the extent that such books,
records and reports and other information are not maintained by the Fund's
custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting
with the Fund's independent accountants, legal counsel and the Fund's other
agents as necessary in connection therewith; establishing and monitoring
the Fund's operating expense budgets; reviewing the Fund's bills;
processing the payment of bills that have been approved by an authorized
person; assisting the Fund in determining the amount of dividends and
distributions available to be paid by the Fund to its shareholders,
preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is required
for such parties to effect the payment of dividends and distributions; and
otherwise assisting the Trust as it may reasonably request in the conduct
of the Fund's business,
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<PAGE> 50
subject to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to diminish
the obligations of any agent of the Fund or any other person not a party to
this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 5, you shall pay the compensation and
expenses of all Trustees, officers and executive employees of the Trust
(including the Fund's share of payroll taxes) who are affiliated persons of
you, and you shall make available, without expense to the Fund, the
services of such of your directors, officers and employees as may duly be
elected officers of the Trust, subject to their individual consent to serve
and to any limitations imposed by law. You shall provide at your expense
the portfolio management services described in section 3 hereof and the
administrative services described in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be
responsible, except to the extent of the reasonable compensation of such of
the Fund's Trustees and officers as are directors, officers or employees of
you whose services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out-of-pocket expenses, but
not including your overhead or employee costs); fees payable to you and to
any other Fund advisors or consultants; legal expenses; auditing and
accounting expenses; maintenance of books and records which are required to
be maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications expenses;
taxes and governmental fees; fees, dues and expenses incurred by the Fund
in connection with membership in investment company trade organizations;
fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing
share certificates and, except as provided below in this section 5, other
expenses in connection with the issuance, offering, distribution, sale,
redemption or repurchase of securities issued by the Fund; expenses
relating to investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond premiums
and other insurance expense; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; the
compensation and all expenses (specifically including travel expenses
relating to Trust business) of Trustees, officers and employees of the
Trust who are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of the Fund;
expenses of printing and distributing reports, notices and dividends to
shareholders; expenses of printing and mailing Prospectuses and SAIs of the
Fund and supplements thereto; costs of stationery; any
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<PAGE> 51
litigation expenses; indemnification of Trustees and officers of the Trust;
costs of shareholders' and other meetings; and travel expenses (or an
appropriate portion thereof) of Trustees and officers of the Trust who are
directors, officers or employees of you to the extent that such expenses
relate to attendance at meetings of the Board of Trustees of the Trust or
any committees thereof or advisors thereto held outside of Boston,
Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the
extent that (i) such expenses are required to be borne by a principal
underwriter which acts as the distributor of the Fund's Shares pursuant to
an underwriting agreement which provides that the underwriter shall assume
some or all of such expenses, or (ii) the Trust on behalf of the Fund shall
have adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some or all of
such expenses. You shall be required to pay such of the foregoing sales
expenses as are not required to be paid by the principal underwriter
pursuant to the underwriting agreement or are not permitted to be paid by
the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be
made and costs to be assumed by you as provided in sections 3, 4 and 5
hereof, the Trust on behalf of the Fund shall pay you in United States
Dollars on the last day of each month the unpaid balance of a fee equal to
the excess of (a) 1/12 of of 1 percent of the average daily net
assets as defined below of the Fund for such month; [provided that, for any
calendar month during which the average of such values exceeds $ ,
the fee payable for that month based on the portion of the average of such
values in excess of $ shall be 1/12 of of 1 percent of
such portion;] [and provided that, for any calendar month during which the
average of such values exceeds $ , the fee payable for that month
based on the portion of the average of such values in excess of $
shall be 1/12 of of 1 percent of such portion;] over any
compensation waived by you from time to time (as more fully described
below). You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided that no such
payment shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time)
on each day on which the net asset value of the Fund is determined
consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the
Fund lawfully determines the value of its net assets as of some other time
on each business day, as of such time. The value of the net assets of the
Fund shall always be determined pursuant to the applicable provisions of
the
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<PAGE> 52
Declaration and the Registration Statement. If the determination of net
asset value does not take place for any particular day, then for the
purposes of this section 6, the value of the net assets of the Fund as last
determined shall be deemed to be the value of its net assets as of 4:00
p.m. (New York time), or as of such other time as the value of the net
assets of the Fund's portfolio may be lawfully determined on that day. If
the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall
be deemed to be the sole determination thereof on that day for the purposes
of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your
services. You shall be contractually bound hereunder by the terms of any
publicly announced waiver of your fee, or any limitation of the Fund's
expenses, as if such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other
investments for the account of the Fund, neither you nor any of your
directors, officers or employees shall act as a principal or agent or
receive any commission. You or your agent shall arrange for the placing of
all orders for the purchase and sale of portfolio securities and other
investments for the Fund's account with brokers or dealers selected by you
in accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act solely as
investment counsel for such clients and not in any way on behalf of the
Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement,
you shall be an independent contractor and not an agent of the Trust.
Whenever the Fund and one or more other accounts or investment companies
advised by the Manager have available funds for investment, investments
suitable and appropriate for each shall be allocated in accordance with
procedures believed by the Manager to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in a manner
believed by the Manager to be equitable. The Fund recognizes that in some
cases this procedure may adversely affect the size of the position that may
be acquired or disposed of for the Fund.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust agrees
that you shall not be liable under this Agreement for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you would
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otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though
also employed by you, who may be or become an employee of and paid by the
Fund shall be deemed, when acting within the scope of his or her employment
by the Fund, to be acting in such employment solely for the Fund and not as
your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1998, and continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually (a) by the vote of a majority of the Trustees
who are not parties to this Agreement or interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the Fund. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with
the 1940 Act and the rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Fund or by the Trust's Board of
Trustees on 60 days' written notice to you, or by you on 60 days' written
notice to the Trust. This Agreement shall terminate automatically in the
event of its assignment.
10. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved in a manner consistent
with the 1940 Act and rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
11. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of
the Secretary of the Commonwealth of Massachusetts, provides that the name
"Scudder Trust" refers to the Trustees under the Declaration
collectively as Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent of the
Trust, shall be subject to claims against or obligations of the Trust or of
the Fund to any extent whatsoever, but that the Trust estate only shall be
liable.
You are hereby expressly put on notice of the limitation of liability
as set forth in the Declaration and you agree that the obligations assumed
by the Trust on behalf of the Fund pursuant to this Agreement shall be
limited in all cases to the Fund and its assets, and you shall not seek
satisfaction of
A-8
<PAGE> 54
any such obligation from the shareholders or any shareholder of the Fund or
any other series of the Trust, or from any Trustee, officer, employee or
agent of the Trust. You understand that the rights and obligations of each
Fund, or series, under the Declaration are separate and distinct from those
of any and all other series.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
[NAME OF TRUST], on behalf of Scudder
Fund
By:
---------------------------------------------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
-------------------------------------------------------------------
Managing Director
A-9
<PAGE> 55
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
MONEY MARKET
Scudder U.S. Treasury Money Safety, liquidity, and stability 0.500% of $ 398,597,054
Fund of capital and, consistent net assets+
therewith, current income.
Scudder Cash Investment Stability of capital while 0.500% to $1,430,623,516
Trust maintaining liquidity of capital $250 million
and providing current income from 0.450% next
money market securities. $250 million
0.400% next
$500 million
0.350%
thereafter+
Scudder Money Market Series High level of current income 0.250% of $ 384,509,425**
consistent with preservation of net assets
capital and liquidity by
investing in a broad range of
short-term money market
instruments.
Scudder Government Money High level of current income 0.250% of $ 36,794,563**
Market Series consistent with preservation of net assets
capital and liquidity by
investing exclusively in
obligations issued or guaranteed
by the U.S. Government or its
agencies or instrumentalities and
in certain repurchase agreements.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund Income exempt from regular 0.500% to $ 220,245,241
federal income taxes and $500 million
stability of principal through 0.480%
investments in municipal thereafter+
securities.
Scudder Tax Free Money High level of current income, 0.250% of $ 79,695,218**
Market Series consistent with preservation of net assets
capital and liquidity, exempt
from federal income tax by
investing primarily in high
quality municipal obligations.
Scudder California Tax Free Stability of capital and the 0.500% of $ 68,695,680
Money Fund maintenance of a constant net net assets+
asset value of $1.00 per share
while providing California tax
payers income exempt from both
California state personal and
regular federal income tax
through investment in high
quality, short-term tax-exempt
California municipal securities.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
** Assets as of 7/31/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-1
<PAGE> 56
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder New York Tax Free Stability of capital and income 0.500% of $ 59,538,652
Money Fund exempt from New York state and net assets+
New York City personal income
taxes and regular federal income
tax through investment in high
quality, short-term municipal
securities in New York.
TAX FREE
Scudder Limited Term Tax High level of income exempt from 0.600% of $ 123,660,431
Free Fund regular federal income tax net assets+
consistent with a high degree of
principal stability.
Scudder Medium Term Tax Free High level of income exempt from 0.600% to $ 650,504,081
Fund regular federal income tax and $500 million
limited principal fluctuation 0.500% thereafter
through investment primarily in
high grade intermediate term
municipal securities.
Scudder Managed Municipal Income exempt from regular 0.550% to $ 737,422,861
Bonds federal income tax primarily $200 million
through investments in high-grade 0.500% next
long-term municipal securities. $500 million
0.475% thereafter
Scudder High Yield Tax Free High level of income, exempt from 0.650% to $ 293,101,021
Fund regular federal income tax, from $300 million
an actively managed portfolio 0.600% thereafter
consisting primarily of
investment grade municipal
securities.
Scudder California Tax Free Income exempt from both 0.625% to $ 288,576,041
Fund California state personal income $200 million
tax and regular federal income 0.600% thereafter
tax primarily through investment
grade municipal securities.
Scudder Massachusetts A high level of income exempt 0.600% of $ 65,505,088
Limited Term Tax Free Fund from both Massachusetts personal net assets+
income tax and regular federal
income tax as is consistent with
a high degree of price stability.
Scudder Massachusetts Tax A high level of income exempt 0.600% of $ 329,842,169
Free Fund from both Massachusetts personal net assets
income tax and regular federal
income tax through investment
primarily in long-term
investment-grade municipal
securities in Massachusetts.
