<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>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] 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
PRELIMINARY COPY
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 the 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 the Fund.
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
<PAGE> 3
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, if any, 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.
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.
<PAGE> 4
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 CARDS PROMPTLY.
<PAGE> 5
Two International Place
Boston, Massachusetts 02110
1-800-225-2470
SCUDDER VARIABLE LIFE INVESTMENT FUND
September [ ], 1997
Dear Shareholder:
On June 26, 1997, Scudder, Stevens & Clark ("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> 6
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,
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> 7
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. ("Scudder"), 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;
(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 24, 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> 8
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,
Secretary
September [ ], 1997
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD 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 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> 9
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> 10
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 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, 3, 4(B) and 5.
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).
2
<PAGE> 11
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
(Approval of new Investment Fund vote separately "majority of the
Management Agreement) outstanding voting
securities" of each
Fund
Proposal 2 Shareholders of each Each nominee must be
(Election of Trustees) Trust vote together elected by a plurality
for each nominee (if a of the shares voting
Trust has several at the Special Meeting
Funds, shareholders of
all Funds vote
together as a single
class)
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 the Approved by the vote
(Approval of a portion of the Trust vote together of two-thirds of
Amended and Restated (if the Trust has shares of the Trust
Declaration of Trust) several Funds, outstanding and
shareholders of all entitled to vote
Funds vote together as
a single class)
Proposal 4(B) Shareholders of the Approved by a
(Approval of a portion of the Trust vote together "majority of the
Amended and Restated (if the Trust has outstanding voting
Declaration of Trust) several Funds, securities" of the
shareholders of all Trust
Funds vote together as
a single class)
Proposal 5 Shareholders of each Approved by a
(Approval of the revision of Fund vote separately "majority of the
certain fundamental outstanding voting
investment policies) securities" of each
Fund
Proposal 6 Shareholders of each Approved by a majority
(Ratification of selection of Fund vote separately of the shares voting
Accountants) at the Special Meeting
</TABLE>
3
<PAGE> 12
Holders of record of the shares of beneficial interest of each Fund at the
close of business on August 24, 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 106,757,048.7630
Bond Portfolio 9,843,682.5250
Balanced Portfolio 8,344,084.8600
Growth and Income Portfolio Class A 11,815,252.1840
Growth and Income Portfolio Class B 114,305.9910
Capital Growth Portfolio Class A 29,934,111.4410
Capital Growth Portfolio Class B 6,326.9140
Global Discovery Portfolio Class A 2,613,391.0530
Global Discovery Portfolio Class B 159,100.8710
International Portfolio Class A 59,763,371.1170
International Portfolio Class B 5,618.0280
</TABLE>
The Trust 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 800-225-5163 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> 13
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 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 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 calls and
5
<PAGE> 14
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 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 the purchase
or sale of securities or other property to, from or on behalf of the
6
<PAGE> 15
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 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> 16
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 compensation pool 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 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> 17
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> 18
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 each Fund's office
rent, render significant administrative services on behalf of each Fund (not
otherwise provided by third parties) necessary for each Fund's operating as an
open-end investment company including, but not limited to, preparing reports to
and meeting materials for each 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 each Fund (such as each 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 each Fund's transfer agent; assisting in
the preparation and filing of each Fund's federal, state and local tax returns;
preparing and filing each 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 each Fund under applicable federal and state securities laws;
maintaining or causing to be maintained for each 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 each
Fund's custodian or other agents of each Fund; assisting in establishing
accounting policies of each Fund; assisting in the resolution of accounting
issues that may arise with respect to each Fund's operations and consulting with
each Fund's independent accountants, legal counsel and each Fund's other agents
as necessary in connection therewith; establishing and monitoring each Fund's
operating expense budgets; reviewing each Fund's bills; processing the payment
of bills that have been approved by an authorized person; assisting each Fund in
determining the amount of dividends and distributions available to be paid by
each Fund to its shareholders, preparing and arranging for the printing of
10
<PAGE> 19
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 each Fund in the conduct of its business, subject to the
direction and control of each 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 each 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 each 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 each 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> 20
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 each 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 each 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 each 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
FISCAL YEAR NET MANAGEMENT MANAGEMENT
FUND (ENDED) 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 .875% $5,590,601
</TABLE>
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
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
12
<PAGE> 21
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 8/1/97 7/1/85 9/30/98
Bond Portfolio 7/16/85 11/14/86 8/1/97 7/1/85 9/30/98
Balanced
Portfolio........ 7/16/85 11/14/86 8/1/97 7/1/85 9/30/98
Growth and Income
Portfolio 5/2/94 5/1/94 8/1/97 4/29/84 9/30/98
Capital Growth
Portfolio 7/16/85 8/4/97 8/1/97 7/1/85 9/30/98
Global Discovery
Portfolio 5/1/96 5/1/96 8/1/97 4/29/96 9/30/98
International
Portfolio 5/1/87 8/4/97 8/1/97 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 later than the effective date.
