<PAGE>
As filed with the Securities and Exchange Commission
on January 3, 2001
Securities Act File No.
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
-----
Pre-Effective Amendment No. /__/ Post-Effective Amendment No. /__/
GLOBAL/INTERNATIONAL FUND, INC.
(Exact Name of Registrant as Specified in Charter)
345 Park Avenue, New York, NY 10154-0010
(Address of Principal Executive Offices) (Zip Code)
John Millette
Scudder Kemper Investments, Inc.
Two International Place
Boston, MA 02110-4103
(Name and Address of Agent for Service)
(617) 295-1000
(Registrant's Area Code and Telephone Number)
with copies to:
Caroline Pearson, Esq. Joseph R. Fleming, Esq.
Scudder Kemper Investments, Inc. Dechert
Two International Place Ten Post Office Square - South
Boston, MA 02110-4103 Boston, MA 02109-4603
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement is declared effective.
Title of Securities Being Registered:
Shares of Capital Stock ($.01 par value)
of Scudder Global Bond Fund, a series of the Registrant
________________________________________________________________________________
It is proposed that this filing will become effective on February 2, 2001
pursuant to Rule 488 under the Securities Act of 1933.
________________________________________________________________________________
No filing fee is required because the Registrant has previously registered an
indefinite number of its shares under the Securities Act of 1933, as amended,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
<PAGE>
PART A
INFORMATION REQUIRED IN THE PROXY/STATEMENT PROSPECTUS
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
KEMPER GLOBAL INCOME FUND
Please take notice that a Special Meeting of Shareholders (the "Meeting")
of Kemper Global Income Fund (the "Fund") will be held at the offices of Scudder
Kemper Investments, Inc., 13th Floor, Two International Place, Boston, MA 02110-
4103, on May 24, 2001, at 4:00 p.m., Eastern time, for the following purposes:
Proposal 1: To elect Trustees of the Fund.
Proposal 2: To approve an Agreement and Plan of Reorganization for the
Fund (the "Plan"). Under the Plan, (i) all or substantially
all of the assets and all of the liabilities of the Fund would
be transferred to Scudder Global Bond Fund, (ii) each
shareholder of the Fund would receive shares of Scudder Global
Bond Fund of a corresponding class to those held by the
shareholder in the Fund in an amount equal to the value of
their holdings in the Fund, and (iii) the Fund would then be
terminated.
Proposal 3: To ratify the selection of Ernst & Young LLP as the
independent auditors for the Fund for the Fund's current
fiscal year.
The persons named as proxies will vote in their discretion on any other
business that may properly come before the Meeting or any adjournments or
postponements thereof.
Holders of record of shares of the Fund at the close of business on March
5, 2001 are entitled to vote at the Meeting and at any adjournments or
postponements thereof.
In the event that the necessary quorum to transact business or the vote
required to approve any Proposal is not obtained at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies. Any
such adjournment as to a matter will require the affirmative vote of the holders
of a majority of the Fund's shares present in person or by proxy at the Meeting.
The persons named as proxies will vote FOR any such adjournment those proxies
which they are entitled to vote in favor of that Proposal and will vote AGAINST
any such adjournment those proxies to be voted against that Proposal.
By Order of the Board,
/s/ Philip J. Collora
Philip J. Collora
Secretary
March 6, 2001
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN
IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE (OR TO TAKE ADVANTAGE OF
THE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE PROXY CARD(S)).
YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) (OR YOUR VOTING BY OTHER
AVAILABLE MEANS) MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS.
IF YOU WISH TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON AT THAT TIME,
YOU WILL STILL BE ABLE TO DO SO.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION.............................................................. __
PROPOSAL 1: ELECTION OF TRUSTEES......................................... __
PROPOSAL 2: APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION............. __
SYNOPSIS..................................................... __
PRINCIPAL RISK FACTORS....................................... __
THE PROPOSED TRANSACTION..................................... __
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT
AUDITORS..................................................... __
ADDITIONAL INFORMATION.................................................... __
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
March [ ], 2001
Relating to the acquisition of the assets of
KEMPER GLOBAL INCOME FUND
222 South Riverside Plaza
Chicago, Illinois 60606
(800) [ ]
__________________________
by and in exchange for shares of capital stock of
SCUDDER GLOBAL BOND FUND,
a separate series of
GLOBAL/INTERNATIONAL FUND, INC. (the "Acquiring Corporation")
345 Park Avenue
New York, New York 10154-0010
(800) [ ]
__________________________
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of
Kemper Global Income Fund (the "Fund") in connection with three proposals.
Proposal 1 describes the election of Trustees and Proposal 3 proposes the
ratification of the selection of the Fund's auditors.
In Proposal 2, shareholders are asked to vote on an Agreement and Plan of
Reorganization (the "Plan") pursuant to which all or substantially all of the
assets of the Fund would be acquired by Scudder Global Bond Fund, a fund with
similar investment characteristics and managed by the same investment manager as
the Fund, in exchange for shares of capital stock of Scudder Global Bond Fund
and the assumption by Scudder Global Bond Fund of all of the liabilities of the
Fund, as described more fully below (the "Reorganization"). Shares of Scudder
Global Bond Fund received would then be distributed to the shareholders of the
Fund in complete liquidation of the Fund. As a result of the Reorganization,
shareholders of the Fund will become shareholders of Scudder Global Bond Fund
and will receive shares of Scudder Global Bond Fund in an amount equal to the
value of their holdings in the Fund as of the close of business on the business
day preceding the closing of the Reorganization (the "Valuation Date"). The
closing of the Reorganization (the "Closing") is contingent upon shareholder
approval of the Plan. A copy of the Plan is attached as Exhibit A. The
Reorganization is expected to occur on or about June 18, 2001.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Proposals 1 and 2 arise out of a restructuring program proposed by Scudder
Kemper Investments, Inc. ("Scudder Kemper" or the "Investment Manager"), the
investment manager of both the Fund and Scudder Global Bond Fund, described in
more detail below. The restructuring program is designed to
<PAGE>
respond to changing industry conditions and investor needs. Scudder Kemper seeks
to consolidate its fund line-up and offer all of the open-end funds it advises
under the "Scudder" name. In addition, Scudder Kemper anticipates changing its
name to "Zurich Scudder Investments, Inc." Scudder Kemper believes that the
combination of its open-end, directly-distributed funds (the "Scudder Funds")
with the funds in the Kemper Family of Funds (the "Kemper Funds") will permit it
to streamline its administrative infrastructure and focus its distribution
efforts. The restructuring program will not result in any reduction in the
services currently offered to Kemper Funds shareholders.
Scudder Global Bond Fund is a diversified series of shares of capital stock
of the Acquiring Corporation, which is an open-end management investment company
organized as a Maryland corporation. The Fund, which is also diversified, is
the only active series of shares of beneficial interest of Kemper Global Income
Fund (the "Acquired Trust"), an open-end management investment company organized
as a Massachusetts business trust.
In the descriptions of the Proposals below, the word "fund" is sometimes
used to mean an investment company or series thereof in general, and not the
Fund whose proxy statement this is. In addition, for simplicity, actions are
described in this Proxy Statement/Prospectus as being taken by either the Fund
or Scudder Global Bond Fund (which are collectively referred to as the "Funds"
and each referred to as a "Fund"), although all actions are actually taken
either by the Acquired Trust or the Acquiring Corporation, on behalf of the
applicable Fund.
This Proxy Statement/Prospectus sets forth concisely the information about
Scudder Global Bond Fund that a prospective investor should know before
investing and should be retained for future reference. For a more detailed
discussion of the investment objective, policies, restrictions and risks of
Scudder Global Bond Fund, see Scudder Global Bond Fund's prospectus dated March
1, 2001, as supplemented from time to time, which is included in the materials
you received with this document and incorporated herein by reference (meaning
that it is legally part of this document). For a more detailed discussion of
the investment objective, policies, restrictions and risks of the Fund, see the
Fund's prospectus dated March 1, 2001, as supplemented from time to time, which
is also incorporated herein by reference and a copy of which may be obtained
upon request and without charge by calling or writing the Fund at the telephone
number or address listed above.
Also incorporated herein by reference is Scudder Global Bond Fund's
statement of additional information dated March 1, 2001, as supplemented from
time to time, which may be obtained upon request and without charge by calling
or writing Scudder Global Bond Fund at the telephone number or address listed
above. A Statement of Additional Information, dated March [ ], 2001,
containing additional information about the Reorganization has been filed with
the Securities and Exchange Commission (the "SEC" or the "Commission") and is
incorporated by reference into this Proxy Statement/Prospectus. A copy of this
Statement of Additional Information is available upon request and without charge
by calling or writing Scudder Global Bond Fund at the telephone number or
address listed above. Shareholder inquiries regarding Scudder Global Bond Fund
may be made by calling (800) [ ] and shareholder inquiries regarding the
Fund may be made by calling (800) [ ]. The information contained
in this document concerning each Fund has been provided by, and is included
herein in reliance upon, that Fund.