Scudder New York Tax Free Income exempt from New York state 0.625% to $ 180,647,157
Fund and New York City personal income $200 million
taxes and regular federal income 0.600% thereafter
tax through investment primarily
in long-term investment-grade
municipal securities in New York.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-2
<PAGE> 57
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Ohio Tax Free Fund Income exempt from Ohio personal 0.600% of $ 84,109,009
income tax and regular federal net assets+
income tax through investment
primarily in investment-grade
municipal securities in Ohio.
Scudder Pennsylvania Tax Income exempt from Pennsylvania 0.600% of $ 74,177,997
Free Fund personal income tax and regular net assets+
federal income tax through
investment primarily in
investment-grade municipal
securities in Pennsylvania.
U.S. INCOME
Scudder Short Term Bond Fund High level of income consistent 0.600% to $1,468,170,885
with a high degree of principal $500 million
stability through investments 0.500% next
primarily in high quality $500 million
short-term bonds. 0.450% next
$500 million
0.400% next
$500 million
0.375% next
$1 billion
0.350% thereafter
Scudder Zero Coupon 2000 High investment returns over a 0.600% of $ 25,440,414
Fund selected period as is consistent net assets+
with investment in U.S.
Government securities and the
minimization of reinvestment
risk.
Scudder GNMA Fund High current income and safety of 0.650% to $ 383,008,164
principal primarily from $200 million
investment in U.S. Government 0.600% next
guaranteed mortgage-backed GNMA $300 million
securities. 0.550% thereafter
Scudder Income Fund A high level of income, 0.650% to $ 578,519,502
consistent with the prudent $200 million
investment of capital, through a 0.600% next
flexible investment program $300 million
emphasizing high-grade bonds. 0.550% thereafter
Scudder High Yield Bond Fund A high level of current income 0.700% of $ 73,523,094
and capital appreciation through net assets
investment primarily in below
investment-grade domestic debt
securities.
GLOBAL INCOME
Scudder Global Bond Fund Total return with an emphasis on 0.750% to $ 217,403,907
current income by investing $1 billion
primarily in high-grade bonds 0.700%
denominated in foreign currencies thereafter+
and the U.S. dollar.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-3
<PAGE> 58
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder International Bond Income primarily by investing in 0.850% to $ 235,993,183
Fund high-grade international bonds $1 billion
and protection and possible 0.800% thereafter
enhancement of principal value by
actively managing currency, bond
market and maturity exposure and
by security selection.
Scudder Emerging Markets High current income and, 1.000% of $ 304,607,984
Income Fund secondarily, long-term capital net assets
appreciation by investing
primarily in high-yielding debt
securities issued in emerging
markets.
ASSET ALLOCATION
Scudder Pathway Conservative Current income and, secondarily, There will be no $ 13,928,759***
Portfolio long-term growth of capital by fee as the Manager
investing substantially in will receive a fee
Scudder bond mutual funds, but from the underlying
will have some exposure to funds.
Scudder equity mutual funds.
Scudder Pathway Balanced Balance of growth and income by There will be no $ 167,721,722***
Portfolio investing in a mix of Scudder fee as the Manager
money market, bond and equity will receive a fee
mutual funds. from the underlying
funds.
Scudder Pathway Growth Long-term growth of capital by There will be no $ 42,234,535***
Portfolio investing predominantly in fee as the Manager
Scudder equity mutual funds will receive a fee
designed to provide long-term from the underlying
growth. funds.
Scudder Pathway Maximize total return by There will be no $ 8,983,598***
International Portfolio investing in a select mix of fee as the Manager
established international and will receive a fee
global Scudder Funds. from the underlying
funds.
U.S. GROWTH AND INCOME
Scudder Balanced Fund A balance of growth and income 0.700% of $ 109,541,542
from a diversified portfolio of net assets+
equity and fixed income
securities and long-term
preservation of capital through a
quality oriented investment
approach designed to reduce risk.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-4
<PAGE> 59
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Growth and Income Long-term growth of capital, 0.600% to $4,186,481,205
Fund current income and growth of $500 million
income primarily from common 0.550% next
stocks, preferred stocks and $500 million
securities convertible into 0.500% next
common stocks. $500 million
0.475% next
$500 million
0.450% next
$1 billion
0.425% next
$1.5 billion
0.405% thereafter
U.S. GROWTH
Scudder Large Company Value Maximize long-term capital 0.750% to $1,651,459,797
Fund (formerly Scudder appreciation through a value $500 million
Capital Growth Fund) driven investment program 0.650% next
emphasizing common stocks and $500 million
preferred stocks. 0.600% next
$500 million
0.550% thereafter
Scudder Value Fund Long-term growth of capital 0.700% of $ 88,874,292
through investment in undervalued net assets
equity securities.
Scudder Small Company Value Long-term growth of capital by 0.750% of $ 41,187,186
Fund investing primarily in net assets+
undervalued equity securities of
small U.S. companies.
Scudder Micro Cap Fund Long-term growth of capital by 0.750% of $ 72,048,339***
investing primarily in a net assets+
diversified portfolio of U.S.
micro-cap common stocks.
Scudder Classic Growth Fund Long-term growth of capital while 0.700% of $ 33,867,066
keeping the value of its shares net assets+
more stable than other growth
mutual funds.
Scudder Large Company Growth Long-term growth of capital 0.700% of $ 221,253,633
Fund (formerly Scudder through investment primarily in net assets
Quality Growth Fund) the equity securities of
seasoned, financially strong U.S.
growth companies.
Scudder Development Fund Long-term growth of capital by 1.000% to $ 861,564,138
investing primarily in equity $500 million
securities of emerging growth 0.950% next
companies. $500 million
0.900% thereafter
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-5
<PAGE> 60
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder 21st Century Growth Long-term growth of capital by 1.000% of $ 20,942,531***
Fund investing primarily in the net assets+
securities of emerging growth
companies poised to be leaders in
the 21st century.
GLOBAL GROWTH
Scudder Global Fund Long-term growth of capital 1.000% to $1,604,465,769
through investment in a $500 million
diversified portfolio of 0.950% next
marketable foreign and domestic $500 million
securities, primarily equity 0.900% thereafter
securities.
Institutional International Long-term growth of capital 0.900% of $ 17,897,508
Equity Portfolio primarily through a diversified net assets+
portfolio of marketable foreign
equity securities.
Scudder International Growth Long-term growth of capital and 1.000% of $ 25,631,898***
and Income Fund current income primarily from net assets+
foreign equity securities
Scudder International Fund Long-term growth of capital 0.900% to $2,583,030,686
primarily through a diversified $500 million
portfolio of marketable foreign 0.850% next
equity securities. $500 million
0.800% next
$1 billion
0.750% next
$1 billion
0.700% thereafter
Scudder Global Discovery Above-average capital 1.100% of $ 350,829,980
Fund appreciation over the long-term net assets
by investing primarily in the
equity securities of small
companies located throughout the
world.
Scudder Emerging Markets Long-term growth of capital 1.20% of $ 75,793,693
Growth Fund primarily through equity net assets+
investments in emerging markets
around the globe.
Scudder Gold Fund Maximum return consistent with 1.000% of $ 163,932,814
investing in a portfolio of gold- net assets
related equity securities and
gold.
Scudder Greater Europe Long-term growth of capital 1.000% of $ 120,300,058
Growth Fund through investment primarily in net assets
the equity securities of European
companies.
Scudder Pacific Long-term growth of capital 1.100% of $ 329,391,540
Opportunities Fund primarily through investment in net assets
the equity securities of Pacific
Basin companies, excluding Japan.
Scudder Latin America Fund Long-term capital appreciation Effective 9/11/97: $ 621,914,690
through investment primarily in 1.250% to
the securities of Latin American $1 billion
issuers. 1.150% thereafter
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-6
<PAGE> 61
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
The Japan Fund, Inc. Long-term capital appreciation 0.850% to $ 385,963,962
through investment primarily in $100 million
equity securities of Japanese 0.750% next
companies. $200 million
0.700% next
$300 million
0.650% thereafter
CLOSED-END FUNDS
The Argentina Fund, Inc. Long-term capital appreciation Adviser: $ 117,596,046
through investment primarily in Effective 11/1/97:
equity securities of Argentine 1.100% of
issuers. net assets
Sub-Adviser:
Paid by Adviser.
0.160% of
net assets
The Brazil Fund, Inc. Long-term capital appreciation 1.200% to $ 417,981,869
through investment primarily in $150 million
equity securities of Brazilian 1.050% next
issuers. $150 million
1.000% thereafter
Effective 10/29/97:
1.200% to
$150 million
1.050% next
$150 million
1.000% next
$200 million
0.900% thereafter
Administrator:
Receives an annual
fee of $50,000
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
</TABLE>
B-7
<PAGE> 62
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
The Korea Fund, Inc. Long-term capital appreciation Advisor: $ 661,690,073
through investment primarily in 1.150% to
equity securities of Korean $50 million
companies. 1.100% next
$50 million
1.000% next
$250 million
0.950% next
$400 million
0.900% thereafter
Sub-Adviser -
Daewoo:
Paid by Adviser.
0.2875% to
$50 million
0.275% next
$50 million
0.250% next
$250 million
0.2375% next
$400 million
0.225% thereafter
The Latin America Dollar High level of current income and, 1.200% of $ 94,748,606
Income Fund, Inc. secondarily, capital appreciation net assets
through investment principally in
dollar-denominated Latin American
debt instruments.
Montgomery Street Income High level of current income 0.500% to $ 198,465,822
Securities, Inc. consistent with prudent $150 million
investment risks through a 0.450% next
diversified portfolio primarily $50 million
of debt securities. 0.400% thereafter
Scudder New Asia Fund, Inc. Long-term capital appreciation 1.250% to $ 133,363,686
through investment primarily in $75 million
equity securities of Asian 1.150% next
companies. $125 million
1.100% thereafter
Scudder New Europe Fund, Long-term capital appreciation 1.250% to $ 266,418,730
Inc. through investment primarily in $75 million
equity securities of companies 1.150% next
traded on smaller or emerging $125 million
European markets and companies 1.100% thereafter
that are viewed as likely to
benefit from changes and
developments throughout Europe.
Scudder Spain and Portugal Long-term capital appreciation Adviser: $ 75,127,194
Fund, Inc. through investment primarily in 1.000% of
equity securities of Spanish & net assets
Portuguese issuers. Administrator:
0.200% of
net assets
Scudder World Income High income and, consistent 1.200% of $ 54,488,637
Opportunities Fund, Inc. therewith, capital appreciation. net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
</TABLE>
B-8
<PAGE> 63
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
INSURANCE PRODUCTS
Balanced Portfolio Balance of growth and income 0.475% of $ 88,342,837
consistent with long-term net assets
preservation of capital through a
diversified portfolio of equity
and fixed income securities.