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 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
13
<PAGE> 22
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 each 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 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
14
<PAGE> 23
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.
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).+ 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 Representa-
- - - ------------------------------
+
* 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> 24
tives 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 the 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. Scudder Trust Company ("STC"), an affiliate
of Scudder, provides subaccounting and recordkeeping services for shareholder
accounts in certain retirement and employee benefit plans. The table below sets
forth for each Fund the respective fees paid to SFAC, SSC and STC during the
last fiscal year of each Fund.
<TABLE>
<CAPTION>
AGGREGATE FEE PAID AGGREGATE FEE PAID AGGREGATE FEE PAID
TO SFAC DURING TO SSC DURING TO STC DURING
NAME OF FUND LAST FISCAL YEAR LAST FISCAL YEAR LAST FISCAL YEAR
- - - -------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Money Market
Portfolio $ 30,073 n/a n/a
Bond Portfolio $ 37,590 n/a n/a
Balanced Portfolio $ 39,830 n/a n/a
Growth and Income
Portfolio $ 42,366 n/a n/a
Capital Growth
Portfolio $ 70,071 n/a n/a
Global Discovery
Portfolio $ 33,383 n/a n/a
International
Portfolio $335,822 n/a n/a
</TABLE>
SFAC, SSC and STC 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.
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
16
<PAGE> 25
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 this Proposal as to any Fund requires the affirmative vote of a
"majority of the outstanding voting securities" 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> 26
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;
Executive Director and Trustee, Educational Foundation, Inc.;
[PHOTO] Vice Chairman and Director, International Insurance Seminars,
Inc.; Director, USLIFE Corporation, NYC. Former Emeritus
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
[PHOTO] Island.
PETER B. FREEMAN (65) Trustee (1985). Corporate Director and Trustee: Director, The
A.H. Belo Company; Trustee, Eastern Utilities Associates
(electric utility holding company); Director, AMICA Life
Insurance Co.; Director AMICA Insurance Co. Formerly:
[PHOTO] 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 Statement University; Member of the Board, The
Atlantic Mutual Insurance Co. Former Trustee, President Mutual
[PHOTO] Life Insurance Company. Dr. Hammond serves on the Boards of an
additional 1 Trust or Corporations whose Funds are advised by
Scudder.
</TABLE>
18
<PAGE> 27
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST
(DATE NOMINEE BECAME TRUSTEE),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
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
[PHOTO] Company Incorporated (bank and trust company). Mr. Pierce
serves on the Boards of an additional 17 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,
[PHOTO] 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
Fund. The information as to beneficial ownership is based on statements
furnished to the Trust by each Trustee and nominee.
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.
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
19
<PAGE> 28
Scudder. These Non-interested Trustees have primary responsibility for assuring
that the Fund is managed in 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 designated 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 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
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.
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.