The Board of Trustees that oversees the Fund is soliciting proxies from
shareholders of the Fund for the Special Meeting of Shareholders to be held on
May 24, 2001, at Scudder Kemper's offices, 13th Floor, Two International Place,
Boston, MA 02110-4103 at 4:00 p.m. (Eastern time), and at any and all
<PAGE>
adjournments or postponements thereof (the "Meeting"). This Proxy
Statement/Prospectus, the Notice of Special Meeting and the proxy card(s) are
first being mailed to shareholders on or about March 6, 2001 or as soon as
practicable thereafter.
The Board of Trustees unanimously recommends that shareholders vote FOR the
nominees listed in Proposal 1, and FOR Proposals 2 and 3.
PROPOSAL 1: ELECTION OF TRUSTEES
At the Meeting, shareholders will be asked to elect eleven individuals to
constitute the Board of Trustees to oversee the Fund. Shareholders are being
asked to elect these individuals to the Board of Trustees in case the Plan, as
described under Proposal 2, is not approved by shareholders. However, if the
Plan is approved, the current Board of Directors of the Acquiring Corporation
will oversee the operations of the combined fund (see "Synopsis - Other
Differences Between the Funds" under Proposal 2).
As discussed further below, Scudder Kemper commenced an initiative to
restructure and streamline the management and operations of the funds it
advises. In connection with that initiative, the Independent Trustees (as
defined below) of the two separate boards of Kemper Funds proposed to
consolidate into a single board. The eleven individuals who have been nominated
for election as Trustees of the Fund were nominated after careful consideration
by the present Board of Trustees. The nominees are listed below. Seven of the
nominees are currently Trustees of the Fund and three of the nominees are
currently trustees or directors of other Kemper Funds. One of the nominees,
although not currently a trustee or director of any Kemper Fund, is a senior
executive officer of Scudder Kemper. These eleven nominees are also being
nominated for election as trustees or directors of most of the other Kemper
Funds. The proposed slate of nominees reflects an effort to consolidate the two
separate boards who have historically supervised different Kemper Funds. The
proposed consolidation is expected to provide administrative efficiencies to
both the Funds and Scudder Kemper.
The persons named as proxies on the enclosed proxy card(s) will vote for
the election of the nominees named below 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 commencing on July 1, 2001 and 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 governing documents of the Fund. 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 current Trustees may recommend. The following tables
present information about the nominees and the Trustees not standing for re-
election. Each nominee's or Trustee's date of birth is in parentheses after his
or her name. Unless otherwise noted, (i) each of the nominees and Trustees has
engaged in the principal occupation(s) noted in the following tables for at
least the most recent five years, although not necessarily in the same capacity,
and (ii) the address of each nominee is c/o Scudder Kemper Investments, Inc.,
222 South Riverside Plaza, Chicago, Illinois 60606.
Nominees for Election as Trustees:
-------------------------------------------------------------------------------
Name (Date of Birth), Principal Occupation and Affiliations Year First
Became a
-------------------------------------------------------------------------------
<PAGE>
-------------------------------------------------------------------------------
Board
Member
-------------------------------------------------------------------------------
John W. Ballantine (2/16/46),/(1)/ Retired; formerly, First 1999
Chicago NBD Corporation/The First National Bank of
Chicago: 1996-1998 Executive Vice President and Chief Risk
Management Officer; 1995-1996 Executive Vice President and
Head of International Banking.
-------------------------------------------------------------------------------
Lewis A. Burnham (1/8/33),/(1)/ Retired; formerly, Partner, 1989
Business Resources Group; formerly, Executive Vice
President, Anchor Glass Container Corporation.
-------------------------------------------------------------------------------
Linda C. Coughlin (1/1/52),*/(2)/ Managing Director, 2000
Scudder Kemper.
-------------------------------------------------------------------------------
Donald L. Dunaway (3/8/37),/(1)/ Retired; formerly, 1989
Executive Vice President, A.O. Smith Corporation
(diversified manufacturer).
-------------------------------------------------------------------------------
James R. Edgar (7/22/46),/(3)/ Distinguished Fellow, Nominee
University of Illinois Institute of Government and Public
Affairs; Director, Kemper Insurance Companies (not
affiliated with the Kemper Funds); formerly, Governor,
State of Illinois.
-------------------------------------------------------------------------------
William F. Glavin (8/30/58),* Managing Director, Scudder Nominee
Kemper.
-------------------------------------------------------------------------------
Robert B. Hoffman (12/11/36),/(1)/ Retired; formerly, 1989
Chairman, Harnischfeger Industries, Inc. (machinery for
the mining and paper industries); formerly, Vice Chairman
and Chief Financial Officer, Monsanto Company
(agricultural, pharmaceutical and nutritional/food
products); formerly, Vice President, Head of International
Operations, FMC Corporation (manufacturer of machinery and
chemicals); Director, Harnischfeger Industries, Inc.
-------------------------------------------------------------------------------
Shirley D. Peterson (9/3/41),/(1)/ Retired; formerly, 1995
President, Hood College; formerly, Partner, Steptoe &
Johnson (attorneys); prior thereto, Commissioner, Internal
Revenue Service; prior thereto, Assistant Attorney General
(Tax), U.S. Department of Justice; Director, Bethlehem
Steel Corp.
-------------------------------------------------------------------------------
Fred B. Renwick (2/1/30),/(3)/ Professor of Finance, New Nominee
York University, Stern School of Business; Director, the
Wartburg Foundation; Chairman, Investment Committee of
Morehouse College Board of Trustees; Director, American
Bible Society Investment Committee; previously member of
the Investment Committee of Atlanta University Board of
Trustees; formerly Director of Board of Pensions
Evangelical Lutheran Church in
-------------------------------------------------------------------------------
<PAGE>
-------------------------------------------------------------------------------
America.
-------------------------------------------------------------------------------
William P. Sommers (7/22/33),/(1)/ Consultant and Director, 1989
SRI Consulting; prior thereto, President and Chief
Executive Officer, SRI International (research and
development); prior thereto, Executive Vice President,
Iameter (medical information and educational service
provider); prior thereto, Senior Vice President and
Director, Booz, Allen & Hamilton Inc. (management
consulting firm); Director, PSI Inc., Evergreen Solar,
Inc. and Litton Industries.
-------------------------------------------------------------------------------
John G. Weithers (8/8/33),/(3)/ Formerly, Chairman of the Nominee
Board and Chief Executive Officer, Chicago Stock Exchange;
Director, Federal Life Insurance Company; President of the
Members of the Corporation and Trustee, DePaul University.
------------------------------------------------------------------------------
* Interested person of the Fund, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act").
/(1)/ Messrs. Ballantine, Burnham, Dunaway, Hoffman, Sommers and Ms. Peterson
serve as board members of 26 investment companies, with 45 portfolios
managed by Scudder Kemper.
/(2)/ Ms. Coughlin serves as a board member of 52 investment companies with 97
portfolios managed by Scudder Kemper.
/(3)/ Messrs. Edgar, Renwick and Weithers serve as board members of 16
investment companies with 58 portfolios managed by Scudder Kemper.
Trustees Not Standing for Re-Election:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Present Office with the Fund;
Principal Occupation or Employment
Name (Date of Birth) and Directorships
------------------- -----------------
-------------------------------------------------------------------------------------------------
<S> <C>
Donald R. Jones (1/17/30) Trustee; Retired; Director, Motorola, Inc.
(manufacturer of electronic equipment and
components); formerly, Executive Vice
President and Chief Financial Officer,
Motorola, Inc.
-------------------------------------------------------------------------------------------------
Thomas W. Littauer (4/26/55)* Chairman, Trustee and Vice President; Managing
Director, Scudder Kemper; formerly, Head of
Broker Dealer Division of Putnam Investment
Management; formerly, President of Client
Management Services for Fidelity Investments.
-------------------------------------------------------------------------------------------------
</TABLE>
* Interested person of the Fund as defined in the 1940 Act.
Appendix 1 lists the number of shares of the Fund owned directly or
beneficially by the Trustees and by the nominees for election.
<PAGE>
Responsibilities of the Board of Trustees -- Board and Committee Meetings
The primary responsibility of the Board is to represent the interests of
the shareholders of the Fund and to provide oversight of the management of the
Fund. The board that is proposed for election at this Meeting is comprised of
two individuals who are considered "interested" Trustees, and nine individuals
who have no affiliation with Scudder Kemper and who are not considered
"interested" Trustees (the "Independent Trustees"). The SEC has recently
proposed a rule that would require a majority of the board members of a fund to
be "independent" if the fund were to take advantage of certain exemptive rules
under the 1940 Act. If the proposed Board of Trustees is approved by
shareholders, more than 75% will be Independent Trustees. The Independent
Trustees have been selected and nominated solely by the current Independent
Trustees of the Fund.