Bond Portfolio High level of income consistent 0.475% of $ 65,769,421
with a high quality portfolio of net assets
debt securities.
Capital Growth Portfolio Long-term capital growth from a 0.475% to $ 440,481,308
portfolio consisting primarily of $500 million
equity securities. 0.450% thereafter
Global Discovery Portfolio Above-average capital 0.975% of $ 16,757,264
appreciation over the long-term net assets+
by investing primarily in the
equity securities of small
companies located throughout the
world.
Growth and Income Portfolio Long-term growth of capital, 0.475% of $ 91,091,547
current income and growth of net assets
income.
International Portfolio Long-term growth of capital 0.875% to $ 726,038,527
primarily through diversified $500 million
holdings of marketable foreign 0.775% thereafter
equity investments.
Money Market Portfolio Stability of capital and current 0.370% of $ 97,785,626
income from a portfolio of money net assets
market instruments.
AARP FUNDS
AARP High Quality Money Fund Current income and liquidity, 0.350% to $ 412,126,193
consistent with maintaining $2 billion
stability and safety of 0.330% next
principal, through investment in $2 billion
high quality securities. 0.300% next
$2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of
net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-9
<PAGE> 64
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP Balanced Stock and Bond Long-term growth of capital and 0.350% to $ 403,179,939
Fund income, consistent with a stable $2 billion
share price, through investment 0.330% next
in a combination of stocks, bonds $2 billion
and cash reserves. 0.300% next
$2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
AARP Capital Growth Fund Long-term capital growth, 0.350% to $ 826,136,713
consistent with a share price $2 billion
more stable than other capital 0.330% next
growth funds, through investment $2 billion
primarily in common stocks and 0.300% next
securities convertible into $2 billion
common stocks. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.320% of
net assets
AARP Global Growth Fund Long-term growth of capital, 0.350% to $ 77,651,978
consistent with a share price $2 billion
more stable than other global 0.330% next
equity funds, through investment $2 billion
primarily in a diversified 0.300% next
portfolio of equity securities of $2 billion
corporations worldwide. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.550% of
net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-10
<PAGE> 65
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP Growth and Income Fund Long-term growth of capital and 0.350% to $4,218,983,398
income, consistent with a stable $2 billion
share price, through investment 0.330% next
primarily in common stocks and $2 billion
securities convertible into 0.300% next
common stocks. $2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
AARP International Stock Long-term growth of capital, 0.350% to $ 12,699,109***
Fund consistent with a share price $2 billion
more stable than other 0.330% next
international equity funds, $2 billion
through investment primarily in a 0.300% next
diversified portfolio of foreign $2 billion
equity securities. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.600% of
net assets
AARP Small Company Stock Long-term growth of capital, 0.350% to $ 25,425,137***
Fund consistent with a share price $2 billion
more stable than other small 0.330% next
company stock funds, through $2 billion
investment primarily in stocks of 0.300% next
small U.S. companies. $2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.550% of
net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-11
<PAGE> 66
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP U.S. Stock Index Fund Long-term capital growth and 0.350% to $ 23,917,674***
income, consistent with greater $2 billion
share price stability than a S&P 0.330% next
500 index fund, by taking an $2 billion
indexing approach to investing in 0.300% next
common stocks, emphasizing higher $2 billion
dividend stocks while maintaining 0.280% next
investment characteristics $2 billion
otherwise similar to the S&P 500 0.260% next
index. $3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.000% of
net assets
AARP Bond Fund for Income High level of current income, 0.350% to $ 34,951,973***
consistent with greater share $2 billion
price stability than a long term 0.330% next
bond, through investment $2 billion
primarily in investment-grade 0.300% next
debt securities. $2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.280% of
net assets
AARP GNMA and U.S. Treasury High level of current income, 0.350% to $4,904,439,844
Fund consistent with greater share $2 billion
price stability than a long-term 0.330% next
bond, through investment $2 billion
principally in U.S. 0.300% next
Government-guaranteed GNMA $2 billion
securities and U.S. Treasury 0.280% next
obligations. $2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.120% of
net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-12
<PAGE> 67
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP High Quality Bond Fund High level of income, consistent 0.350% to $ 511,905,166
with greater share price $2 billion
stability than a long-term bond, 0.330% next
through investment primarily in a $2 billion
portfolio of high quality 0.300% next
securities $2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
AARP Diversified Growth Long-term growth of capital There will be no $ 36,411,938***
Portfolio through investment primarily in fee as the manager
AARP stock mutual funds. will receive a fee
from the underlying
funds.
AARP Diversified Income Current income with modest long- There will be no $ 34,230,023***
Portfolio term appreciation through fee as the manager
investment primarily in AARP bond will receive a fee
mutual funds. from the underlying
funds.
AARP High Quality Tax Free Current income free from federal 0.350% to $ 111,264,728
Money Fund income taxes and liquidity, $2 billion
consistent with maintaining 0.330% next
stability and safety of $2 billion
principal, through investment in 0.300% next
high-quality municipal $2 billion
securities. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of
net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
</TABLE>
B-13
<PAGE> 68
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP Insured Tax Free High level of income free from 0.350% to $1,755,412,222
General Bond Fund federal income taxes, consistent $2 billion
with greater share price 0.330% next
stability than a long-term $2 billion
municipal bond, through 0.300% next
investment primarily in municipal $2 billion
securities covered by insurance. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
</TABLE>
B-14
<PAGE> 69
EXHIBIT C
PROPOSED AMENDMENTS TO BE INCLUDED IN THE
AMENDED AND RESTATED DECLARATION OF TRUST
[ ] DATED , 1997
SCUDDER VARIABLE LIFE INVESTMENT FUND
Following are proposed amendments, other than non-material clarifying or
correcting changes, to be included in the Trust's Amended and Restated
Declaration of Trust, as described in the proxy statement. Additions are shown
in BOLD TYPE and deletions by a [ ].
Unless otherwise indicated with respect to particular provisions, the
adoption of the Amended and Restated Declaration of Trust requires an
affirmative vote of a majority of the outstanding voting securities of the Trust
as defined in the Investment Company Act of 1940, as amended.
Section 1.2. Definitions.
Wherever they are used herein, the following terms have the following
respective meanings:
(b) "CLASS" MEANS THE TWO OR MORE CLASSES AS MAY BE ESTABLISHED AND
DESIGNATED FROM TIME TO TIME BY THE TRUSTEES PURSUANT TO SECTION 5.13 HEREOF.
(c) THE TERM "COMMISSION" HAS THE MEANING GIVEN IT IN THE 1940 ACT. THE
TERM "INTERESTED PERSON" HAS THE MEANING GIVEN IT IN THE 1940 ACT, AS MODIFIED
BY ANY APPLICABLE ORDER OR ORDERS OF THE COMMISSION. [ ] Except as otherwise
defined by the Trustees in conjunction with the establishment of any series of
Shares, the term "vote of a majority of the Shares outstanding and entitled to
vote" shall have the same meaning as the term [ ] "VOTE of a majority of the
outstanding voting securities" given it in the 1940 Act.
(i) "MUNICIPAL BONDS" MEANS OBLIGATIONS ISSUED BY OR ON BEHALF OF STATES,
TERRITORIES OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA AND THEIR
POLITICAL SUBDIVISIONS, AGENCIES AND INSTRUMENTALITIES, OR OTHER ISSUERS, THE
INTEREST FROM WHICH IS EXEMPT FROM REGULAR FEDERAL INCOME TAX.
(l)[ ] "SERIES" INDIVIDUALLY OR COLLECTIVELY MEANS THE TWO OR MORE
SERIES AS MAY BE ESTABLISHED AND DESIGNATED FROM TIME TO TIME BY THE TRUSTEES
PURSUANT TO SECTION 5.11 HEREOF. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM
"SERIES" SHALL INCLUDE CLASSES INTO WHICH SHARES OF THE TRUST, OR OF A SERIES,
MAY BE DIVIDED FROM TIME TO TIME.
(q) THE "TRUST PROPERTY" MEANS ANY AND ALL PROPERTY, REAL OR PERSONAL,
TANGIBLE OR INTANGIBLE, WHICH IS OWNED OR HELD BY OR FOR THE ACCOUNT OF THE
TRUST OR THE TRUSTEES.
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Section 2.2. Investments.
The Trustees shall have the power:
(b) To invest in, hold for investment, or reinvest in, securities,
including SHARES OF OPEN-END INVESTMENT COMPANIES; common and preferred stocks;
warrants; bonds, debentures, bills, time notes and all other evidences of
indebtedness; negotiable or non-negotiable instruments; government securities,
including securities of any state, municipality or other political subdivision
thereof, or any governmental or quasi-governmental agency or instrumentality;
and money market instruments including bank certificates of deposit, finance
paper, commercial paper, bankers acceptances and all kinds of repurchase
agreements, of any corporation, company, trust, association, firm or other
business organization however established, and of any country, state,
municipality or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality.
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend, and to pledge any such securities and TO ENTER
INTO repurchase agreements AND FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, TO
PURCHASE AND SELL FUTURES CONTRACTS ON SECURITIES, SECURITIES INDICES AND
FOREIGN CURRENCIES, TO PURCHASE OR SELL OPTIONS ON SUCH CONTRACTS, FOREIGN
CURRENCY CONTRACTS, AND FOREIGN CURRENCIES AND TO ENGAGE IN ALL TYPES OF HEDGING
AND RISK MANAGEMENT TRANSACTIONS.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities [ ], repurchase agreements, FUTURES CONTRACTS AND OPTIONS AND
OTHER ASSETS included in the [ ] TRUST Property, including the right to vote
thereon and otherwise act with respect thereto and to do all acts for the [ ]
PRESERVATION, protection, improvement and enhancement in value of all such [ ]
ASSETS.
(H) TO ENTER INTO A PLAN OF DISTRIBUTION AND ANY RELATED AGREEMENTS WHEREBY
THE TRUST MAY FINANCE DIRECTLY OR INDIRECTLY ANY ACTIVITY WHICH IS PRIMARILY
INTENDED TO RESULT IN THE SALE OF SHARES.