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<PAGE> 29
The following chart sets forth the number of meetings of the Board, the
Audit Committee and the Committee on Independent Trustees of each Trust during
the calendar year 1996.
NUMBER OF BOARD AND COMMITTEE MEETINGS HELD
BY THE TRUST DURING THE CALENDAR YEAR 1996
<TABLE>
<CAPTION>
COMMITTEE ON
BOARD OF TRUSTEES AUDIT COMMITTEE INDEPENDENT
MEETINGS MEETINGS TRUSTEES MEETINGS
------------------------------------------------------------------
<S> <C> <C>
4 1 1
</TABLE>
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
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
</TABLE>
21
<PAGE> 30
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
TRUST;
NAME (AGE) PRINCIPAL OCCUPATION OR YEAR FIRST BECAME
----------- EMPLOYMENT(1) AN OFFICER(2)
-------------------------- -----------------
<S> <C> <C>
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 (1992-1995). 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
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
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
22
<PAGE> 31
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.
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 $ 26,333 (7 Funds)
Peter B. Freeman $ 16,483 $ 131,734 (33 Funds)
Dr. J. D. Hammond $ 26,233 $ 26,333 (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 four 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 structure as described below, and in that case cause the Fund
to do so without further approval by shareholders.
23
<PAGE> 32
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 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 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.
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 accordance with its investment objective and policies.
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<PAGE> 33
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 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 Restated Declaration is attached
to the 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"
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 structure is described in Proposal 3. Management of the
Trust believes the Trustees currently have the power to enter into a
master/feeder 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 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 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
25
<PAGE> 34
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 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
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
Redemption of Certain Shareholders' Interests . A new subparagraph (b)
would be added to Section 6.6 to give the Trustees the power to redeem a
shareholder's interest if the shareholder has previously been involved in
fraudulent securities transactions. The Trustees anticipate that this power
would be exercised only if they believed it was likely that the shareholder
might contemplate a fraudulent redemption or take other action to the detriment
of other shareholders.
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
26
<PAGE> 35
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.
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
27
<PAGE> 36
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.
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 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.
Shareholders will be asked to vote on each proposed fundamental policy
separately on the enclosed proxy card.
28
<PAGE> 37
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.
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. Accordingly,
therefore, except as stated above, the borrowing policy of each Fund would not
be changed by adoption of the proposed policy.
PROPOSAL 5.3: SENIOR SECURITIES
The current policy of each Fund prohibits the issuance of senior
securities, except in connection with permitted indebtedness and except in
connection with the issuance of separate series of shares and, in the case of
Global
29
<PAGE> 38
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 SEC 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.
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, and
that the adoption of the proposed concentration policy would make no substantive
change in the current concentration policy of any 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
30
<PAGE> 39
loans (Policy 5.8) is substantially identical to 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 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
31
<PAGE> 40
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 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
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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.
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 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
A portion of 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.
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<PAGE> 42
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 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. 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> 43
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 PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
Thomas F. McDonough
Secretary
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<PAGE> 44
EXHIBIT A
MASTER FORM
OF
NEW INVESTMENT MANAGEMENT AGREEMENT
36
<PAGE> 45
EXHIBIT B
OTHER INVESTMENT COMPANIES
ADVISED BY SCUDDER
37
<PAGE> 46
EXHIBIT C
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.
PROPOSED AMENDMENTS TO BE INCLUDED IN THE
AMENDED AND RESTATED DECLARATION OF TRUST
DATED , 1997
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 of record a plurality of the Shares voting at a meeting of
Shareholders. SUCH A
- - - ------------------------------
(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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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 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
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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.
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
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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
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
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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))
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
- - - ------------------------------
(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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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 SERIESreacquired 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 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
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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.
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
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<PAGE> 54
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.