The Trustees meet multiple times during the year to review the investment
performance of the Fund and other operational matters, including policies and
procedures designed to assure compliance with regulatory and other requirements.
Furthermore, the Independent Trustees review the fees paid to the Investment
Manager and its affiliates for investment advisory services and other
administrative and shareholder services. The Trustees have adopted specific
policies and guidelines that, among other things, seek to further enhance the
effectiveness of the Independent Trustees in performing their duties. Many of
these are similar to those suggested in the Investment Company Institute's 1999
Report of the Advisory Group on Best Practices for Fund Directors (the "Advisory
Group Report"). For example, the Independent Trustees select independent legal
counsel to work with them in reviewing fees, advisory and other contracts and
overseeing fund matters, and regularly meet privately with their counsel.
Currently, the Board of Trustees has an Audit Committee and a Nominating
and Governance Committee, the responsibilities of which are described below. In
addition, the Board has a Valuation Committee and a Contract Renewal Committee.
During calendar year 2000, the Board of Trustees met eight times. Each then
current Trustee attended 75% or more of the respective meetings of the Board and
the Committees (if a member thereof) held during calendar year 2000.
Audit Committee
The Audit Committee makes recommendations regarding the selection of
independent auditors for the Fund, confers with the independent auditors
regarding the Fund's financial statements, the results of audits and related
matters, and performs such other tasks as the full Board of Trustees deems
necessary or appropriate. As suggested by the Advisory Group Report, the Audit
Committee is comprised of only Independent Trustees, receives annual
representations from the auditors as to their independence, and has a written
charter that delineates the committee's duties and powers. Currently, the
members of the Audit Committee are Donald L. Dunaway (Chairman), Robert B.
Hoffman and Donald R. Jones. The Audit Committee held five meetings during
calendar year 2000.
Nominating and Governance Committee
The Board of Trustees has a Nominating and Governance Committee, comprised
of only Independent Trustees, that seeks and reviews candidates for
consideration as nominees for membership on the Board and oversees the
administration of the Fund's Governance Procedures and Guidelines. The
Nominating and Governance Committee has a written charter that delineates the
committee's duties and powers. Shareholders wishing to submit the name of a
candidate for consideration by the committee
<PAGE>
should submit their recommendation(s) to the Secretary of the Fund. Currently,
the members of the Nominating and Governance Committee are Lewis A. Burnham
(Chairman), John W. Ballantine, Shirley D. Peterson and William P. Sommers. The
Nominating and Governance Committee held one meeting during calendar year 2000.
Officers
The following persons are officers of the Fund:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Name (Date of Birth) Present Office with the Fund; Year First Became an Officer/1/
------------------- Principal Occupation or Employment -------------------------------
----------------------------------
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark S. Casady (9/21/60) President; Managing Director, 1998
Scudder Kemper; formerly,
Institutional Sales Manager of an
unaffiliated mutual fund
distributor.
--------------------------------------------------------------------------------------------------------
Philip J. Collora (11/15/45) Vice President and Secretary; 1989
Attorney, Senior Vice President,
Scudder Kemper.
--------------------------------------------------------------------------------------------------------
Thomas W. Littauer (4/26/55) Vice President, Chairman and 1998
Trustee; Managing Director,
Scudder Kemper; formerly, Head of
Broker Dealer Division of an
unaffiliated investment
management firm during 1997;
prior thereto, President of
Client Management Services of an
unaffiliated investment
management firm from 1991 to 1996.
--------------------------------------------------------------------------------------------------------
Kathryn L. Quirk (12/3/52) Vice President; Managing 1998
Director, Scudder Kemper.
--------------------------------------------------------------------------------------------------------
Linda J. Wondrack (9/12/64) Vice President; Senior Vice 1998
President, Scudder Kemper.
--------------------------------------------------------------------------------------------------------
Jan C. Faller (8/16/66) Vice President; Vice President, 2000
Scudder Kemper.
--------------------------------------------------------------------------------------------------------
John R. Hebble (6/27/58) Treasurer; Senior Vice President, 1998
Scudder Kemper.
--------------------------------------------------------------------------------------------------------
Brenda Lyons (2/21/63) Assistant Treasurer; Senior Vice 1998
President, Scudder Kemper.
--------------------------------------------------------------------------------------------------------
</TABLE>
_____________________
/1/ The President, Treasurer and Secretary each holds office until the first
meeting of Trustees in each calendar year and until his or her successor has
been duly elected and qualified, and all other officers hold offices as the
Trustees permit in accordance with the By-laws of the Fund.
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
Maureen E. Kane (2/14/62) Assistant Secretary; Vice 1998
President, Scudder Kemper;
formerly, Assistant Vice
President of an unaffiliated
investment management firm; prior
thereto, Associated Staff
Attorney of an unaffiliated
investment management firm and
Associate, Peabody & Arnold (law
firm).
--------------------------------------------------------------------------------------------------------
Caroline Pearson (4/1/62) Assistant Secretary; Senior Vice 1998
President, Scudder Kemper;
formerly, Associate, Dechert
Price & Rhoads (law firm) from
1989-1997.
--------------------------------------------------------------------------------------------------------
</TABLE>
Compensation of Trustees and Officers
The Fund pays the Independent Trustees a monthly retainer and an attendance
fee, plus expenses, for each Board meeting and committee meeting attended. As
reflected below, the Trustees currently serve as board members of various other
Kemper Funds. Scudder Kemper supervises the Fund's investments, pays the
compensation and expenses of its personnel who serve as Trustees and officers on
behalf of the Fund and receives a management fee for its services. Several of
the officers and Trustees are also officers, directors, employees or
stockholders of Scudder Kemper and participate in the fees paid to that firm,
although the Fund makes no direct payments to them.
To facilitate the restructuring of the boards of the Kemper Funds, certain
Independent Trustees agreed not to stand for re-election. Independent Trustees
of the Fund are not entitled to benefits under any pension or retirement plan.
However, the Board of each Kemper Fund determined that, particularly given the
benefits that would accrue to the Kemper Funds from the restructuring of the
boards, it was appropriate to provide the four Independent Trustees who were not
standing for re-election for various Kemper Funds a one-time benefit. The cost
of such benefit is being allocated among all the Kemper Funds, with Scudder
Kemper agreeing to bear one-half of the cost of such benefit, given that Scudder
Kemper also benefits from administrative efficiencies of a consolidated board.
Mr. Jones, an Independent Trustee of the Fund who is not standing for re-
election, will receive such a one-time benefit. The amount received on behalf
of each fund for which he serves as a trustee ranges from $1,071 to $8,078.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Trustees who receive compensation from the Fund.
Column (2) Aggregate compensation received by each Trustee from the Fund
during calendar year 2000.
Column (3) Total compensation received by each Trustee from funds advised
by Scudder Kemper (collectively, the "Fund Complex") during calendar year 2000.
<PAGE>
Compensation Table
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Aggregate Compensation Total Compensation From
Name of Trustee from Fund Fund Complex/(2)(3)/
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
John W. Ballantine $ [ ] $ [ ]
--------------------------------------------------------------------------------------------------------
Lewis A. Burnham $ [ ] $ [ ]
--------------------------------------------------------------------------------------------------------
Donald L. Dunaway/(1)/ $ [ ] $ [ ]
--------------------------------------------------------------------------------------------------------
Robert B. Hoffman $ [ ] $ [ ]
--------------------------------------------------------------------------------------------------------
Donald R. Jones $ [ ] $ [ ]
--------------------------------------------------------------------------------------------------------
Shirley D. Peterson $ [ ] $ [ ]
--------------------------------------------------------------------------------------------------------
William P. Sommers $ [ ] $ [ ]
--------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Includes deferred fees. Pursuant to deferred compensation agreements
with the Fund, deferred amounts accrue interest monthly at a rate equal to the
yield of Zurich Money Funds -- Zurich Money Market Fund. Total deferred fees
(including interest thereon) payable from the Fund to Mr. Dunaway are $_______.
/(2)/ Includes compensation for service on the boards of [ ] Kemper
trusts/corporations comprised of [ ] funds. Each trustee currently serves on
the boards of [ ] Kemper trusts/corporations comprised of [ ] funds.
/(3)/ Aggregate compensation does not reflect amounts paid to the Trustees for
special meetings in connection with the Scudder Kemper restructuring initiative.
Such amounts totaled [$_______, $_______, $_______, $_______, $_______, $_______
and $_______ for Messrs. Ballantine, Burnham, Dunaway, Hoffman, Jones, Sommers
and Ms. Peterson,] respectively.
The Board of Trustees unanimously recommends
that the shareholders of the Fund vote FOR each nominee.