(i) TO INVEST, THROUGH A TRANSFER OF CASH, SECURITIES AND OTHER ASSETS OR
OTHERWISE, ALL OR A PORTION OF THE TRUST PROPERTY, OR TO SELL ALL OR A PORTION
OF THE TRUST PROPERTY AND INVEST THE PROCEEDS OF SUCH SALES, IN ANOTHER
INVESTMENT COMPANY THAT IS REGISTERED UNDER THE 1940 ACT.((1))
SECTION 2.12. [ ] ELECTION AND TERM.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 2.14 hereof, the Trustees shall be elected by the
Shareholders owning
- ------------------------------
(1) Adoption of this Section 2.2(i) requires the affirmative vote of two-thirds
of the shares of the Trust outstanding and entitled to vote.
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<PAGE> 71
of record a plurality of the Shares voting at a meeting of Shareholders. SUCH A
MEETING SHALL BE HELD ON A DATE FIXED BY THE TRUSTEES. Except in the event of
resignation or removals pursuant to Section 2.13 hereof, each Trustee shall hold
office until SUCH TIME AS LESS THAN A MAJORITY OF THE TRUSTEES HOLDING OFFICE
HAVE BEEN ELECTED BY SHAREHOLDERS, AND THEREAFTER UNTIL THE HOLDING OF A
SHAREHOLDERS' MEETING AS REQUIRED BY THE NEXT FOLLOWING SENTENCE. IN SUCH EVENT
THE TRUSTEES THEN IN OFFICE WILL CALL A SHAREHOLDERS' MEETING FOR THE ELECTION
OF TRUSTEES. EXCEPT FOR THE FOREGOING CIRCUMSTANCES, THE TRUSTEES SHALL CONTINUE
TO HOLD OFFICE AND MAY APPOINT SUCCESSOR TRUSTEES.
Section 2.13. Resignation and Removal.
Any Trustee may resign his trust (without THE need for ANY prior or
subsequent accounting) by an instrument in writing signed by him and delivered
to the other Trustees and such resignation shall be effective upon such
delivery, or at a later date according to the terms of the instrument. Any of
the Trustees may be removed (provided the aggregate number of Trustees after
such removal shall not be less than [ ] ONE) with cause, by the action of
two-thirds of the remaining Trustees [ ]. ANY TRUSTEE MAY BE REMOVED AT ANY
MEETING OF SHAREHOLDERS BY VOTE of two-thirds of the [ ] OUTSTANDING SHARES.
THE TRUSTEES SHALL PROMPTLY CALL A MEETING OF THE SHAREHOLDERS FOR THE PURPOSE
OF VOTING UPON THE QUESTION OF REMOVAL OF ANY SUCH TRUSTEE OR TRUSTEES WHEN
REQUESTED IN WRITING SO TO DO BY THE HOLDERS OF NOT LESS THAN TEN PERCENT OF THE
OUTSTANDING SHARES AND, IN THAT CONNECTION, THE TRUSTEES WILL ASSIST SHAREHOLDER
COMMUNICATIONS TO THE EXTENT PROVIDED FOR IN SECTION 16(c) UNDER THE 1940 ACT.
Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a
Trustee, he shall execute and deliver such documents as the remaining Trustees
shall require for the purpose of conveying to the [ ] TRUST or the remaining
Trustees any [ ] TRUST Property OR PROPERTY OF ANY SERIES OF THE TRUST held in
the name of the resigning or removed Trustee. Upon the incapacity or death of
any Trustee, his legal representative shall execute and deliver on his behalf
such documents as the remaining Trustees shall require as provided in the
preceding sentence.
SECTION 2.16. SHAREHOLDER VOTE, ETC. NOT REQUIRED.
EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED TO THE CONTRARY IN THIS
DECLARATION, THE TRUSTEES MAY EXERCISE EACH OF THE POWERS GRANTED TO THEM IN
THIS DECLARATION WITHOUT THE VOTE, APPROVAL OR AGREEMENT OF THE SHAREHOLDERS,
UNLESS SUCH A VOTE, APPROVAL OR AGREEMENT IS REQUIRED BY THE 1940 ACT OR
APPLICABLE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
Section 3.2. Advisory or Management Contract.
The Trustees may in their discretion from time to time enter into an
investment advisory or management contract OR SEPARATE ADVISORY CONTRACTS WITH
RESPECT TO ONE OR MORE SERIES whereby the other party to such contract shall
undertake to furnish to the [ ] TRUST such management, investment advisory,
statistical and research facilities and services and such other facilities
C-3
<PAGE> 72
and services, if any, and all upon such terms and conditions as the Trustees may
in their discretion determine, including the grant of authority to such other
party to determine what securities shall be purchased or sold by the [ ] TRUST
and what portion of its assets shall be uninvested, which authority shall
include the power to make changes in the [ ] INVESTMENTS OF THE TRUST OR ANY
SERIES.
THE TRUSTEES MAY ALSO EMPLOY, OR AUTHORIZE THE INVESTMENT ADVISER TO
EMPLOY, ONE OR MORE SUB-ADVISERS FROM TIME TO TIME TO PERFORM SUCH OF THE ACTS
AND SERVICES OF THE INVESTMENT ADVISER AND UPON SUCH TERMS AND CONDITIONS AS MAY
BE AGREED UPON BETWEEN THE INVESTMENT ADVISER AND SUCH SUB-ADVISERS AND APPROVED
BY THE TRUSTEES. ANY REFERENCE IN THIS DECLARATION TO THE INVESTMENT ADVISER
SHALL BE DEEMED TO INCLUDE SUCH SUB-ADVISERS UNLESS THE CONTEXT OTHERWISE
REQUIRES.
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc.
No Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with [ ] TRUST Property or the acts, obligations or
affairs of the [ ] TRUST. No Trustee, officer, employee or agent of the [ ]
TRUST shall be subject to any personal liability whatsoever to any Person, other
than to the [ ] TRUST or its Shareholders, in connection with [ ] TRUST
Property or the affairs of the [ ] TRUST, save only that arising from bad
faith, willful misfeasance, gross negligence or reckless disregard of his duties
with respect to such Person; and all such Persons shall look solely to the [ ]
TRUST Property for satisfaction of claims of any nature arising in connection
with the affairs of the [ ] TRUST. If any Shareholder, Trustee, officer,
employee, or agent, as such, of the [ ] TRUST, is made a [ ] PARTY to any suit
or proceeding to enforce any such liability of the [ ] TRUST, he shall not, on
account thereof, be held to any personal liability. The [ ] TRUST shall
indemnify and hold each Shareholder harmless from and against all claims and
liabilities, to which such Shareholder may become subject by reason [ ] FOR his
being or having been a Shareholder, and shall reimburse such Shareholder for all
legal and other expenses reasonably incurred by him in connection with any such
claim or liability. THE INDEMNIFICATION AND REIMBURSEMENT REQUIRED BY THE
PRECEDING SENTENCE SHALL BE MADE ONLY OUT OF THE ASSETS OF THE ONE OR MORE
SERIES OF WHICH THE SHAREHOLDER WHO IS ENTITLED TO INDEMNIFICATION OR
REIMBURSEMENT WAS A SHAREHOLDER AT THE TIME THE ACT OR EVENT OCCURRED WHICH GAVE
RISE TO THE CLAIM AGAINST OR LIABILITY OF SAID SHAREHOLDER. The rights accruing
to a Shareholder under this Section 4.1 shall not [ ] IMPAIR any other right to
which such Shareholder may be lawfully entitled, nor shall anything herein
contained restrict the right of the [ ] TRUST to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.
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<PAGE> 73
Section 4.3. Mandatory Indemnification.
(a) Subject to the exceptions and limitations contained in paragraph (b)
below:
(i) every person who is, or has been, a Trustee or officer of the [ ]
TRUST shall be indemnified by the [ ] TRUST to the fullest extent
permitted by law against all liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue
of his being or having been a Trustee or officer and against amounts paid
or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal,
ADMINISTRATIVE or other, including appeals), actual or threatened; and the
words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the [ ] TRUST, A SERIES THEREOF, or the
Shareholders by reason of A FINAL ADJUDICATION BY A COURT OR OTHER BODY
BEFORE WHICH A PROCEEDING WAS BROUGHT THAT HE ENGAGED IN willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interest of the [ ] TRUST;
(iii) in the event of a settlement or other disposition not involving
a final adjudication as provided in paragraph (b)(i) OR (b)(ii) resulting
in a payment by a Trustee or officer, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office:
(A) by the court or other body approving the settlement or other
disposition; or
(B) based upon a review of readily available facts (as opposed to a
full trial-type inquiry) by (x) vote of a majority of the Disinterested
Trustees acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter) or (y) written
opinion of independent legal counsel.
Section 5.7. Notices, REPORTS.
Any and all notices to which any Shareholder may be entitled and any and
all communications shall be deemed duly served or given if mailed, postage
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<PAGE> 74
prepaid, addressed to any Shareholder of record at his last known address as
recorded on the register of the [ ] TRUST. A NOTICE OF A MEETING, AN ANNUAL
REPORT AND ANY OTHER COMMUNICATION TO SHAREHOLDERS NEED NOT BE SENT TO A
SHAREHOLDER (i) IF AN ANNUAL REPORT AND A PROXY STATEMENT FOR TWO CONSECUTIVE
SHAREHOLDER MEETINGS HAVE BEEN MAILED TO SUCH SHAREHOLDER'S ADDRESS AND HAVE
BEEN RETURNED AS UNDELIVERABLE, (ii) IF ALL, AND AT LEAST TWO, CHECKS (IF SENT
BY FIRST CLASS MAIL) IN PAYMENT OF DIVIDENDS ON SHARES DURING A TWELVE-MONTH
PERIOD HAVE BEEN MAILED TO SUCH SHAREHOLDER'S ADDRESS AND HAVE BEEN RETURNED AS
UNDELIVERABLE OR (iii) IN ANY OTHER CASE IN WHICH A PROXY STATEMENT CONCERNING A
MEETING OF SECURITY HOLDERS IS NOT REQUIRED TO BE GIVEN PURSUANT TO THE
COMMISSION'S PROXY RULES AS FROM TIME TO TIME IN EFFECT UNDER THE SECURITIES
EXCHANGE ACT OF 1934. HOWEVER, DELIVERY OF SUCH PROXY STATEMENTS, ANNUAL REPORTS
AND OTHER COMMUNICATIONS SHALL RESUME IF AND WHEN SUCH SHAREHOLDER DELIVERS OR
CAUSES TO BE DELIVERED TO THE TRUST WRITTEN NOTICE SETTING FORTH SUCH
SHAREHOLDER'S THEN CURRENT ADDRESS.
Section 5.9. Voting Powers.