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
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<PAGE> 55
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
(A) 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, OR
(B) THE TRUSTEES BELIEVE THAT IT IS IN THE BEST INTEREST OF THE TRUST TO DO
SO BECAUSE OF PRIOR INVOLVEMENT BY THE SHAREHOLDER IN FRAUDULENT ACTS RELATING
TO SECURITIES TRANSACTIONS.
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 REQUIREMENTS 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
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<PAGE> 56
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.
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 SUCHmanner 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
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<PAGE> 57
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;
(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
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(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.
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))
- - - ------------------------------
(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.
(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.
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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 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.
- - - ------------------------------
(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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EXHIBIT D
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, 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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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.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
<PAGE> 62
(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 connected with you (or any
organization which shall have succeeded to your business as investment
manager) or the Trademark Owner. In no
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<PAGE> 63
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 reports and information as the Trust's officers or Board of
Trustees shall reasonably request.
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<PAGE> 64
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, 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
4
<PAGE> 65
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 litigation expenses;
indemnification of Trustees and officers of the Trust; costs of
shareholders' and other meetings; and travel expenses (or an
5
<PAGE> 66
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 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
6
<PAGE> 67
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
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
7
<PAGE> 68
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, 19 , 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 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
8
<PAGE> 69
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
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<PAGE> 70
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
MONEY MARKET
Scudder U.S. Treasury Money Fund Safety, liquidity, and stability of capital 0.500% of net assets
and, consistent therewith, current income.
Scudder Cash Investment Trust Stability of capital while maintaining 0.500% to $250 million
liquidity of capital and providing current 0.450% next $250 million
income from money market securities. 0.400% next $500 million
0.350% thereafter
Scudder Money Market Series High level of current income consistent with 0.250% of net assets
preservation of capital and liquidity by
investing in a broad range of short-term
money market instruments.
Scudder Government Money Market High level of current income consistent with 0.250% of net assets
Series preservation of 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 federal income 0.500% to $500 million
taxes and stability of principal through 0.480% thereafter
investments in municipal securities.
Scudder Tax Free Money Market High level of current income consistent with 0.250% of net assets
Series preservation of capital and liquidity exempt
from federal income tax by investing
primarily in high quality municipal
obligations.
</TABLE>
10
<PAGE> 71
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
Scudder California Tax Free Money Stability of capital and the maintenance of a 0.500% of net assets
Fund constant net asset value of $1.00 per share
while providing California tax payers income
exempt from both California personal and
regular federal income tax through investment
in high quality, short- term tax-exempt
California municipal securities.
Scudder New York Tax Free Money Stability of capital and income exempt from 0.500% of net assets
Fund New York state and 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 Free Fund High level of income exempt from regular 0.600% of net assets
federal income tax consistent with a high
degree of principal stability.
Scudder Medium Term Tax Free Fund High level of income exempt from regular 0.600% to $500 million
federal income tax and limited principal 0.500% thereafter
fluctuation through investment primarily in
high grade intermediate term municipal
securities.
Scudder Managed Municipal Bonds Income exempt from regular federal income tax 0.550% to $200 million
primarily through investments in high-grade 0.500% next $500 million
long-term municipal securities. 0.475% thereafter
Scudder High Yield Tax Free Fund High level of income, exempt from regular 0.650% to $300 million
federal income tax, from an actively managed 0.600% thereafter
portfolio consisting primarily of investment
grade municipal securities.
Scudder California Tax Free Fund Income exempt from both California state 0.625% to $200 million
personal income tax and regular federal 0.600% thereafter
income tax primarily through investment grade
municipal securities.
</TABLE>
11
<PAGE> 72
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
Scudder Massachusetts Limited Term A high level of income exempt from both 0.600% of net assets
Tax Free Fund Massachusetts personal income tax and regular
federal income tax as is consistent with a
high degree of price stability.
Scudder Massachusetts Tax Free A high level of income exempt from both 0.600% of net assets
Fund Massachusetts personal income tax and regular
federal income tax through investment
primarily in long-term investment-grade
municipal securities in Massachusetts.