PROPOSAL 2: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. SYNOPSIS
Introduction
The Board of Trustees, including all of the Independent Trustees, approved
the Plan at a meeting held on November 29, 2000. Subject to its approval by the
shareholders of the Fund, the Plan provides for (a) the transfer of all or
substantially all of the assets and all of the liabilities of the Fund to
Scudder Global Bond Fund in exchange for Class A, Class B and Class C shares of
Scudder Global Bond Fund; (b) the distribution of such shares to the
shareholders of the Fund in complete liquidation of the Fund; and (c) the
termination of the Fund. As a result of the Reorganization, each shareholder of
the Fund will become a shareholder of Scudder Global Bond Fund, a fund with
similar investment characteristics and managed by the same investment manager as
the Fund. Immediately after the Reorganization, each shareholder of the Fund
will hold shares of the class of shares of Scudder Global Bond Fund that
corresponds to the class of shares of the Fund held by that shareholder on the
Valuation Date, having an
<PAGE>
aggregate net asset value equal to the aggregate net asset value of such
shareholder's shares of the Fund on the Valuation Date.
Scudder Kemper is the investment manager of both Funds. If the
Reorganization is completed, the Fund's shareholders will continue to enjoy all
of the same shareholder privileges as they currently enjoy, such as access to
professional service representatives, exchange privileges and automatic dividend
reinvestment. Services provided to the Class A, Class B and Class C
shareholders of Scudder Global Bond Fund following the Reorganization will be
identical to those currently provided to shareholders of the corresponding class
of the Fund. See "Purchase, Redemption and Exchange Information."
Background of the Reorganization
The Reorganization is part of a broader restructuring program to respond to
changing industry conditions and investor needs. The mutual fund industry has
grown dramatically over the last ten years. During this period of rapid growth,
investment managers expanded the range of fund offerings that are available to
investors in an effort to meet the growing and changing needs and desires of an
increasingly large and dynamic group of investors. With this expansion has come
increased complexity and competition among mutual funds, as well as the
potential for increased confusion among investors. The group of funds advised
by Scudder Kemper has followed this pattern.
As a result, Scudder Kemper has sought ways to restructure and streamline
the management and operations of the funds it advises by consolidating all of
the retail mutual funds that it currently sponsors into a single product line
offered under the "Scudder" name. Scudder Kemper believes, and has advised the
boards, that further reducing the number of funds it advises and adding the
classes of shares currently offered on all Kemper Funds to the Scudder Funds
will benefit fund shareholders. Scudder Kemper has, therefore, proposed the
combination of many Scudder Funds and Kemper Funds that have similar or
compatible investment objectives and policies. Scudder Kemper believes that the
larger funds, along with the fewer number of funds, that result from these
combinations may help to enhance investment performance and increase efficiency
of operations. The restructuring program will not result in any changes in the
shareholder services currently offered to shareholders of the Kemper Funds.
Most of the Scudder Funds have recently adopted a new fee structure for
certain administrative services. Under this fee structure, in exchange for
payment by a fund of a single administrative fee rate, Scudder Kemper provides
or pays for substantially all services that the fund normally requires for its
operations, other than those provided under the fund's investment management
agreement and certain other expenses. This administrative fee enables investors
to determine with greater certainty the expense level that a fund will
experience, and, for the term of the administration agreement, transfers
substantially all of the risk of increased costs to Scudder Kemper. Likewise,
Scudder Kemper receives all of the benefits of economies of scale from increases
in asset size or decreased operating expenses. Scudder Global Bond Fund has
implemented such an administrative fee, as described in "Administrative Fee"
below. As part of the restructuring effort, Scudder Kemper has proposed
extending this administrative fee structure to those funds currently offered
under the Kemper name.
The fund consolidations and the consolidation of the boards currently
overseeing the Kemper Funds (see Proposal 1 above) are expected to have a
positive impact on Scudder Kemper, as well. These changes are likely to result
in reduced costs (and the potential for increased profitability) for Scudder
Kemper in advising or servicing funds.
<PAGE>
Reasons for the Proposed Reorganization; Board Approval
Since receiving Scudder Kemper's proposals on May 24, 2000, the Independent
Trustees have conducted a thorough review of all aspects of the proposed
restructuring program. They have been assisted in this regard by their
independent counsel and by independent consultants with special expertise in
financial and mutual fund industry matters. In the course of discussions with
representatives of Scudder Kemper, the Independent Trustees have requested, and
Scudder Kemper has accepted, numerous changes designed to protect and enhance
the interests of shareholders. See "The Proposed Transaction - Board Approval
of the Proposed Transaction" below.
In determining whether to recommend that the shareholders of the Fund
approve the Reorganization, the Board of Trustees considered that:
. As part of Scudder Kemper's overall restructuring, the Fund would be
duplicative of another similar fund advised by Scudder Kemper in the
same distribution channel.
. The combined fund would adopt the lower fee schedule of the two Funds'
investment management agreements.
. The fixed fee rate under the Administration Agreement is expected to
be less than the estimated current applicable operating expenses the
Fund would otherwise pay.
. It is a condition of the Reorganization that each Fund receive an
opinion of tax counsel that the transaction would be a tax-free
transaction.
. Although the Fund agreed to pay the estimated costs of the
Reorganization allocated to Class A shares and a portion of the
estimated costs of the Reorganization allocated to Class B and Class C
shares, management has estimated that such allocated costs will be
recoverable from lower overall expense rates within six months of
completion of the Reorganization. Scudder Kemper agreed to pay a
portion of the estimated costs of the Reorganization allocated to
Class B and Class C shares and all of the costs of the Reorganization
that exceed estimated costs.
For these reasons, as more fully described below under "The Proposed
Transaction -- Board Approval of the Proposed Transaction," the Board of
Trustees, including the Independent Trustees, has concluded that:
. the Reorganization is in the best interests of the Fund and its
shareholders; and
. the interests of the existing shareholders of the Fund will not be
diluted as a result of the Reorganization.
Accordingly, the Trustees unanimously recommend approval of the Plan
effecting the Reorganization. If the Plan is not approved, the Fund will
continue in existence unless other action is taken by the Trustees.
<PAGE>
Investment Objectives, Policies and Restrictions of the Funds
This section will help you compare the investment objectives and policies
of the Fund and Scudder Global Bond Fund. Please be aware that this is only a
summary. More complete information may be found in the Funds' prospectuses.
The investment objectives, policies and restrictions of Scudder Global Bond
Fund and the Fund are similar. Some differences do exist. The investment
objective of Scudder Global Bond Fund is to provide total return, with an
emphasis on current income; capital appreciation is a secondary objective. The
Fund's investment objective is to provide high current income consistent with
prudent total return asset management. There can be no assurance that either
Fund will achieve its investment objectives.
Each Fund invests primarily in high grade bonds and other income producing
securities of issuers from around the world. Scudder Global Bond Fund invests at
least 65% of its total assets in high quality bonds of issuers from around the
world, including the United States. Scudder Global Bond Fund can buy many types
of income-producing securities, among them U.S. and foreign government bonds,
corporate bonds and mortgage- and asset-backed securities. The Fund invests at
least 65% of its total assets in foreign and U.S. investment-grade bonds and
other income-producing securities. While the Fund may invest in securities
issued by any issuer and in any currency, it generally focuses on issuers in
developed markets, such as Australia, Canada, Japan, New Zealand, the U.S. and
Western Europe, and on securities of other countries that are denominated in the
currencies of these countries or the euro. The Fund invests at least 65% of its
total assets in at least three countries. Scudder Global Bond Fund may invest
substantially in issuers of one or more countries and will have investments in
debt securities of issuers from a minimum of three different countries. To a
more limited extent, each Fund may use various types of derivatives (contracts
whose value is based on, for example, indices, currencies or securities),
although the Investment Manager does not expect to use derivatives as principal
investments for either Fund, and might not use them at all.
Scudder Global Bond Fund invests at least 65% of its total assets in
intermediate- and long-term bonds of the top two grades of credit quality, and
at least 15% of its total assets in U.S. dollar-denominated securities. Scudder
Global Bond Fund could put up to 15% of its net assets in junk bonds rated as
low as the [fourth credit grade (i.e., grade BBB/Baa)]. The Fund normally
invests at least 65% of its total assets in investment-grade bonds, which are
those in the top four credit grades (i.e., BBB/Baa and above). The Fund may
invest up to 35% of its net assets in foreign or domestic debt securities of any
credit quality, including junk bonds (i.e., grade BB and below). Although each
Fund may adjust its duration (a measure of sensitivity to interest rate
movements), the Investment Manager generally intends to keep it between 4 and 6
years for each Fund.