The Shareholders shall have power to vote only (i) for the election of
Trustees as provided in Section 2.12; (ii) [ ] FOR THE REMOVAL OF TRUSTEES AS
PROVIDED IN SECTION 2.13; (iii) with respect to any amendment of this
Declaration to the extent and as provided in Section 8.3; [ ] (iv) to the same
extent as the stockholders of [ ] Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the [ ]
TRUST OR ANY SERIES OR CLASS THEREOF or the Shareholders [ ] (PROVIDED,
HOWEVER, THAT A SHAREHOLDER OF A PARTICULAR SERIES OR CLASS SHALL NOT BE
ENTITLED TO BRING A DERIVATIVE OR CLASS ACTION ON BEHALF OF ANY OTHER SERIES OR
CLASS (OR SHAREHOLDER OF ANY OTHER SERIES OR CLASS) OF THE TRUST); AND (v) with
respect to such additional matters relating to the [ ] TRUST as may be required
by this Declaration, the By-laws or any registration of the [ ] TRUST as an
investment company under the 1940 Act with the Commission (or any successor
agency) or as the Trustees may consider necessary or desirable. Each whole Share
shall be entitled to one vote as to any matter on which it is entitled to vote
and each fractional Share shall be entitled to a proportionate fractional vote,
except that the Trustees may, in conjunction with the establishment of any [ ]
SERIES OR CLASS of Shares, ESTABLISH OR RESERVE THE RIGHT TO establish
conditions under which the several [ ] SERIES OR CLASSES shall have separate
voting rights or no voting rights. There shall be no cumulative voting in the
election of Trustees. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required by law, this Declaration
or the By-laws to be taken by Shareholders. The By-laws may include further
provisions for Shareholders' votes and meetings and related matters.((2))
- ------------------------------
(2) Amendment of this Section 5.9 as set forth above requires the affirmative
vote of two-thirds of the shares of the Trust outstanding and entitled to
vote.
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<PAGE> 75
Section 5.11. Series Designation.
The Trustees, in their discretion, may authorize the division of Shares
into two or more [ ] SERIES, and the different [ ] SERIES shall be established
and designated, and the variations in the relative rights and preferences as
between the different [ ] SERIES shall be fixed and determined, by the
Trustees; provided, that all Shares shall be identical except that there may be
variations so fixed and determined between different [ ] SERIES as to
investment objective, purchase price, ALLOCATION OF EXPENSES, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several [ ] SERIES shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be [ ] SHARES of any or all [ ] SERIES as the context may require.
(a) [ ] ALL PROVISIONS HEREIN RELATING TO THE TRUST SHALL APPLY EQUALLY TO
EACH SERIES OF THE TRUST EXCEPT AS THE CONTEXT REQUIRES OTHERWISE.
(b) The number of authorized Shares and the number of Shares of each [ ]
SERIES that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any [ ] SERIES into one or more [ ] SERIES that may be established and
designated from time to time. The Trustees may hold as treasury [ ] SHARES (of
the same or some other [ ] SERIES), reissue for such consideration and on such
terms as they may determine, or cancel any Shares of any [ ] SERIES reacquired
by the [ ] TRUST at their discretion from time to time.
(c) All consideration received by the [ ] TRUST for the issue or sale of
Shares of a particular [ ] SERIES, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that [ ] SERIES for all purposes, subject only to the
rights of creditors OF SUCH SERIES and except as may otherwise be required by
applicable laws, and shall be so recorded upon the books of account of the [ ]
TRUST. In the event that there are any assets, income, earnings, profits, and
proceeds thereof, funds, or payments which are not readily identifiable as
belonging to any particular [ ] SERIES, the Trustees shall allocate them among
any one or more of the [ ] SERIES established and designated from time to time
in such manner and on such basis as they, in their sole discretion, deem fair
and equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the [ ] SHAREHOLDERS of all [ ] SERIES for all purposes.
(D) The assets belonging to each particular [ ] SERIES shall be charged
with the liabilities of the [ ] TRUST in respect of that [ ] SERIES and WITH
all expenses, costs, charges and reserves attributable to that [ ] SERIES, and
any general liabilities, expenses, costs, charges or reserves of the [ ] TRUST
which are not readily identifiable as belonging to any particular [ ] SERIES
shall be
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<PAGE> 76
allocated and charged by the Trustees to and among any one or more of the [ ]
SERIES established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable. Each
allocation of liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the [ ] SHAREHOLDERS of all [ ] SERIES
for all purposes. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items are capital; and each
such determination and allocation shall be conclusive and binding upon the
Shareholders. THE ASSETS OF A PARTICULAR SERIES OF THE TRUST SHALL, UNDER NO
CIRCUMSTANCES, BE CHARGED WITH LIABILITIES ATTRIBUTABLE TO ANY OTHER SERIES OF
THE TRUST. ALL PERSONS EXTENDING CREDIT TO, OR CONTRACTING WITH OR HAVING ANY
CLAIM AGAINST A PARTICULAR SERIES OF THE TRUST SHALL LOOK ONLY TO THE ASSETS OF
THAT PARTICULAR SERIES FOR PAYMENT OF SUCH CREDIT, CONTRACT OR CLAIM. NO
SHAREHOLDER OR FORMER SHAREHOLDER OF ANY SERIES SHALL HAVE ANY CLAIM ON OR RIGHT
TO ANY ASSETS ALLOCATED OR BELONGING TO ANY OTHER SERIES.
(e) EACH SHARE OF A SERIES OF THE TRUST SHALL REPRESENT A BENEFICIAL
INTEREST IN THE NET ASSETS OF SUCH SERIES. EACH HOLDER OF SHARES OF A SERIES
SHALL BE ENTITLED TO RECEIVE HIS PRO RATA SHARE OF DISTRIBUTIONS OF INCOME AND
CAPITAL GAINS MADE WITH RESPECT TO SUCH SERIES, EXCEPT AS PROVIDED IN SECTION
5.13 HEREOF. UPON REDEMPTION OF HIS SHARES OR INDEMNIFICATION FOR LIABILITIES
INCURRED BY REASON OF HIS BEING OR HAVING BEEN A SHAREHOLDER OF A SERIES, SUCH
SHAREHOLDER SHALL BE PAID SOLELY OUT OF THE FUNDS AND PROPERTY OF SUCH SERIES OF
THE TRUST. UPON LIQUIDATION OR TERMINATION OF A SERIES OF THE TRUST,
SHAREHOLDERS OF SUCH SERIES SHALL BE ENTITLED TO RECEIVE A PRO RATA SHARE OF THE
NET ASSETS OF SUCH SERIES, EXCEPT AS PROVIDED IN SECTION 5.13 HEREOF. A
SHAREHOLDER OF A PARTICULAR SERIES OF THE TRUST SHALL NOT BE ENTITLED TO
PARTICIPATE IN A DERIVATIVE OR CLASS ACTION ON BEHALF OF ANY OTHER SERIES OR THE
SHAREHOLDERS OF ANY OTHER SERIES OF THE TRUST.
(F) The establishment and designation of any [ ] SERIES of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such [ ] SERIES, or as otherwise provided in such instrument.
[ ] THE Trustees may by an instrument executed by a majority of their number
abolish [ ] ANY SERIES AND THE ESTABLISHMENT AND DESIGNATION THEREOF. EXCEPT AS
OTHERWISE PROVIDED IN THIS ARTICLE V, THE TRUSTEES SHALL HAVE THE POWER TO
DETERMINE THE DESIGNATIONS, PREFERENCES, PRIVILEGES, LIMITATIONS AND RIGHTS, OF
EACH CLASS AND SERIES OF SHARES. EACH INSTRUMENT REFERRED TO IN THIS PARAGRAPH
SHALL HAVE THE STATUS OF AN AMENDMENT TO THIS DECLARATION.
SECTION 5.12. ASSENT TO DECLARATION OF TRUST.
EVERY SHAREHOLDER, BY VIRTUE OF HAVING BECOME A SHAREHOLDER, SHALL BE HELD
TO HAVE EXPRESSLY ASSENTED AND AGREED TO THE TERMS HEREOF AND TO HAVE BECOME A
PARTY HERETO.
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SECTION 5.13. CLASS DESIGNATION.
THE TRUSTEES, IN THEIR DISCRETION, MAY AUTHORIZE THE DIVISION OF THE SHARES
OF THE TRUST, OR, IF ANY SERIES BE ESTABLISHED, THE SHARES OF ANY SERIES, INTO
TWO OR MORE CLASSES, AND THE DIFFERENT CLASSES SHALL BE ESTABLISHED AND
DESIGNATED, AND THE VARIATIONS IN THE RELATIVE RIGHTS AND PREFERENCES AS BETWEEN
THE DIFFERENT CLASSES SHALL BE FIXED AND DETERMINED, BY THE TRUSTEES; PROVIDED,
THAT ALL SHARES OF THE TRUST OR OF ANY SERIES SHALL BE IDENTICAL TO ALL OTHER
SHARES OF THE TRUST OR THE SAME SERIES, AS THE CASE MAY BE, EXCEPT THAT THERE
MAY BE VARIATIONS BETWEEN DIFFERENT CLASSES AS TO ALLOCATION OF EXPENSES, RIGHT
OF REDEMPTION, SPECIAL AND RELATIVE RIGHTS AS TO DIVIDENDS AND ON LIQUIDATION,
CONVERSION RIGHTS, AND CONDITIONS UNDER WHICH THE SEVERAL CLASSES SHALL HAVE
SEPARATE VOTING RIGHTS. ALL REFERENCES TO SHARES IN THIS DECLARATION SHALL BE
DEEMED TO BE SHARES OF ANY OR ALL CLASSES AS THE CONTEXT MAY REQUIRE.
IF THE TRUSTEES SHALL DIVIDE THE SHARES OF THE TRUST OR ANY SERIES INTO TWO
OR MORE CLASSES, THE FOLLOWING PROVISIONS SHALL BE APPLICABLE:
(a) ALL PROVISIONS HEREIN RELATING TO THE TRUST, OR ANY SERIES OF THE
TRUST, SHALL APPLY EQUALLY TO EACH CLASS OF SHARES OF THE TRUST OR OF ANY SERIES
OF THE TRUST, EXCEPT AS THE CONTEXT REQUIRES OTHERWISE.
