December 31, 1997
Dear Shareowner,
On the reverse side, you will find language supplementing Institutional
International Equity Portfolio's prospectus. As it details, the Portfolio's
investment adviser has changed its name to Scudder Kemper Investments, Inc.,
from Scudder, Stevens & Clark, Inc. This change is pursuant to the acquisition
of a majority interest in Scudder, Stevens & Clark, Inc. by Zurich Insurance
Company, and the combining of Scudder's business with that of Zurich Kemper
Investments, Inc.
We thank you for your continued investment in the Portfolio, and encourage
you to call Scudder Investor Relations at 1-800-225-2470 with any questions.
Sincerely,
/s/Mark S. Casady
Mark S. Casady
President, Scudder Investor Services, Inc.
This letter is for explanatory purposes and is not part of the prospectus
supplement on the reverse side.
(over, please)
<PAGE>
Institutional International Equity Portfolio
Supplement to Prospectus
Dated May 1, 1997
The Portfolio's investment adviser, Scudder, Stevens & Clark, Inc. ("Scudder"),
and Zurich Insurance Company ("Zurich"), an international insurance and
financial services organization, have formed a new global investment
organization by combining Scudder's business with that of Zurich's subsidiary,
Zurich Kemper Investments, Inc., and Scudder has changed its name to Scudder
Kemper Investments, Inc. ("Scudder Kemper"). As a result of the transaction,
Zurich owns approximately 70% of Scudder Kemper, with the balance owned by
Scudder Kemper's officers and employees. Scudder Kemper now manages in excess of
$200 billion in assets.
The transaction between Scudder and Zurich resulted in the termination of the
Portfolio's investment management agreement with Scudder. However, a new
investment management agreement between the Portfolio and Scudder Kemper was
approved by the Board of Directors. A special meeting of shareholders (the
"Special Meeting") was held in October, 1997, at which time the shareholders
also approved a new investment management agreement. The new investment
management agreement is effective as of December 31, 1997 and will be in effect
for an initial term ending on the same date as would the previous investment
management agreement. Following the transaction, the Fund will continue to be
no-load.
The Portfolio's Investment Management Agreement is the same in all material
respects as the previous investment management agreement, except that Scudder
Kemper is the new investment adviser.
In addition, the following text replaces the section entitled "Experienced
professional management" under Company Organization.
Scudder Kemper Investments, Inc., one of the nation's most experienced
investment management firms, actively manages your investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities. The Adviser has been a
leader in international investment management and trading for over 40 years.
The Institutional International Equity Portfolio is managed by a team of
investment professionals, each of whom plays an important role in the
Portfolio's management process. Team members work together to develop investment
strategies and select securities for the Portfolio. Team members are supported
by the Adviser's large staff of economists, research analysts, traders, and
other investment specialists who work in the Adviser's offices across the U.S.
and abroad. The Adviser believes its team approach benefits Portfolio investors
by bringing together many disciplines and leveraging the Adviser's extensive
resources.
Lead Portfolio Manager Irene Cheng joined the Adviser in 1993. Ms. Cheng, who
has over 13 years of industry experience, focuses on portfolio management,
research, and equity analysis for the Adviser's international equity accounts.
J. Gregory Garrett, Portfolio Manager, joined the Adviser in 1990, and the
Portfolio's team in 1997. Mr. Garrett specializes in international client
service and international equity management and has over ten years of investment
experience.
December 31, 1997