Jan C. Faller is the lead portfolio manager for Scudder Global Bond Fund
and is a co-lead portfolio manager for the Fund. Robert Stirling is a co-lead
portfolio manager for the Fund, but is not a portfolio manager for Scudder
Global Bond Fund. In making buy and sell decisions for each Fund, the
Investment Manager typically considers a number of factors, such as economic
outlook, interest rate movements, security characteristics and changes in supply
and demand within the global bond markets. Currency outlooks and credit quality
are also considered, in the case of Scudder Global Bond Fund, while inflation
trends are considered, in the case of the Fund. In choosing individual bonds
for each Fund, the Investment Manager uses independent analysis to look for
bonds that have attractive yields and, in the case of Scudder Global Bond Fund,
show improving credit, and, in the case of the Fund, that have good
<PAGE>
credit. With respect to Scudder Global Bond Fund, the Investment Manager
prefers, but may not exclusively invest in, bonds that are denominated in stable
or strengthening currencies.
The Funds' fundamental investment restrictions, as set forth under
"Investment Restrictions" in each Fund's statement of additional information,
are substantially similar. Fundamental investment restrictions may
not be changed without the approval of Fund shareholders. The Funds' non-
fundamental investment restrictions (i.e., those changeable by the Board without
shareholder approval), as set forth under "Investment Restrictions" in each
Fund's statement of additional information, are identical, except that: (i)
Scudder Global Bond Fund may not lend portfolio securities in an amount greater
than 5% of its total assets, while the Fund may not lend portfolio securities in
an amount greater than one third of its total assets, and (ii) the Fund, and not
Scudder Global Bond Fund, has a stated non-fundamental investment restriction
limiting the Fund's investments in illiquid securities to no more than 15% of
its net assets. Both Funds are, however, subject to such a restriction pursuant
to applicable regulation. Investors should refer to each Fund's statement of
additional information for a fuller description of the Fund's investment
policies and restrictions.
Portfolio Turnover
The portfolio turnover rate for Scudder Global Bond Fund, i.e., the ratio
of the lesser of annual sales or purchases to the monthly average value of the
portfolio (excluding from both the numerator and the denominator securities with
maturities at the time of acquisition of one year or less), for the fiscal year
ended October 31, 2000 was 0.95%. The portfolio turnover rate for the Fund for
the fiscal year ended December 31, 2000 was [ ]%. [A higher portfolio
turnover rate involves greater brokerage and transaction expenses to a fund and
may result in the realization of net capital gains, which would be taxable to
shareholders when distributed.]
Comparative Considerations
The portfolio characteristics of the combined Fund after the Reorganization
will reflect the blended characteristics of the Fund and Scudder Global Bond
Fund. The following characteristics are as of ____, 2000 for both Funds and
also reflect the blended characteristics of both Funds after the Reorganization
as of that same date.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Yield(1) Avg. Avg. Portfolio Quality(3)
Maturity Duration
(Years)(2) (Years)(2)
----------------------------------------------
AAA AA A BBB BB and
below
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fund
Scudder Global
Bond Fund
New (Pro
forma)(4)
--------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Fund Global Diversification
-----------------------------------------------------------------------------------------------------------------------------------
Country Fund (% total assets invested) Scudder Global Bond Fund (% total New (Pro Forma)(4)
assets invested)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States
-----------------------------------------------------------------------------------------------------------------------------------
Canada
-----------------------------------------------------------------------------------------------------------------------------------
Germany
-----------------------------------------------------------------------------------------------------------------------------------
Australia
-----------------------------------------------------------------------------------------------------------------------------------
Japan
-----------------------------------------------------------------------------------------------------------------------------------
New Zealand
-----------------------------------------------------------------------------------------------------------------------------------
Norway
-----------------------------------------------------------------------------------------------------------------------------------
United Kingdom
-----------------------------------------------------------------------------------------------------------------------------------
France
-----------------------------------------------------------------------------------------------------------------------------------
Other
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The yield provided for the Fund represents the yield for its Class A shares
and the yield provided for Scudder Global Bond Fund represents the yield for its
Class S shares, for the 30 days ended ____________, 2000. The yield is computed
by dividing the net investment income per share earned during a specified one
month or 30-day period by the maximum offering price per share on the last day
of the period. In the case of the Class S shares of Scudder Global Bond Fund,
the maximum offering price was calculated using the up-front sales charge [and
the current expense ratio] applicable to the Fund's Class A shares. The pro
forma yield reflects the Class A shares up-front sales charge and estimated
expense ratio of the combined Fund, giving effect to the Reorganization, and,
therefore, is not necessarily indicative of the actual yield to any particular
shareholder. The yield for other classes of shares would vary.
(2) Both dollar-weighted average maturity and duration reflect the sensitivity
of a Fund to interest rate fluctuations. The average dollar-weighted maturity
of a Fund is the dollar-weighted average of the stated maturities of all debt
instruments held by the Fund. Duration is the weighted present value of
principal and interest payments expressed in years and may more accurately
measure a Fund's sensitivity to incremental changes in interest rates than
average maturity. Other factors being equal (e.g., portfolio quality), a Fund
with a longer maturity and duration reacts more strongly to interest rate
changes than a Fund with a shorter maturity and duration. For example, a Fund
with a duration of five (5) years is expected to experience a price decrease of
roughly five percent (5%) for each percent increase in interest rates while a
comparable Fund with a duration of four (4) years is expected to experience a
price decrease of roughly four percent (4%) for the same change in interest
rates.
(3) Represents the higher of ratings by Moody's and S&P. See Annex A to the
Statement of Additional Information for a general description of Moody's and
S&P's ratings.
(4) Reflects the blended characteristics of the Fund and Scudder Global Bond
Fund as of ______________, 2000.
Performance
The following table shows how the returns of the Fund and Scudder Global
Bond Fund over different periods average out. For context, the table also
includes a broad-based market index (which,
<PAGE>
unlike the Funds, does not have any fees or expenses). The performances of both
Funds and the index vary over time, and past performance is not necessarily
indicative of future results. All figures assume reinvestment of dividends and
distributions.
Average Annual Total Return
for the Periods Ended December 31, 2000
[Insert Table]
For management's discussion of Scudder Global Bond Fund's performance for
the fiscal year ended October 31, 2000, please refer to Exhibit B.
Investment Manager; Fees and Expenses
Each Fund retains the investment management firm of Scudder Kemper,
pursuant to separate contracts, to manage its daily investment and business
affairs, subject to the policies established by each Fund's Trustees. Scudder
Kemper is a Delaware corporation located at 345 Park Avenue, New York, New York
10154-0010.
Pursuant to separate contracts, each Fund pays the Investment Manager a
graduated investment management fee, although the fee rates and breakpoints
differ. The fee is graduated so that increases in a Fund's net assets may
result in a lower annual fee rate and decreases in its net assets may result in
a higher annual fee rate. As of October 31, 2000, Scudder Global Bond Fund had
total net assets of $143,369,238. For the fiscal year ended October 31, 2000,
Scudder Global Bond Fund paid the Investment Manager a fee of 0.49% (after
waivers) of its average daily net assets. As of December 31, 2000, the Fund had
total net assets of $[ ]. For the fiscal year ended December 31, 2000,
the Fund paid the Investment Manager a fee of [ ]% of its average daily net
assets.
Currently the fee schedules for the Fund and Scudder Global Bond Fund are
as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Fund Scudder Global Bond Fund
-------------------------------------------------------------------------------------------------------------
Average Daily Net Assets Fee Rate Average Daily Net Assets Fee Rate
------------------------ -------- ------------------------ --------
<S> <C> <C> <C>
First $250 million 0.75% First $1 billion 0.75%
Next $750 million 0.72% Over $1 billion 0.70%
Next $1.5 billion 0.70%
Next $2.5 billion 0.68%
Next $2.5 billion 0.65%
Next $2.5 billion 0.64%
Next $2.5 billion 0.63%
Over $12.5 billion 0.62%
-------------------------------------------------------------------------------------------------------------
</TABLE>
Scudder Kemper has proposed that Scudder Global Bond Fund adopt the lower
fee schedule of the Fund stated in the table above. The effectiveness of the
new investment management agreement for Scudder Global Bond Fund and the Closing
are contingent upon each other. Based upon the Fund's average net assets for
the twelve month period ended September 30, 2000, the effective advisory fee
rate for the Fund is 0.75%. Based upon each Fund's average net assets for the
twelve month period ended September 30, 2000, the effective advisory fee rate
for Scudder Global Bond Fund after the
<PAGE>
Reorganization would be 0.75% of average daily net assets, giving effect to the
proposed new investment management agreement.
From its investment management fee received from the Fund, Scudder Kemper
pays to the Fund's sub-adviser, Scudder Investments U.K. Limited, 1 South Place,
London, U.K. EC42M 2ZS, a monthly fee at the annual rate of 0.30% of the Fund's
average daily net assets.
Administrative Fee
Scudder Global Bond Fund has entered into an administration agreement with
Scudder Kemper (the "Administration Agreement"), pursuant to which Scudder
Kemper provides or pays others to provide substantially all of the
administrative services required by the Class A, Class B and Class C shares of
Scudder Global Bond Fund (other than those provided by Scudder Kemper under its
investment management agreement with that Fund) in exchange for the payment by
Scudder Global Bond Fund of an annual administrative services fee (the
"Administrative Fee") equal to 0.400%, 0.450% and 0.425% of average daily net
assets attributable to the Class A, Class B and Class C shares, respectively.