(b) THE NUMBER OF SHARES OF EACH CLASS THAT MAY BE ISSUED SHALL BE
UNLIMITED. THE TRUSTEES MAY CLASSIFY OR RECLASSIFY ANY SHARES OR ANY SERIES OF
ANY SHARES INTO ONE OR MORE CLASSES THAT MAY BE ESTABLISHED AND DESIGNATED FROM
TIME TO TIME. THE TRUSTEES MAY HOLD AS TREASURY SHARES (OF THE SAME OR SOME
OTHER CLASS), REISSUE FOR SUCH CONSIDERATION AND ON SUCH TERMS AS THEY MAY
DETERMINE, OR CANCEL ANY SHARES OF ANY CLASS REACQUIRED BY THE TRUST AT THEIR
DISCRETION FROM TIME TO TIME.
(c) LIABILITIES, EXPENSES, COSTS, CHARGES AND RESERVES RELATED TO THE
DISTRIBUTION OF, AND OTHER IDENTIFIED EXPENSES THAT SHOULD PROPERLY BE ALLOCATED
TO, THE SHARES OF A PARTICULAR CLASS MAY BE CHARGED TO AND BORNE SOLELY BY SUCH
CLASS AND THE BEARING OF EXPENSES SOLELY BY A CLASS OF SHARES MAY BE
APPROPRIATELY REFLECTED (IN A MANNER DETERMINED BY THE TRUSTEES) AND CAUSE
DIFFERENCES IN THE NET ASSET VALUE ATTRIBUTABLE TO, AND THE DIVIDEND, REDEMPTION
AND LIQUIDATION RIGHTS OF, THE SHARES OF DIFFERENT CLASSES. EACH ALLOCATION OF
LIABILITIES, EXPENSES, COSTS, CHARGES AND RESERVES BY THE TRUSTEES SHALL BE
CONCLUSIVE AND BINDING UPON THE SHAREHOLDERS OF ALL CLASSES FOR ALL PURPOSES.
(d) THE ESTABLISHMENT AND DESIGNATION OF ANY CLASS OF SHARES SHALL BE
EFFECTIVE UPON THE EXECUTION BY A MAJORITY OF THE THEN TRUSTEES OF AN INSTRUMENT
SETTING FORTH SUCH ESTABLISHMENT AND DESIGNATION AND THE RELATIVE RIGHTS AND
PREFERENCES OF SUCH CLASS, OR AS OTHERWISE PROVIDED IN SUCH INSTRUMENT. THE
TRUSTEES MAY, BY AN INSTRUMENT EXECUTED BY A MAJORITY OF THEIR NUMBER, ABOLISH
ANY CLASS and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to this
Declaration.
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SECTION 6.2. Price.
Shares shall be redeemed at their net asset value, WHICH MAY BE REDUCED BY
ANY REDEMPTION FEE AUTHORIZED BY THE TRUSTEES, determined as set forth in
Section 7.1 hereof as of such time as the Trustees shall have theretofore
prescribed by resolution. In the absence of such resolution, the redemption
price of Shares deposited shall be the net asset value of such Shares next
determined as set forth in Section 7.1 hereof after receipt of such application.
Section 6.3. Payment.
Payment for such Shares shall be made in cash or in property OUT OF THE
ASSETS OF THE RELEVANT SERIES OF THE TRUST to the Shareholder of record at such
time and in the manner, not inconsistent with the 1940 Act or other applicable
laws, as may be specified from time to time in the [ ] TRUST'S then effective
[ ] REGISTRATION STATEMENT under the Securities Act of 1933, subject to the
provisions of Section 6.4 hereof.
Section 6.6. Redemption of Shareholder's Interest.
The [ ] TRUST shall have the right at any time without prior notice to the
Shareholder to redeem Shares of any Shareholder for their then current net asset
value per Share if at such time the Shareholder owns Shares having an aggregate
net asset value of less than [ ] AN AMOUNT SET FROM TIME TO TIME BY THE
TRUSTEES subject to such terms and conditions as the Trustees may approve, and
subject to the [ ] TRUST'S giving general notice to all Shareholders of its
intention to avail itself of such right, either by publication in the [ ]
TRUST'S REGISTRATION STATEMENT, if any, or by such other means as the Trustees
may determine.
Section 7.1. Net Asset Value.
The value of the assets of the [ ] TRUST OR ANY SERIES OF THE TRUST SHALL
BE DETERMINED by appraisal of the securities [ ] OF THE TRUST OR ALLOCATED TO
SUCH SERIES, SUCH APPRAISAL TO BE ON THE BASIS OF SUCH method as shall be deemed
to reflect the fair value thereof, determined in good faith by or under the
direction of the Trustees. From the total value of said assets, there shall be
deducted all indebtedness, interest, taxes, payable or accrued, including
estimated taxes on unrealized book profits, expenses and management charges
accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities ATTRIBUTABLE TO
THE TRUST OR SUCH SERIES OR CLASS THEREOF which shall be deemed appropriate. The
[ ] NET ASSET VALUE OF A SHARE SHALL BE DETERMINED BY DIVIDING the net asset
value of the [ ] CLASS, OR, IF NO CLASS HAS BEEN ESTABLISHED, OF THE SERIES,
OR, IF NO SERIES HAS BEEN ESTABLISHED, OF THE TRUST, BY THE NUMBER OF SHARES OF
THAT CLASS, OR SERIES, OR OF THE TRUST, AS APPLICABLE, OUTSTANDING. THE NET
ASSET VALUE OF SHARES OF THE TRUST OR ANY CLASS OR SERIES OF THE TRUST SHALL BE
DETERMINED PURSUANT TO THE PROCEDURE AND METHODS PRESCRIBED OR APPROVED BY THE
TRUSTEES IN THEIR DISCRETION AND AS SET FORTH IN THE MOST RECENT REGISTRATION
STATEMENT OF THE TRUST AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO THE REQUIRE-
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MENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE 1940 ACT, AS AMENDED, AND
THE RULES THEREUNDER. The net asset value of the Shares shall be determined at
least once on each business day, as of the close of trading on the New York
Stock Exchange or as of such other time or times as the Trustees shall
determine. The power and duty to make the daily calculations may be delegated by
the Trustees to the Investment Adviser, the Custodian, the Transfer Agent or
such other Person as the Trustees [ ] MAY DETERMINE BY RESOLUTION OR BY
APPROVING A CONTRACT WHICH DELEGATES SUCH DUTY TO ANOTHER PERSON. The Trustees
may suspend the daily determination of net asset value to the extent permitted
by the 1940 Act.
Section 7.2. Distributions to Shareholders.
The Trustees shall from time to time distribute ratably among the
Shareholders OF THE TRUST OR A SERIES such proportion of the net profits,
surplus (including paid-in surplus), capital, or assets OF THE TRUST OR SUCH
SERIES held by the Trustees as they may deem proper. Such distributions may be
made in cash or property (including without limitation any type of obligations
of the [ ] TRUST OR SUCH SERIES or any assets thereof), and the Trustees may
distribute ratably among the Shareholders additional Shares OF THE TRUST OR SUCH
SERIES issuable hereunder in such manner, at such times, and on such terms as
the Trustees may deem proper. Such distributions may be among the Shareholders
of record at the time of declaring a distribution or among the Shareholders of
record at such other date or time or dates or times as the Trustees shall
determine. The Trustees may in their discretion determine that, solely for the
purposes of such distributions, [ ] OUTSTANDING Shares shall exclude Shares for
which orders have been placed subsequent to a specified time on the date the
distribution is declared or on the next preceding day if the distribution is
declared as of a day on which Boston banks are not open for business, all as
described in the [ ] REGISTRATION STATEMENT under the Securities Act of 1933.
The Trustees may always retain from the net profits such amount as they may deem
necessary to pay the debts or expenses of the [ ] TRUST OR THE SERIES or to
meet obligations of the [ ] TRUST OR THE SERIES, or as they may deem desirable
to use in the conduct of its affairs or to retain for future requirements or
extensions of the business. The Trustees may adopt and offer to Shareholders
such dividend reinvestment plans, cash dividend payout plans or related plans as
the Trustees shall deem appropriate. THE ABOVE PROVISIONS MAY BE MODIFIED TO THE
EXTENT REQUIRED BY A PLAN ADOPTED BY THE TRUSTEES TO ESTABLISH CLASSES OF SHARES
OF THE TRUST OR OF A SERIES.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the [ ] TRUST OR THE SERIES to avoid or reduce liability for taxes.
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Section 7.3. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares.
[ ] SUBJECT TO SECTION 5.11 AND SECTION 5.13 HEREOF, THE net income of the
[ ] TRUST OR ANY SERIES shall be determined in [ ] SUCH manner AS the Trustees
shall provide by resolution. Expenses of the [ ] TRUST OR A SERIES, including
the advisory or management fee, shall be accrued each day. Such net income may
be determined by or under the direction of the Trustees as of the close of
trading on the New York Stock Exchange on each day on which such [ ] EXCHANGE
is open or as of such other time or times as the Trustees shall determine, and,
except as provided herein, all the net income of the [ ] TRUST OR ANY SERIES,
AS so determined, may be declared as a dividend on the Outstanding Shares OF THE
TRUST OR SUCH SERIES. If, for any reason, the net income of the [ ] TRUST OR
ANY SERIES, determined at any time is a negative amount, the Trustees shall have
the power WITH RESPECT TO THE TRUST OR SUCH SERIES (i) to offset each
Shareholder's pro rata share of such negative amount from the accrued dividend
account of such Shareholder, or (ii) to reduce the number of [ ] OUTSTANDING
Shares of the [ ] TRUST OR SUCH SERIES by reducing the number of Shares in the
account of such Shareholder by that number of full and fractional Shares which
represents the amount of such excess negative net income, or (iii) to cause to
be recorded on the books of the [ ] TRUST OR SUCH SERIES an asset account in
the amount of such negative net income, which account may be reduced by the
amount, provided that the same shall thereupon become the property of the [ ]
TRUST OR SUCH SERIES WITH RESPECT TO THE TRUST OR SUCH SERIES and shall not be
paid to any Shareholder, of dividends declared thereafter upon the Outstanding
Shares of the Trust or such Series on the day such negative net income is
experienced, until such asset account is reduced to zero; or (iv) to combine the
methods described in clauses (i) and (ii) and (iii) of this sentence, in order
to cause the net asset value per Share of the [ ] TRUST OR SUCH SERIES to
remain at a constant amount per Outstanding Share immediately after each such
determination and declaration. The Trustees shall also have the power to fail to
declare a dividend out of net income for the purpose of causing the net asset
value per [ ] SHARE to be increased to a constant amount. The Trustees shall
NOT BE REQUIRED TO ADOPT, BUT MAY AT ANY TIME ADOPT, DISCONTINUE OR AMEND THE
PRACTICE OF MAINTAINING THE NET ASSET VALUE PER SHARE OF THE TRUST OR A SERIES
AT A CONSTANT AMOUNT.
