SCUDDER
Scudder Variable Life Investment Fund
Supplement to Prospectus Dated May 1, 1999
Bond Portfolio
The following information replaces the current disclosure concerning portfolio
management for Bond Portfolio:
Scudder Kemper takes a team approach to asset management. Scudder Kemper's team
is comprised of investment professionals, economists, research analysts, traders
and other investment specialists, located in offices across the United States
and around the world.
Robert S. Cessine is the Portfolio Manager for the Bond Portfolio. Mr. Cessine
joined the team for the Portfolio in 1999, and joined Scudder Kemper in 1993. He
began his investment career in 1982. Prior to joining Scudder Kemper he was a
Senior Corporate Bond Analyst and Chairman of the Bond Selection Committee at an
unaffiliated investment management company.
Growth and Income Portfolio
The following replaces the second full paragraph in the "Main investment
strategies" section of the Prospectus for Growth and Income Portfolio:
In managing the portfolio, the portfolio management team considers both yield
and other valuation and growth factors, meaning that it focuses the portfolio's
investments on securities of companies whose dividends and earnings prospects
are believed to be attractive relative to the portfolio's benchmark index, the
Standard & Poor's 500 Composite Stock Price Index. The portfolio may sell
securities if their yield or growth prospects are expected to be below the
benchmark average. Typically, companies that meet these criteria are large.
The following replaces the first full paragraph in the "Risk management
strategies" section of the Prospectus for Growth and Income Portfolio:
The portfolio management team manages the portfolio's risk by diversifying
widely among industries and companies. The portfolio also invests primarily in
dividend-paying stocks, whose prices have historically tended to fall less in
down markets.
August 20, 1999
<PAGE>
Balanced Portfolio
The following changes with respect to the Balanced Portfolio are effective
September 1, 1999.
The following replaces disclosure in the "Portfolio management" section of the
Prospectus for Balanced Portfolio:
Gary A. Langbaum is the Lead Portfolio Manager for the Balanced Portfolio. Mr.
Langbaum joined the team for the portfolio in 1999, and joined Scudder Kemper in
1988. He began his investment career in 1970. Prior to joining Scudder Kemper he
was a Senior Research Analyst and Associate Director of Research at a banking
trust company.
Tracy McCormick is a Portfolio Manager for the Balanced Portfolio. Ms. McCormick
joined the team for the portfolio in 1999, and joined Scudder Kemper in 1994.
She began her investment career in 1980. Prior to joining Scudder Kemper she was
a Senior Vice President and a Portfolio Manager at an unaffiliated investment
management company.
Robert S. Cessine is a Portfolio Manager for the Balanced Portfolio. Mr. Cessine
joined the team for the portfolio in 1999, and joined Scudder Kemper in 1993. He
began his investment career in 1982. Prior to joining Scudder Kemper he was a
Senior Corporate Bond Analyst and Chairman of the Bond Selection Committee at an
unaffiliated investment management company.
The following replaces disclosure in the "Investment objective," "Main
investment strategies," "Other investments," "Risk management strategies" and
"Main risks" sections of the Prospectus for Balanced Portfolio:
Investment objective
Balanced Portfolio pursues a balance of growth and income from a diversified
portfolio of equity and fixed-income securities. Unless otherwise indicated, the
portfolio's investment objective and policies may be changed without a vote of
shareholders.
Main investment strategies
The portfolio management team allocates portfolio holdings among equity and
fixed-income securities based on its evaluation of the overall financial
climate, including interest rates, capital flows, inflation and fiscal controls.
It also makes adjustments among industry sectors and, in the case of
fixed-income securities, overall credit quality and duration. The portfolio
invests primarily in the equity and fixed-income securities of U.S. companies.
<PAGE>
The portfolio normally invests between 50% and 75% of its net assets in common
stocks and other equity securities. Equity securities in which the portfolio may
invest include common stocks, preferred stocks, convertible securities and
warrants.
The portfolio management team focuses on equity securities it regards as
reasonably priced relative to their earnings growth potential. It evaluates a
variety of factors, including historic and projected earnings growth, balance
sheets and stock prices. The portfolio management team follows a disciplined buy
and sell strategy, in which proprietary research gathered from meetings with,
among others, senior management of companies in which the portfolio invests,
government experts and industry leaders plays an important role.
To enhance income and stability, the portfolio will normally invest 25% to 50%
of its net assets in fixed-income securities. At all times, the portfolio will
be invested at least 25% in fixed-income senior securities. The portfolio
management team allocates fixed-income investments among corporate bonds, U.S.
government securities, mortgage-backed securities and other fixed-income
securities. While the portfolio has the ability to invest up to 20% of its bond
assets (10% of total portfolio assets) in high yield securities, it normally
invests predominantly in corporate debt securities which are rated in the four
highest grades by a nationally recognized statistical rating service, such as
Standard and Poor's Ratings Services or Moody's Investors Service, Inc.
Of course, there can be no guarantee that by following these strategies, the
portfolio will achieve its objective.
Other investments
To a more limited extent, the portfolio may, but is not required to, utilize
other investments and investment techniques that may impact portfolio
performance including, but not limited to, options, futures and other
derivatives (financial instruments that derive their value from other securities
or commodities, or that are based on indices).
Risk management strategies
The portfolio manages risk in its stock allocation by diversifying widely among
industries and companies.
The portfolio's bond investments are diversified by maturity, credit quality and
industry.
For temporary defensive purposes, the portfolio may invest up to 100% of its
assets in cash and in money market and short-term instruments. In such a case,
the portfolio would not be pursuing, and may not achieve, its investment
objective.
<PAGE>
The portfolio may, but is not required to, use certain derivatives in an attempt
to manage risk. The use of derivatives could magnify losses.
Main risks
The primary factor affecting the portfolio's performance is stock market
movements. Stock market movements will affect the portfolio's share prices on a
daily basis and the portfolio's returns and net asset value will go up and down.
Declines are possible both in the overall stock market and in the type of
securities held by the portfolio.
An investment in the common stock of a company represents a proportionate
ownership interest in that company. Therefore, the portfolio participates in the
success or failure of any company in which it holds stock. Compared to other
classes of financial assets, such as bonds or cash equivalents, common stocks
have historically offered the greatest potential for gain on your investment.
However, the market value of common stocks can fluctuate significantly,
reflecting such things as the business performance of the issuing company,
investors' perceptions of the company or the overall stock market and general
economic or financial market.
To the extent that the portfolio invests in bonds, the most significant risk is
that interest rates will rise, and the prices of bonds held by the portfolio
will fall in proportion to their duration. It is also possible that bonds in the
portfolio's portfolio could be downgraded in credit rating or go into default.
Investments in high yield securities (often referred to as "junk bonds") are
more likely to be affected by negative developments relating to their issuers or
industries, and entail relatively greater risk of loss of income and principal
than investments in higher rated securities. Market prices of high yield
securities may fluctuate more than market prices of higher rated securities.
The portfolio management team's skill in choosing appropriate investments for
the portfolio will determine in large part the portfolio's ability to achieve
its investment objective. The portfolio's asset allocation could prove to be
less appropriate to market conditions than those of other balanced mutual funds.
There are market and investment risks with any security and the value of an
investment in the portfolio will fluctuate over time and it is possible to lose
money invested in the portfolio.