The fees for the services provided by Kemper Distributors, Inc. ("KDI") under
its current services agreement and underwriting and distribution agreement with
Scudder Global Bond Fund are not covered by, and are in addition to, the
Administrative Fee. One effect of this arrangement is to make Scudder Global
Bond Fund's future expense ratio more predictable. On the other hand, the
administrative fee rate does not decrease with economies of scale from increases
in asset size or decreased operating expenses. The details of this arrangement
(including expenses that are not covered) are set out below.
Various service providers (the "Service Providers"), some of which are
affiliated with Scudder Kemper, provide certain services to Scudder Global Bond
Fund pursuant to separate agreements. These Service Providers may differ from
current Service Providers of the Fund. Scudder Fund Accounting Corporation, a
subsidiary of Scudder Kemper, computes net asset value for Scudder Global Bond
Fund and maintains its accounting records. Kemper Service Company, also a
subsidiary of Scudder Kemper, is the transfer, shareholder servicing and
dividend-paying agent for the Class A, Class B and Class C shares of Scudder
Global Bond Fund. Scudder Trust Company, an affiliate of Scudder Kemper,
provides subaccounting and recordkeeping services for shareholder accounts in
certain retirement and employee benefit plans. As custodian, Brown Brothers
Harriman & Company holds the portfolio securities of Scudder Global Bond Fund,
pursuant to a custodian agreement. Other Service Providers include the
independent public accountants and legal counsel for Scudder Global Bond Fund.
Under the Administration Agreement, each Service Provider provides the
services to Scudder Global Bond Fund described above, except that Scudder Kemper
pays these entities for the provision of their services to Scudder Global Bond
Fund and pays most other fund expenses, including insurance, registration,
printing and postage fees. In return, Scudder Global Bond Fund pays Scudder
Kemper the Administrative Fee.
The Administration Agreement will remain in effect with respect to the
Class A, Class B and Class C shares for an initial term ending September 30,
2003, subject to earlier termination by the directors that oversee Scudder
Global Bond Fund. The Administration Agreement shall continue in effect on an
annual basis after September 30, 2003, provided that such continuance is
approved at least annually by a majority of the directors, including the
Independent Directors, that oversee Scudder Global Bond Fund. The fee payable
by Scudder Global Bond Fund to Scudder Kemper pursuant to the Administration
<PAGE>
Agreement is reduced by the amount of any credit received from Scudder High
Yield Bond Fund's custodian for cash balances.
Certain expenses of Scudder Global Bond Fund are not borne by Scudder
Kemper under the Administration Agreement, such as taxes, brokerage, interest
and extraordinary expenses, and the fees and expenses of the Independent
Trustees (including the fees and expenses of their independent counsel).
Scudder Global Bond Fund continues to pay the fees required by its investment
management agreement with Scudder Kemper. In addition, it pays the fees under
its services agreement and underwriting and distribution services agreement with
KDI, as described in "Distribution and Service Fees" below.
Comparison of Expenses
The tables and examples below are designed to assist you in understanding
the various costs and expenses that you will bear directly or indirectly as an
investor in the Class A, Class B and Class C shares of Scudder Global Bond Fund,
and compares these with the expenses of the Fund. [Comparative statement
regarding expenses to be inserted.] Unless otherwise noted, the information is
based on each Fund's expenses and average daily net assets during the twelve
months ended September 30, 2000 and on a pro forma basis as of that date and for
the twelve month period then ended, assuming the Reorganization had been in
effect for the period.
Expense Comparison Table
Class A Shares
<TABLE>
<CAPTION>
Scudder
Global Pro Forma
Fund Bond Fund (Combined)/(1)/
---- --------- ---------------
Shareholder Fees
----------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on 4.50% 4.50% 4.50%
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge None None None
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed None None None
on reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses (unaudited)
------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.75% 0.75% 0.75%
Rule 12b-1/ASF Fees 0.22% 0.25% 0.22%
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Other Expenses 0.87% 0.40%(3) 0.40%
Total Annual Fund Operating Expenses 1.84% 1.40% 1.37%
Expense Example of Total Operating Expenses
-------------------------------------------
at the End of the Period(4)
---------------------------
One Year $ 629 $ 586 $ 583
Three Years $1,003 $ 873 $ 864
Five Years $1,401 $1,181 $1,166
Ten Years $2,511 $2,054 $2,022
</TABLE>
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization, including the implementation of Scudder Global Bond Fund's
Administration Agreement and the adoption of a distribution plan.
(2) Class A shares purchased under the Large Order NAV Purchase Privilege have
a 1% contingent deferred sales charge if sold during the first year after
purchase and .50% if sold during the second year after purchase.
(3) Restated to reflect the implementation of Scudder Global Bond Fund's
Administration Agreement.
(4) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends,
total operating expenses remain the same and redemptions at the end of each
period.
Expense Comparison Table
Class B Shares
<TABLE>
<CAPTION>
Scudder
Global Pro Forma
Fund Bond Fund (Combined)/(1)/
---- --------- ---------------
Shareholder Fees
----------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases None None None
(as % of offering price)
Maximum Contingent Deferred Sales Charge (Load) 4.00% 4.00% 4.00%
(as % of redemption proceeds)(2)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Maximum Deferred Sales Charge (Load) imposed on None None None
reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses (unaudited)
------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.75% 0.75% 0.75%
Rule 12b-1/ASF Fees 1.00% 1.00% 1.00%
Other Expenses 0.79% 0.45%(3) 0.45%
Total Annual Fund Operating Expenses 2.54% 2.20% 2.20%
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming Redemption at the End of the Period(4)
-----------------------------------------------
One Year $ 657 $ 623 $ 623
Three Years $1,091 $ 988 $ 988
Five Years $1,550 $1,380 $1,380
Ten Years $2,548 $2,146 $2,131
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming No Redemption at the End of the
----------------------------------------
Period(4)
---------
One Year $ 257 $ 223 $ 223
Three Years $ 791 $ 688 $ 688
Five Years $1,350 $1,180 $1,180
Ten Years $2,548 $2,146 $2,131
</TABLE>
___________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization, including the implementation of Scudder Global Bond Fund's
Administration Agreement and the adoption of a distribution plan.
(2) Contingent deferred sales charges on Class B shares sold during the first
six years of ownership are 4% in the first year, 3% in the second and third
year, 2% in the fourth and fifth year, and 1% in the sixth year.
<PAGE>
(3) Restated to reflect the implementation of Scudder Global Bond Fund's
Administration Agreement.
(4) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same. Assumes conversion to Class
A shares six years after purchase.
Expense Comparison Table
Class C Shares
<TABLE>
<CAPTION>
Scudder
Global Pro Forma
Fund Bond Fund (Combined)/(1)/
---- --------- ---------------
Shareholder Fees
----------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases None None None
(as % of offering price)
Maximum Contingent Deferred Sales Charge (Load) 1.00% 1.00% 1.00%
(as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed on None None None
reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses (unaudited)
------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.75% 0.75% 0.75%
Rule 12b-1/ASF Fees 1.00% 1.00% 1.00%
Other Expenses 0.67% 0.43%(3) 0.43%
Total Annual Fund Operating Expenses 2.42% 2.18% 2.18%
Expense Example of Total Operating Expenses
--------------------------------------------
Assuming Redemption at the End of the Period(4)
-----------------------------------------------
One Year $ 345 $ 321 $ 321
Three Years $ 755 $ 682 $ 682
Five Years $1,291 $1,169 $1,169
Ten Years $2,756 $2,513 $2,513
</TABLE>
<PAGE>
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming No Redemption at the End of the
----------------------------------------
Period(4)
---------
<TABLE>
<S> <C> <C> <C>
One Year $ 245 $ 221 $ 221
Three Years $ 755 $ 682 $ 682
Five Years $1,291 $1,169 $1,169
Ten Years $2,756 $2,513 $2,513
</TABLE>
___________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization, including the implementation of Scudder Global Bond Fund's
Administration Agreement and the adoption of a distribution plan.
(2) Contingent deferred sales charge on Class C shares is 1% for shares sold
during the first year after purchase.
(3) Restated to reflect the implementation of Scudder Global Bond Fund's
Administration Agreement.