Section 8.2. Termination of [ ] Trust.
(a) [ ] THE TRUST OR ANY SERIES OF THE TRUST MAY BE TERMINATED BY AN
INSTRUMENT IN WRITING SIGNED BY A MAJORITY OF THE TRUSTEES, OR by the
affirmative vote of THE holders of [ ] A MAJORITY of the Shares OF THE TRUST OR
SERIES outstanding and entitled to vote at any meeting of Shareholders [ ].
Upon the termination of the [ ] TRUST OR ANY SERIES,
(i) [ ] THE TRUST OR ANY SERIES shall carry on no business except for
the purpose of winding up its affairs [ ];
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<PAGE> 81
(ii) [ ] THE Trustees shall proceed to wind up the affairs of the
[ ] TRUST OR SERIES and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the [ ] TRUST OR SERIES
shall have been wound up, including the power to fulfill or discharge the
contracts of the TRUST OR SERIES, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the remaining
[ ] TRUST Property OR PROPERTY OF THE SERIES to one or more persons at
public or private sale for consideration which may consist in whole or in
part of cash, securities or other property of any kind, discharge or pay
its liabilities, and do all other acts appropriate to liquidate its
business; [ ] AND
(iii) [ ] AFTER paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining [ ] TRUST Property OR PROPERTY OF THE SERIES, in
cash or in kind or partly each, among the Shareholders OF THE TRUST OR
SERIES according to their respective rights.
(b) After termination of the [ ] TRUST OR ANY SERIES and distribution to
the Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the [ ] TRUST an instrument in writing setting
forth the fact of such termination, and the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and the rights and
interests of all Shareholders OF THE TRUST OR SERIES shall thereupon cease.((3))
Section 8.3. Amendment Procedure.
(a) This Declaration may be amended by a vote of the holders of a majority
of the Shares outstanding and entitled to vote. [ ] AMENDMENTS SHALL BE
EFFECTIVE UPON THE TAKING OF ACTION AS PROVIDED IN THIS SECTION OR AT SUCH LATER
TIME AS SHALL BE SPECIFIED IN THE APPLICABLE VOTE OR INSTRUMENT. The Trustees
may also amend this Declaration without the vote or consent of Shareholders if
they deem it necessary to conform this Declaration to the requirements of
applicable federal or state laws or regulations or the requirements of the
regulated investment company provisions of the Internal Revenue Code (INCLUDING
THOSE PROVISIONS OF SUCH CODE RELATING TO THE RETENTION OF THE EXEMPTION FROM
FEDERAL INCOME TAX WITH RESPECT TO DIVIDENDS PAID BY THE TRUST OUT OF INTEREST
INCOME RECEIVED ON MUNICIPAL BONDS), but the Trustees shall not be liable for
failing so to do. THE TRUSTEES MAY ALSO AMEND THIS DECLARATION WITHOUT THE VOTE
OR CONSENT OF SHAREHOLDERS IF THEY DEEM IT NECESSARY OR DESIRABLE TO CHANGE THE
NAME OF THE TRUST, TO SUPPLY ANY OMISSION, TO CURE, CORRECT OR SUPPLEMENT ANY
AMBIGUOUS, DEFECTIVE OR INCONSISTENT PROVISION HEREOF, OR TO MAKE ANY OTHER
CHANGES IN THE DECLARATION WHICH DO NOT MATERIALLY ADVERSELY AFFECT THE RIGHTS
OF SHAREHOLDERS HEREUNDER.
- ------------------------------
(3) Amendment of this Section 8.2 as set forth above requires the affirmative
vote of two-thirds of the shares of the Trust outstanding and entitled to
vote.
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Section 8.4. Merger, Consolidation and Sale of Assets.
The [ ] TRUST OR ANY SERIES THEREOF may merge or consolidate with any
other corporation, association, trust or other organization or may sell, lease
or exchange all or substantially all of the [ ] TRUST Property OR THE PROPERTY
OF ANY SERIES, including its good will, upon such terms and conditions and for
such consideration when and as authorized [ ] BY AN INSTRUMENT IN WRITING
SIGNED BY A MAJORITY OF THE TRUSTEES.((4))
Section 8.5. [ ] INCORPORATION.
[ ] WHEN AUTHORIZED BY AN INSTRUMENT IN WRITING SIGNED BY A MAJORITY OF
THE TRUSTEES, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association or other organization to take over all of the
[ ] TRUST Property OR THE PROPERTY OF ANY SERIES or to carry on any business in
which the [ ] TRUST OR THE SERIES shall directly or indirectly have any
interest, and to sell, convey and transfer the [ ] TRUST Property OR THE
PROPERTY OF ANY SERIES to any such corporation, trust, association or
organization in exchange for the Shares or securities thereof or otherwise, and
to lend money to, subscribe for the Shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization, or any corporation, partnership, trust, association or
organization in which the [ ] TRUST OR THE SERIES holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the [ ] TRUST OR ANY SERIES or any successor thereto and
any such corporation, trust, partnership, association or other organization if
and to the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the [ ] TRUST Property to such
organization or entities.((5))
Section 10.1. Filing.
This Declaration and any amendment hereto shall be filed in the office of
the Secretary of the Commonwealth of Massachusetts and in such other places as
may be required under the laws of THE COMMONWEALTH OF Massachusetts and may also
be filed or recorded in such other places as the Trustees deem appropriate. [ ]
UNLESS THE AMENDMENT IS EMBODIED IN AN INSTRUMENT SIGNED BY A MAJORITY OF THE
TRUSTEES, EACH AMENDMENT filed shall be accompanied by a certificate signed and
acknowledged by a Trustee stating that such action was
- ------------------------------
(4) Amendment of this Section 8.4 as set forth above requires the affirmative
vote of two-thirds of the shares of the Trust outstanding and entitled to
vote.
(5) Amendment of this Section 8.5 as set forth above requires the affirmative
vote of two-thirds of the shares of the Trust outstanding and entitled to
vote.
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<PAGE> 83
duly taken in a manner provided herein [ ]. A restated Declaration, integrating
into a single instrument all of the provisions of the Declaration which are then
in effect and operative, may be executed from time to time by a majority of the
Trustees and shall, upon filing with the Secretary of the Commonwealth of
Massachusetts, be conclusive evidence of all amendments contained therein and
may hereafter be referred to in lieu of the original Declaration and the various
amendments thereto. THE RESTATED DECLARATION MAY INCLUDE ANY AMENDMENT WHICH THE
TRUSTEES ARE EMPOWERED TO ADOPT, WHETHER OR NOT SUCH AMENDMENT HAS BEEN ADOPTED
PRIOR TO THE EXECUTION OF THE RESTATED DECLARATION.
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<PAGE> 84
EXHIBIT D
PROPOSED FUNDAMENTAL INVESTMENT POLICIES
SCUDDER VARIABLE LIFE INVESTMENT FUND
MONEY MARKET PORTFOLIO
BOND PORTFOLIO
BALANCED PORTFOLIO
GROWTH AND INCOME PORTFOLIO
CAPITAL GROWTH PORTFOLIO
GLOBAL DISCOVERY PORTFOLIO
INTERNATIONAL PORTFOLIO
5.1. Each Fund has elected to be classified as a diversified series of an
open-end investment company.
In addition, as a matter of fundamental policy, each Fund will not:
5.2. borrow money, except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
5.3. issue senior securities, except as permitted under the Investment
Company Act of 1940, as amended, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time;
5.4. concentrate its investments in a particular industry, as that
term is used in the Investment Company Act of 1940, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time;
5.5. purchase physical commodities or contracts relating to physical
commodities; or
5.6. engage in the business of underwriting securities issued by
others, except to the extent that the Fund may be deemed to be an
underwriter in connection with the disposition of portfolio securities;
5.7. purchase or sell real estate, which term does not include
securities of companies which deal in real estate or mortgages or
investments secured by real estate or interests therein, except that the
Fund reserves freedom of action to hold and to sell real estate acquired as
a result of the Fund's ownership of securities;
5.8. make loans to other persons, except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase agreements
and the purchase of debt instruments or interests in indebtedness in
accordance with the Fund's investment objective and policies may be deemed
to be loans.
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<PAGE> 85
EXHIBIT E
CURRENT FUNDAMENTAL INVESTMENT POLICIES
SCUDDER VARIABLE LIFE INVESTMENT FUND
As a matter of fundamental policy, the Fund may not on behalf of any
Portfolio:
(1) purchase and sell real estate (though it may invest in securities
of companies which deal in real estate and in other permitted investments
secured by real estate) or commodities or commodities contracts, except (a)
debt securities futures contracts and securities index futures contracts
and options thereon, and (b) in the case of the International Portfolio,
foreign currency futures contracts;
(2) participate on a joint or a joint and several basis in any trading
account in securities, but may for the purpose of possibly achieving better
net results on portfolio transactions or lower brokerage commission rates
join with other investment company and client accounts managed by Scudder,
Stevens & Clark or its affiliates in the purchase or sale of portfolio
securities;
(3) purchase or retain securities of an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the
Fund or a member, officer, director or trustee of the investment adviser of
the Fund if one or more of such individuals owns beneficially more than
one-half of one percent ( 1/2 of 1%) of the shares or securities or both
(taken at market value) of such issuer and such individuals owning more
than one-half of one percent ( 1/2 of 1%) of such shares or securities
together own beneficially more than 5% of such shares or securities or
both;
(4) purchase securities on margin or make short sales unless, by
virtue of its ownership of other securities, it has the right to obtain
securities equivalent in kind and amount to the securities sold and, if the
right is conditional, the sale is made upon the same conditions;
(5) issue senior securities, except as appropriate to evidence
indebtedness which a Portfolio is permitted to incur pursuant to the
Investment Restrictions set forth in the Fund's prospectus and except for
shares of various additional series which may be established by the
Trustees; and
(6) act as underwriter of the securities issued by others, except to
the extent that the purchase of securities in accordance with its
investment objective and policies directly from the issuer thereof and the
later disposition thereof may be deemed to be underwriting.