Scudder New York Tax Free Fund Income exempt from New York state and New 0.625% to $200 million
York City personal income taxes and regular 0.600% thereafter
federal income tax through investment
primarily in long-term investment-grade
municipal securities in New York.
Scudder Ohio Tax Free Fund Income exempt from Ohio personal income tax 0.600% of net assets
and regular federal income tax through
investment primarily in investment-grade
municipal securities in Ohio.
Scudder Pennsylvania Tax Free Fund Income exempt from Pennsylvania personal 0.600% of net assets
income tax and regular 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 with a high 0.600% to $500 million
degree of principal stability through 0.500% next $500 million
investments primarily in high quality 0.450% next $500 million
short-term bonds. 0.400% next $500 million
0.375% next $1 billion
0.350% thereafter
</TABLE>
12
<PAGE> 73
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
Scudder Zero Coupon 2000 Fund High investment returns over a selected 0.600% of net assets
period as is consistent with investment in
U.S. Government securities and the
minimization of reinvestment risk.
Scudder GNMA Fund High current income and safety of principal 0.650% to $200 million
primarily from investment in U.S. Government 0.600% next $300 million
mortgage-backed GNMA securities. 0.550% thereafter
Scudder Income Fund A high level of income, consistent with the 0.650% to $200 million
prudent investment of capital, through a 0.600% next $300 million
flexible investment program emphasizing 0.550% thereafter
high-grade bonds.
Scudder High Yield Bond Fund A high level of current income and capital 0.700% of net assets
appreciation through investment primarily in
below investment-grade domestic debt
securities.
GLOBAL INCOME
Scudder Global Bond Fund Total return with an emphasis on current 0.750% to $1 billion
income by investing primarily in high-grade 0.700% thereafter
bonds denominated in foreign currencies and
the U.S. dollar.
Scudder International Bond Fund Income primarily by investing in high-grade 0.850% to $1 billion
international bonds and protection and 0.800% thereafter
possible enhancement of principal value by
actively managing currency, bond market and
maturity exposure and by security selection.
Scudder Emerging Markets Income High current income and, secondarily, 1.000% of net assets
Fund long-term capital appreciation by investing
primarily in high-yielding debt securities
issued in emerging markets.
</TABLE>
13
<PAGE> 74
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
ASSET ALLOCATION
Scudder Pathway Conservative Current income and, secondarily, long-term 0.000%
Portfolio growth of capital by investing substantially
in bond mutual funds, but will have some
exposure to equity mutual funds.
Scudder Pathway Balanced Portfolio Balance of growth and income by investing in 0.000%
a mix of money market, bond and equity mutual
funds.
Scudder Pathway Growth Portfolio Long-term growth of capital by investing 0.000%
predominantly in equity mutual funds designed
to provide long-term growth.
Scudder Pathway International Maximize total return by investing in a 0.000%
Portfolio select mix of established international and
global Scudder Funds.
U.S. GROWTH AND INCOME
Scudder Balanced Fund A balance of growth and income from a 0.700% of net assets
diversified portfolio of equity and fixed
income securities and long-term preservation
of capital through a quality oriented
investment approach designed to reduce risk.
</TABLE>
14
<PAGE> 75
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
Scudder Growth and Income Fund Long-term growth of capital, current income 0.600% to $500 million
and growth of income primarily from common 0.550% next $500 million
stocks, preferred stocks and securities 0.500% next $500 million
convertible into common stocks. 0.475% next $500 million
0.450% next $1 billion
0.425% next $1 billion
0.405% thereafter
U.S. GROWTH
Scudder Large Company Value Fund Maximize long-term capital appreciation 0.750% to $500 million
(formerly Scudder Capital Growth through a value driven investment program 0.650% next $500 million
Fund) emphasizing common stocks and preferred
stocks.
Scudder Value Fund Long-term growth of capital through 0.700% of net assets
investment in undervalued equity securities.