(4) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
Distribution and Services Fees
Pursuant to an underwriting and distribution services agreement with
Scudder Global Bond Fund, KDI, 222 South Riverside Plaza, Chicago, Illinois
60606, an affiliate of the Investment Manager, acts as the principal underwriter
and distributor of the Class A, Class B and Class C shares of that Fund and acts
as agent of the Fund in the continuing offer of such shares. Scudder Global Bond
Fund has adopted distribution plans on behalf of the Class A, Class B and Class
C shares in accordance with Rule 12b-1 under the 1940 Act that are substantially
identical to the existing distribution plans adopted by the Fund, with one
exception. As under the current distribution plans for the Fund, Scudder Global
Bond Fund pays KDI an asset-based fee at an annual rate of 0.75% of Class B and
Class C shares. The distribution plans for Scudder Global Bond Fund, however,
unlike the distribution plans for the Fund, also authorize the payment to KDI of
the 0.25% services fee with respect to the Class A, Class B and Class C shares
pursuant to the services agreement described below. Neither KDI nor the Trustees
of the Fund believe that the services performed by KDI under the services
agreement have been primarily intended to result in sales of fund shares (i.e.,
"distribution" services) as defined in Rule 12b-1, but rather are post-sale
administrative and other services provided to existing shareholders.
Nonetheless, to avoid legal uncertainties due to the ambiguity of the language
contained in Rule 12b-1 and eliminate any doubt that may arise in the future
regarding whether the services performed by KDI under the services agreement are
"distribution" services, the distribution plans for Scudder Global Bond Fund
authorize the payment of the services fee. The fact that the services fee is
authorized by Scudder Global Bond Fund's distribution plans does not change the
fee rate or affect the nature or quality of the services provided by KDI.
Pursuant to the services agreement with Scudder Global Bond Fund, which is
substantially identical to the current services agreement with the Fund, KDI
receives a services fee of up to 0.25% per
<PAGE>
year with respect to the Class A, Class B and Class C shares of Scudder Global
Bond Fund. KDI uses the services fee to compensate financial services firms
("firms") for providing personal services and maintenance of accounts for their
customers that hold those classes of shares of Scudder Global Bond Fund, and may
retain any portion of the fee not paid to firms to compensate itself for
administrative functions performed by the Fund. All fee amounts are payable
monthly and are based on the average daily net assets of each Fund attributable
to the relevant class of shares.
Purchases, Exchanges, and Redemptions
Both Funds are part of the Scudder Kemper complex of mutual funds. The
procedures for purchases, exchanges, and redemptions of Class A, Class B and
Class C shares of Scudder Global Bond Fund are identical to those of the Fund.
Shares of Scudder Global Bond Fund are exchangeable for shares of the same class
of most other open-end funds advised by Scudder Kemper offering such shares.
Corresponding classes of shares of Scudder Global Bond Fund have identical
sales charges to those of the Fund. Scudder Global Bond Fund has a maximum
initial sales charge of 4.50% on Class A shares. Shareholders who purchase $1
million or more of Class A shares pay no initial sales charge but may have to
pay a contingent deferred sales charge (a "CDSC") of up to 1% if the shares are
sold within 2 years of the date on which they were purchased. Class B shares are
sold without a front-end sales charge, but may be subject to a CDSC upon
redemption, depending on the length of time the shares are held. The CDSC begins
at 4% for shares sold in the first year, declines to 1% in the sixth year and is
eliminated after the sixth year. After six years, Class B shares automatically
convert to Class A shares. Class C shares are sold without a front-end sales
charge, but may be subject to a CDSC of up to 1% if the shares are sold within
one year of purchase.
Class A, Class B and Class C shares of Scudder Global Bond Fund received in
the Reorganization will be issued at net asset value, without a sales charge,
and no CDSC will be imposed on any shares of the Fund exchanged for shares of
Scudder Global Bond Fund as a result of the Reorganization. However, following
the Reorganization, any CDSC that applies to shares of the Fund will continue to
apply to shares of Scudder Global Bond Fund received in the Reorganization,
using the original purchase date for such shares to calculate the holding
period, rather than the date such shares are received in the Reorganization.
Services available to shareholders of Class A, Class B and Class C shares
of Scudder Global Bond Fund will be identical to those available to shareholders
of the corresponding classes of the Fund and include the purchase and redemption
of shares through an automated telephone system and over the Internet, telephone
redemptions, and exchanges by telephone to most other Scudder Kemper funds that
offer Class A, Class B and Class C shares, and reinvestment privileges. Please
see the Fund's prospectus for additional information.
Dividends and Other Distributions
The Fund intends to distribute its investment company taxable income and
any net realized capital gains in November or December. Scudder Global Bond Fund
intends to declare dividends from its net investment income and short-term
capital gains daily and distribute them monthly. Scudder Global Bond Fund
intends to distribute long-term capital gains in December, or otherwise as
needed. Additional distributions may be made if necessary. Shareholders of each
Fund can have their dividends and distributions automatically invested in
additional shares of the same class of that Fund, or a different fund
<PAGE>
in the same family of funds, at net asset value and credited to the
shareholder's account on the payment date or, at the shareholder's election,
paid in cash. For retirement plans, reinvestment is the only option.
If the Plan is approved by the Fund's shareholders, the Fund will pay its
shareholders a distribution of all undistributed net investment income and
undistributed realized net capital gains immediately prior to the Closing.
Other Differences Between the Funds.
Charter Documents.
The Acquired Trust is established as a Massachusetts business trust
pursuant to a Declaration of Trust (the "Declaration"). The Acquiring
Corporation is organized as a Maryland corporation under Articles of
Incorporation (the "Articles"). Although the organizational documents of
the Acquired Trust and of the Acquiring Corporation are similar, some
differences do exist. The more significant differences are listed below.
. A trustee of the Acquired Trust may be removed for cause by a majority
of the trustees, while removal without cause requires a majority vote of
shareholders entitled to vote more than 50% of the votes entitled to be
cast on the matter; removal of a director of the Acquiring Corporation
requires a majority vote of a) the board of directors, b) a committee of
the board of directors appointed for such purpose, or c) the stockholders
by vote of a majority of the outstanding shares of the Acquiring
Corporation.
. A special meeting of Fund shareholders may be called by shareholders
holding at least 25% (or 10% if the purpose is to determine the removal
of a trustee) of the Fund's shares then outstanding; the Acquiring
Corporation's Articles are silent as to the procedure for calling a
special meeting of stockholders.
. The Acquired Trust's shareholders have the right to vote on the
termination or reorganization of the Acquired Trust or a series thereof;
the Acquiring Corporation's board of directors may liquidate the
Acquiring Corporation or a series of the Acquiring Corporation without a
vote of stockholders.
. The Acquired Trust's Declaration may be amended by the trustees if
authorized by a majority vote of the shareholders except in certain
circumstances where a shareholder vote is not required; the Acquiring
Corporation's Articles may be amended or repealed by the Acquiring
Corporation without a vote of stockholders.
. There are differences in the potential liabilities of shareholders of
a Massachusetts business trust as compared to those of a Maryland
corporation, as described below in "The Proposed Transaction -Description
of Securities to Be Issued."
Trustees/Directors and Officers.
The Trustees of the Fund, currently and as proposed under Proposal 1,
are different from the Directors of Scudder Global Bond Fund. As described
in Scudder Global Bond Fund's prospectus that has been included in the
materials that you received with this document, the
<PAGE>
following individuals comprise the Board of Directors of Scudder Global
Bond Fund: Linda C. Coughlin, Henry P. Becton, Jr., Dawn-Marie Driscoll,
Edgar Fiedler, Keith R. Fox, Joan E. Spero, Jean Gleason Stromberg, Jean C.
Tempel, and Steven Zaleznick. In addition, the officers of the Fund and
Scudder Global Bond Fund are different. (See Proposal 1 and the Statement
of Additional Information for further information.)
Fiscal Year.
The Fund's fiscal year-end is December 31. Scudder Global Bond Fund's
fiscal year-end is October 31.
Custodian.
The Fund's custodian is The Chase Manhattan Bank. Scudder Global Bond
Fund's custodian is Brown Brothers Harriman & Company.
Auditors.
The Fund's auditors are Ernst & Young LLP. Scudder Global Bond Fund's
auditors are PricewaterhouseCoopers LLP.
Tax Consequences
As a condition to the Reorganization, each Fund will have received an
opinion of Willkie Farr & Gallagher in connection with the Reorganization, to
the effect that, based upon certain facts, assumptions and representations, the
Reorganization will constitute a tax-free reorganization within the meaning of
section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
If the Reorganization constitutes a tax-free reorganization, no gain or loss
will be recognized by the Fund or its shareholders as a direct result of the
Reorganization. See "The Proposed Transaction -- Federal Income Tax
Consequences."
* * *
The preceding is only a summary of certain information contained in this
Proxy Statement/Prospectus relating to the Reorganization. This summary is
qualified by reference to the more complete information contained elsewhere in
this Proxy Statement/Prospectus, the prospectuses and statements of additional
information of the Funds, and the Plan. Shareholders should read this entire
Proxy Statement/Prospectus carefully.