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<PAGE> 86
In addition, as a matter of fundamental policy, the Fund may not on behalf
of any Portfolio, other than Global Discovery Portfolio:
(1) with respect to 75% of the value of the total assets of a
Portfolio, invest more than 5% of the value of the Portfolio's total assets
in the securities of any one issuer, except U.S. Government securities and,
with respect to 100% of the value of the total assets of a Portfolio, the
Fund may not invest more than 25% of the value of the Portfolio's total
assets in the securities of any one issuer, except U.S. Government
securities;
(2) borrow money except from banks as a temporary measure for
extraordinary or emergency purposes (each Portfolio is required to maintain
asset coverage (including borrowings) of 300% for all borrowings) and no
purchases of securities for a Portfolio will be made while borrowings of
that Portfolio exceed 5% of the Portfolio's assets (the payment of interest
on borrowings by a Portfolio will reduce that Portfolio's income);
(3) make loans to other persons, except loans of portfolio securities
and except to the extent that the purchase of debt obligations in
accordance with its investment objective and policies and the entry into
repurchase agreements may be deemed to be loans;
(4) pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by the investment restriction below, it may pledge
securities having a market value at the time of pledge not exceeding 15% of
the value of a Portfolio's total assets and except in connection with the
writing of covered call options and the purchase and sale of futures
contracts and options on futures contracts;
(5) purchase any securities which would cause more than 25% of the
market value of its total assets at the time of such purchase to be
invested in the securities of one or more issuers having their principal
business activities in the same industry, provided that there is no
limitation with respect to investments in obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities. (For the
purposes of this restriction, telephone companies are considered to be in a
separate industry from gas and electric public utilities, and wholly-owned
finance companies are considered to be in the industry of their parents if
their activities are primarily related to financing the activities of the
parents.);
(6) purchase the securities of any issuer if such purchase would cause
more than 10% of the voting securities of such issuer to be held by the
Fund or Portfolio;
(7) enter into repurchase agreements or purchase any securities if, as
a result thereof, more than 10% of the total assets of a Portfolio (taken
at market value) would be, in the aggregate, subject to repurchase
agreements maturing in more than seven days and invested in restricted
securities or securities which are not readily marketable; and
E-2
<PAGE> 87
(8) purchase or sell any put or call options or any combination
thereof, except that the Fund may purchase and sell options on futures
contracts on debt securities, options on securities indexes and securities
index futures contracts and write covered call option contracts on
securities owned by a Portfolio, and may also purchase call options for the
purpose of terminating its outstanding obligations with respect to
securities upon which covered call option contracts have been written (i.e.
"closing purchase transactions"), and except that the International
Portfolio may also purchase and sell options on foreign currency and on
foreign currency futures contracts.
With respect to Global Discovery Portfolio, the Fund may not, as a matter
of fundamental policy:
(1) with respect to 75% of its total assets taken at market value,
purchase more than 10% of the voting securities of any one issuer or invest
more than 5% of the value of its total assets in the securities of any one
issuer, except obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and except securities of closed end
investment companies;
(2) borrow money except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(3) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages, and
(ii) securities secured by real estate or interests therein, and that the
Fund reserves freedom of action to hold and sell real estate acquired as a
result of the Fund's ownership of securities) or purchase or sell physical
commodities or contracts relating to physical commodities;
(4) act as an underwriter of securities issued by others, except to
the extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund;
(5) make loans to other persons, except (a) loans of portfolio
securities, provided collateral is maintained at not less than 100% by
marking to market daily, and (b) to the extent the entry into repurchase
agreements and the purchase of debt securities in accordance with its
investment objective and investment policies may be deemed to be loans;
(6) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for shares of the
separate classes or series of the Fund; provided that collateral
arrangements with respect to currency-related contracts, futures contracts,
options or other permitted investments, including deposits of initial and
variation margin, are
E-3
<PAGE> 88
not considered to be the issuance of senior securities for purposes of this
restriction; and
(7) purchase any securities which would cause more than 25% of the
market value of its total assets at the time of such purchase to be
invested in the securities of one or more issuers having their principal
business activities in the same industry, provided that there is no
limitation with respect to investments in obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities (for the purposes
of this restriction, telephone companies are considered to be in a separate
industry from gas and electric public utilities, wholly-owned finance
companies are considered to be in the same industry of their parents if
their activities are primarily related to financing the activities of their
parents and each foreign government, its agencies or instrumentalities as
well as supranational organizations as a group, are each considered to be a
separate industry).
E-4
<PAGE> 89
SCUDDER VARIABLE LIFE INVESTMENT FUND
PROXY MONEY MARKET PORTFOLIO PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
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 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, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 10:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Dr. Kenneth Black, Jr., Dr. Rosita P. Chang, Peter B. Freeman, Dr.
J.D. Hammond and Daniel Pierce.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
(continued on other side)
<PAGE> 90
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [
] ABSTAIN
4(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [
] ABSTAIN
4(B). To approve certain other provisions of the Amended and Restated
Declaration of Trust;
[ ] FOR [ ] AGAINST [
] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.6 underwriting of securities; 5.11 related issues;
5.2 borrowing; 5.7 investment in real estate; 5.12 pledging;
5.3 senior securities; 5.8 lending; 5.13 restricted and illiquid securities;
5.4 concentration; 5.9 margin purchases and short sales; 5.14 voting securities;
5.5 commodities; 5.10 joint trading accounts; 5.15 options.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [
] ABSTAIN
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 exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated, 1997
---------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 91
SCUDDER VARIABLE LIFE INVESTMENT FUND
PROXY BOND PORTFOLIO PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
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 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, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 10:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Dr. Kenneth Black, Jr., Dr. Rosita P. Chang, Peter B. Freeman, Dr.
J.D. Hammond and Daniel Pierce.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
(continued on other side)
<PAGE> 92
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4(B). To approve certain other provisions of the Amended and Restated
Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.6 underwriting of securities; 5.11 related issuers;
5.2 borrowing; 5.7 investment in real estate; 5.12 pledging;
5.3 senior securities; 5.8 lending; 5.13 restricted and illiquid securities;
5.4 concentration; 5.9 margin purchases and short sales; 5.14 voting securities;
5.5 commodities; 5.10 joint trading accounts; 5.15 options.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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 exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated, -------------------------------1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 93
SCUDDER VARIABLE LIFE INVESTMENT FUND
PROXY BALANCED PORTFOLIO PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
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 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, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 10:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Dr. Kenneth Black, Jr., Dr. Rosita P. Chang, Peter B. Freeman, Dr.
J.D. Hammond and Daniel Pierce.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
(continued on other side)
<PAGE> 94
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4(B). To approve certain other provisions of the Amended and Restated
Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.6 underwriting of securities; 5.11 related issues;
5.2 borrowing; 5.7 investment in real estate; 5.12 pledging;
5.3 senior securities; 5.8 lending; 5.13 restricted and illiquid securities;
5.4 concentration; 5.9 margin purchases and short sales; 5.14 voting securities;
5.5 commodities; 5.10 joint trading accounts; 5.15 options.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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 exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated, -------------------------------1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 95
SCUDDER VARIABLE LIFE INVESTMENT FUND
PROXY PROXY
GROWTH AND INCOME PORTOLIO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
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 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, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 10:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Dr. Kenneth Black, Jr., Dr. Rosita P. Chang, Peter B. Freeman, Dr.
J.D. Hammond and Daniel Pierce.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 96
4(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4(B). To approve certain other provisions of the Amended and Restated
Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.5 commodities; 5.9 margin purchases and short
5.2 borrowing; 5.6 underwriting of securities; sales;
5.3 senior securities; 5.7 investment in real estate; 5.10 joint trading accounts;
5.4 concentration; 5.8 lending 5.11 related issues;
5.12 pledging;
5.13 restricted and illiquid securities;
5.14 voting securities;
5.15 options.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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 exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated, -------------------------------1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 97
SCUDDER VARIABLE LIFE INVESTMENT FUND
PROXY GLOBAL DISCOVERY PORTFOLIO PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
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 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, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 10:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Dr. Kenneth Black, Jr., Dr. Rosita P. Chang, Peter B. Freeman, Dr.
J.D. Hammond and Daniel Pierce.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
(continued on other side)
<PAGE> 98
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4(B). To approve certain other provisions of the Amended and Restated
Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.6 underwriting of securities; 5.11 related issuers;
5.2 borrowing; 5.7 investment in real estate; 5.12 pledging;
5.3 senior securities; 5.8 lending; 5.13 restricted and illiquid securities;
5.4 concentration; 5.9 margin purchases and short sales; 5.14 voting securities;
5.5 commodities; 5.10 joint trading accounts; 5.15 options.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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 exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated, -------------------------------1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 99
SCUDDER VARIABLE LIFE INVESTMENT FUND
PROXY CAPITAL GROWTH PORTFOLIO PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
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 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, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 10:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Dr. Kenneth Black, Jr., Dr. Rosita P. Chang, Peter B. Freeman, Dr.
J.D. Hammond and Daniel Pierce.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
(continued on other side)
<PAGE> 100
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [
] ABSTAIN
4(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [
] ABSTAIN
4(B). To approve certain other provisions of the Amended and Restated
Declaration of Trust;
[ ] FOR [ ] AGAINST [
] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.6 underwriting of securities; 5.11 related issuers;
5.2 borrowing; 5.7 investment in real estate; 5.12 pledging;
5.3 senior securities; 5.8 lending; 5.13 restricted and illiquid securities;
5.4 concentration; 5.9 margin purchases and short sales; 5.14 voting securities;
5.5 commodities; 5.10 joint trading accounts; 5.15 options.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [
] ABSTAIN
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 exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated, 1997
---------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 101
SCUDDER VARIABLE LIFE INVESTMENT FUND
PROXY INTERNATIONAL PORTFOLIO PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
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 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, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 10:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Dr. Kenneth Black, Jr., Dr. Rosita P. Chang, Peter B. Freeman, Dr.
J.D. Hammond and Daniel Pierce.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
(continued on other side)
<PAGE> 102
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [
] ABSTAIN
4(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [
] ABSTAIN
4(B). To approve certain other provisions of the Amended and Restated
Declaration of Trust;
[ ] FOR [ ] AGAINST [
] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.6 underwriting of securities; 5.11 related issuers;
5.2 borrowing; 5.7 investment in real estate; 5.12 pledging;
5.3 senior securities; 5.8 lending; 5.13 restricted and illiquid securities;
5.4 concentration; 5.9 margin purchases and short sales; 5.14 voting securities;
5.5 commodities; 5.10 joint trading accounts; 5.15 options.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [
] ABSTAIN
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 exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated, 1997
---------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