Scudder Small Company Value Fund Long-term growth of capital by investing 0.750% of net assets
primarily in undervalued equity securities of
small U.S. companies.
Scudder Micro Cap Fund Long-term growth of capital by investing 0.750% of net assets
primarily in a diversified portfolio of U.S.
micro-cap common stocks.
Scudder Classic Growth Fund Long-term growth of capital while keeping the 0.700% of net assets
value of its shares more stable than other
growth mutual funds.
Scudder Large Company Growth Fund Long-term growth of capital through 0.700% of net assets
(formerly Scudder Quality Growth investment primarily in the equity securities
Fund) of seasoned, financially strong U.S. growth
companies.
Scudder Development Fund Long-term growth of capital by investing 1.000% to $500 million
primarily in equity securities of emerging 0.950% next $500 million
growth companies. 0.900% thereafter
</TABLE>
15
<PAGE> 76
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
Scudder 21st Century Growth Fund Long-term growth of capital by investing 1.000% of net assets
primarily in the securities of emerging
growth companies poised to be leaders in the
21st century.
GLOBAL GROWTH
Scudder Global Fund Long-term growth of capital through Effective 9/11/97:
investment in a diversified portfolio of 1.000% to $500 million
marketable foreign and domestic securities, 0.950% next $500 million
primarily equity securities. 0.900% next $500 million
0.850% thereafter
Institutional International Equity Long-term growth of capital primarily through 0.900% of net assets
Portfolio a diversified portfolio of marketable foreign
equity securities.
Scudder International Growth and Long-term growth of capital and current 1.000% of net assets
Income Fund income primarily from foreign equity
securities
Scudder International Fund Long-term growth of capital primarily through 0.900% to $500 million
a diversified portfolio of marketable foreign 0.850% next $500 million
equity securities. 0.800% next $1 billion
0.750% next $1 billion
0.700% thereafter
Scudder Global Discovery Fund Above-average capital appreciation over the 1.100% of net assets
long-term by investing primarily in the
equity securities of small companies located
throughout the world.
Scudder Emerging Markets Growth Long-term growth of capital primarily through 1.25% of net assets
Fund equity investments in emerging markets around
the globe.
Scudder Gold Fund Maximum return consistent with investing in a 1.000% of net assets
portfolio of gold-related equity securities
and gold.
</TABLE>
16
<PAGE> 77
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
Scudder Greater Europe Growth Fund Long-term growth of capital through 1.000% of net assets
investment primarily in the equity securities
of European companies.
Scudder Pacific Opportunities Fund Long-term growth of capital primarily through 1.100% of net assets
investment in the equity securities of
Pacific Basin companies, excluding Japan.
Scudder Latin America Fund Long-term capital appreciation through Effective 9/11/97:
investment primarily in the securities of 1.250% to $1 billion
Latin American issuers. 1.150% thereafter
The Japan Fund, Inc. Long-term capital appreciation through 0.850% to $100 million
investment primarily in equity securities of 0.750% next $200 million
Japanese companies. 0.700% next $300 million
0.650% thereafter
CLOSED-END FUNDS
The Argentina Fund, Inc. Long-term capital appreciation through Advisor:
investment primarily in equity securities of Effective 11/1/97:
Argentine issuers. 1.100% of net assets
Sub-Advisor:
Paid by Advisor.
0.160% of net assets
</TABLE>
17
<PAGE> 78
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
The Brazil Fund, Inc. Long-term capital appreciation through 1.200% to $150 million
investment primarily in equity securities of 1.050% next $150 million
Brazilian issuers. 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
The Korea Fund, Inc. Long-term capital appreciation through Advisor:
investment primarily in equity securities of 1.150% to $50 million
Korean issuers. 1.100% next $50 million
1.000% next $250 million
0.950% next $400 million
0.900% thereafter
Sub-Advisor - Daewoo:
Paid by Advisor.
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 Income High level of current income and, 1.200% of net assets
Fund, Inc. secondarily, capital appreciation through
investment principally in dollar-denominated
Latin American debt instruments.
Montgomery Street Income High level of current income consistent with 0.500% to $150 million
Securities, Inc. prudent investment risks through a 0.450% next $50 million
diversified portfolio primarily of debt 0.400% thereafter
securities.
</TABLE>
18
<PAGE> 79
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
Scudder New Asia Fund, Inc. Long-term capital appreciation through 1.250% to $75 million
investment primarily in equity securities of 1.150% next $125 million
Asian companies. 1.100% thereafter
Scudder New Europe Fund, Inc. Long-term capital appreciation through 1.250% to $75 million
investment primarily in equity securities of 1.150% next $125 million
companies traded on smaller or emerging 1.100% thereafter
European markets and companies that are
viewed as likely to benefit from changes and
developments throughout Europe.
Scudder Spain and Portugal Fund, Long-term capital appreciation through Advisor:
Inc. investment primarily in equity securities of 1.000% of net assets
Spanish & Portuguese issuers. Administrator:
0.200% of net assets
Scudder World Income Opportunities High income and, consistent therewith, 1.200% of net assets
Fund, Inc. capital appreciation.
INSURANCE PRODUCTS
Balanced Portfolio Balance of growth and income consistent with 0.475% of net assets
long-term preservation of capital through a
diversified portfolio of equity and fixed
income securities.
Bond Portfolio High level of income consistent with a high 0.475% of net assets
quality portfolio of debt securities.
Capital Growth Portfolio Long-term capital growth from a portfolio 0.475% to $500 million
consisting primarily of equity securities. 0.450% thereafter
Global Discovery Portfolio Above-average capital appreciation over the 0.975% of net assets
long-term by investing primarily in the
equity securities of small companies located
throughout the world.
</TABLE>
19
<PAGE> 80
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
Growth and Income Portfolio Long-term growth of capital, current income 0.475% of net assets
and growth of income.
International Portfolio Long-term growth of capital primarily through 0.875% to $500 million
diversified holdings of marketable foreign 0.775% thereafter
equity investments.
Money Market Portfolio............ Stability of capital and, consistent 0.370% of net assets
therewith, liquidity of capital and current
income.
AARP FUNDS
AARP High Quality Money Fund Current income and liquidity, consistent with 0.350% to $2 billion
maintaining stability and safety of 0.330% next $2 billion
principal, through investment in high quality 0.300% next $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
FEE RATE PROGRAM ASSETS
------------------------- --------------
AARP Balanced Stock and Bond Fund Long-term growth of capital and income, 0.350% to $2 billion
consistent with a stable share price, through 0.330% next $2 billion
investment in a combination of stocks, bonds 0.300% next $2 billion
and cash reserves. 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
</TABLE>
20
<PAGE> 81
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
AARP Capital Growth Fund Long-term capital growth, consistent with a 0.350% to $2 billion
stable share price, through investment 0.330% next $2 billion
primarily in common stocks and securities 0.300% next $2 billion
convertible into 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
FEE RATE PROGRAM ASSETS
------------------------- --------------
AARP Global Growth Fund Long-term growth of capital, consistent with 0.350% to $2 billion
a stable share price, through investment 0.330% next $2 billion
primarily in a diversified portfolio of 0.300% next $2 billion
equity securities of 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
FEE RATE PROGRAM ASSETS
------------------------- --------------
AARP Growth and Income Fund Long-term growth of capital and income, 0.350% to $2 billion
consistent with a stable share price, through 0.330% next $2 billion
investment primarily in common stocks and 0.300% next $2 billion
securities convertible into common stocks. 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
</TABLE>
21
<PAGE> 82
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
AARP International Stock Fund Long-term growth of capital, consistent with 0.350% to $2 billion
a stable share price, through investment 0.330% next $2 billion
primarily in foreign equity 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
0.600% of net assets
FEE RATE PROGRAM ASSETS
------------------------- --------------
AARP Small Company Stock Fund Long-term growth of capital, consistent with 0.350% to $2 billion
a stable share price, through investment 0.330% next $2 billion
primarily in stocks of small U.S. companies. 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
0.550% of net assets
FEE RATE PROGRAM ASSETS
------------------------- --------------
AARP U.S. Stock Index Fund Long-term growth of capital, consistent with 0.350% to $2 billion
greater share price stability than a S&P 500 0.330% next $2 billion
index fund, by taking an indexing approach to 0.300% next $2 billion
investing in common stocks, emphasizing 0.280% next $2 billion
higher dividend stocks while maintaining 0.260% next $3 billion
investment characteristics otherwise similar 0.250% next $3 billion
to the S&P 500 index. 0.240% thereafter
INDIVIDUAL FUND FEE
0.000% of net assets
</TABLE>
22
<PAGE> 83
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
AARP Bond Fund for Income High level of current income, consistent with 0.350% to $2 billion
greater share price stability than a long 0.330% next $2 billion
term bond, through investment primarily in 0.300% next $2 billion
investment-grade debt securities. 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
FEE RATE PROGRAM ASSETS
------------------------- --------------
AARP GNMA and U.S. Treasury Fund High level of current income, consistent with 0.350% to $2 billion
greater share price stability than a 0.330% next $2 billion
long-term bond, through investment 0.300% next $2 billion
principally in U.S. Government-guaranteed 0.280% next $2 billion
GNMA securities and U.S. Treasury 0.260% next $3 billion
obligations. 0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.120% of net assets
FEE RATE PROGRAM ASSETS
------------------------- --------------
AARP High Quality Bond Fund High level of income, consistent with greater 0.350% to $2 billion
share price stability than a long-term bond, 0.330% next $2 billion
through investment primarily in a portfolio 0.300% next $2 billion
of high quality securities 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
</TABLE>
23
<PAGE> 84
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ --------------------------------------------- ------------------------- --------------
<S> <C> <C> <C>
AARP Diversified Growth Portfolio Long-term growth of capital through There will be no fee as
investment primarily in AARP stock mutual the manager will receive
funds. a fee from the underlying
funds.
AARP Diversified Income Portfolio Current income with modest capital There will be no fee as
appreciation through investment primarily in the manager will receive
AARP bond mutual funds. a fee from the underlying
funds.
AARP High Quality Tax Free Money Current income exempt from federal income 0.350% to $2 billion
Fund taxes and liquidity, consistent with 0.330% next $2 billion
maintaining stability and safety of 0.300% next $2 billion
principal, through investment in high-quality 0.280% next $2 billion
municipal securities. 0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of net assets
FEE RATE PROGRAM ASSETS
------------------------- --------------
AARP Insured Tax Free General Bond High level of income free from federal income 0.350% to $2 billion
Fund taxes, consistent with greater share price 0.330% next $2 billion
stability than a long-term municipal bond, 0.300% next $2 billion
through investment primarily in municipal 0.280% next $2 billion
securities covered by insurance. 0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of net assets
</TABLE>
24
<PAGE> 85
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> 86
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 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> 87
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> 88
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 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> 89
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> 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 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 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> 92
4(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [
] ABSTAIN
4(B). To approve certain 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 sales;
5.2 borrowing; 5.6 underwriting of securities; 5.10 joint trading accounts;
5.3 senior securities; 5.7 investment in real estate; 5.11 related issues;
5.4 concentration; 5.8 lending 5.12 pledging;
<CAPTION>
5.1 diversification; 5.13 restricted and illiquid securities;
5.3 senior securities; 5.15 options.
5.4 concentration;
<CAPTION>
5.2 borrowing; 5.14 voting securities;
</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 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> 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 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> 95
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> 96
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 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> 97
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> 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 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.