II. PRINCIPAL RISK FACTORS
Because of their similar investment objectives, policies and strategies,
the principal risks presented by the Funds are similar. The main risks
applicable to each Fund include, among others, management risk (i.e., securities
selection by the Investment Manager), risk associated with global interest
rates, market risk, credit risk, foreign currency risk and risk associated with
foreign investments. In addition, each Fund presents the risk associated with
being non-diversified. Since each Fund is non-diversified, its investment
returns are more likely to be impacted by changes in the market value and
returns of any one portfolio holding as compared to diversified funds.
Investments in high yield securities, or "junk bonds," entail relatively greater
risk of loss of income and principal than investments in higher rated
securities, and may fluctuate more in value. [This risk may be more pronounced
for the
<PAGE>
Fund, which may invest in lower quality bonds than Scudder Global Bond Fund and
may commit a greater percentage of its assets to lower-rated securities.] If
interest rates drop significantly, holders of mortgages represented by mortgage-
backed securities are more likely to refinance, thus prepaying their obligations
and potentially forcing Scudder Global Bond Fund, to the extent that it invests
in mortgage-backed securities, to reinvest in securities that pay lower interest
rates. Lastly, the Funds are not insured or guaranteed by the FDIC or any other
government agency. Share prices will go up and down, so be aware that you could
lose money.
For a further discussion of the investment techniques and risk factors
applicable to the Funds, see the "Investment Objectives, Policies and
Restrictions of the Funds" above, and each Fund's prospectus and statement of
additional information.
III. THE PROPOSED TRANSACTION
Description of the Plan
As stated above, the Plan provides for the transfer of all or substantially
all of the assets of the Fund to Scudder Global Bond Fund in exchange for that
number of full and fractional Class A, Class B and Class C shares having an
aggregate net asset value equal to the aggregate net asset value of the shares
of the corresponding classes of the Fund as of the close of business on the
Valuation Date. Scudder Global Bond Fund will assume all of the liabilities of
the Fund. The Fund will distribute the Class A, Class B and Class C shares
received in the exchange to the shareholders of the Fund in complete liquidation
of the Fund. The Fund will then be terminated.
Upon completion of the Reorganization, each shareholder of the Fund will
own that number of full and fractional Class A, Class B and Class C Shares
having an aggregate net asset value equal to the aggregate net asset value of
such shareholder's shares of the corresponding class held in the Fund as of the
close of business on the Valuation Date. Such shares will be held in an account
with Scudder Global Bond Fund identical in all material respects to the account
currently maintained by the Fund for such shareholder. In the interest of
economy and convenience, Class A, Class B and Class C shares issued to the
Fund's shareholders in the Reorganization will be in uncertificated form. If
Class A, Class B or Class C shares of the Fund are represented by certificates
prior to the Closing, such certificates should be returned to the Fund's
shareholder servicing agent. Any Class A, Class B or Class C shares of Scudder
Global Bond Fund distributed in the Reorganization to shareholders in exchange
for certificated shares of the Fund may not be transferred, exchanged or
redeemed without delivery of such certificates.
Until the Closing, shareholders of the Fund will continue to be able to
redeem their shares at the net asset value next determined after receipt by the
Fund's transfer agent of a redemption request in proper form. Redemption and
purchase requests received on or after the Valuation Date by the transfer agent
will be treated as requests received for the redemption or purchase of Class A,
Class B or Class C shares of Scudder Global Bond Fund received by the
shareholder in connection with the Reorganization.
The obligations of each of the Fund and the Acquiring Corporation, on
behalf of Scudder Global Bond Fund, under the Plan are subject to various
conditions, as stated therein, which includes Scudder Global Bond Fund's
adoption of a new investment management agreement. The Plan also requires that
all filings be made with, and all authority be received from, the SEC and state
securities commissions as may be necessary in the opinion of counsel to permit
the parties to carry out the transactions contemplated by the Plan. Each Fund is
in the process of making the necessary filings. To provide for unforeseen
<PAGE>
events, the Plan may be terminated: (i) by the mutual agreement of the parties;
(ii) by either party if the Closing has not occurred by _____ __, 2001, unless
such date is extended by mutual agreement of the parties; or (iii) by either
party if the other party has materially breached its obligations under the Plan
or made a material misrepresentation in the Plan or in connection with the
Reorganization. The Plan may also be amended by mutual agreement in writing.
However, no amendment may be made following the shareholder meeting if such
amendment would have the effect of changing the provisions for determining the
number of shares of Scudder Global Bond Fund to be issued to the Fund in the
Plan to the detriment of the Fund's shareholders without their approval. For a
complete description of the terms and conditions of the Reorganization, please
refer to the Plan at Exhibit A.
Board Approval of the Proposed Transaction
As discussed above, the Reorganization is part of a Scudder Kemper
initiative that is intended to restructure and streamline the management and
operations of the funds Scudder Kemper advises. Scudder Kemper first proposed
the Reorganization to the Trustees of the Fund at a meeting held on May 24,
2000, see "Synopsis--Background of the Reorganization" above. This initiative
includes five major components:
(i) A change in branding to offer virtually all funds advised by Scudder
Kemper under the Scudder Investments name, with a concentration on
intermediary distribution;
(ii) The combination of funds with similar investment objectives and
policies, including in particular the combination of the Kemper
Funds with similar Scudder Funds currently offered to the general
public;
(iii) The liquidation of certain small funds which have not achieved
market acceptance and which are unlikely to reach an efficient
operating size;
(iv) The implementation of an administration agreement for the Kemper
Funds similar to that recently adopted by the Scudder Funds
covering, for a single fee rate, substantially all services required
for the operation of the fund (other than those provided under the
fund's investment management agreement) and most expenses; and
(v) The consolidation of certain boards overseeing funds advised by
Scudder Kemper.
The Independent Trustees of the Fund reviewed the potential implications of
these proposals for the Fund as well as the various other funds for which they
serve as board members. They were assisted in this review by their independent
legal counsel and by independent consultants with special expertise in financial
and mutual fund industry matters. Following the May 24th meeting, the
Independent Trustees met in person or by telephone on numerous occasions
(including committee meetings) to review and discuss these proposals, both among
themselves and with representatives of Scudder Kemper, including the
"interested" Trustees. In the course of their review, the Independent Trustees
requested and received substantial additional information and suggested numerous
changes to Scudder Kemper's proposals.
Following the conclusion of this process, the Trustees of the Fund, the
board members of other funds involved and Scudder Kemper reached general
agreement on the elements of a restructuring plan that they believed were in the
best interests of shareholders and, where required, agreed to submit elements of
the plan for approval to shareholders of those funds.
<PAGE>
On November 29, 2000, the Board of Trustees, including the Independent
Trustees, unanimously approved the terms of the Reorganization and certain
related proposals. The Trustees have also unanimously agreed to recommend that
the Reorganization be approved by the Fund's shareholders.
In determining whether to recommend that the shareholders of the Fund
approve the Reorganization, the Board of Trustees considered that:
. As part of Scudder Kemper's overall restructuring, the Fund would be
duplicative of another similar fund advised by Scudder Kemper in the same
distribution channel.
. The combined fund would adopt the lower fee schedule of the two Funds'
investment management agreements.
. The fixed fee rate under the Administration Agreement is expected to be
less than the estimated current applicable operating expenses the Fund
would otherwise pay.
. It is a condition of the Reorganization that each Fund receive an opinion
of tax counsel that the transaction would be a tax-free transaction.
. Although the Fund agreed to pay the estimated costs of the Reorganization
allocated to Class A shares and a portion of the estimated costs of the
Reorganization allocated to Class B and Class C shares, management has
estimated that such allocated costs will be recoverable from lower
overall expense rates within six months of completion of the
Reorganization. Scudder Kemper agreed to pay a portion of the estimated
costs of the Reorganization allocated to Class B and Class C shares and
all of the costs of the Reorganization that exceed estimated costs.
As part of their deliberations, the Trustees considered, among other
things: (a) the fees and expense ratios of the Funds, including comparisons
between the expenses of the Fund and the estimated operating expenses of Scudder
Global Bond Fund after the Reorganization, and between the estimated operating
expenses of Scudder Global Bond Fund and other mutual funds with similar
investment objectives; (b) the terms and conditions of the Reorganization and
whether the Reorganization would result in the dilution of shareholder
interests; (c) the compatibility of the Funds' investment objectives, policies,
restrictions and portfolios; (d) the service features available to shareholders
of each Fund; (e) prospects for Scudder Global Bond Fund to attract additional
assets; and (f) the investment performance of each Fund.
As part of their analysis, the Trustees considered direct and indirect
costs to shareholders including: (a) the direct costs of the Reorganization to
be borne by existing shareholders; (b) the potential costs of any necessary
rebalancing of the Fund's portfolio; and (c) the potential tax consequences to
shareholders as a result of differences in the Funds' realized or unrealized
capital gains or losses and capital loss carry-forwards.
Costs. The anticipated costs of the Reorganization allocable
to the Fund are $48,049, which includes board meeting fees,
legal, accounting and other consultant fees, and proxy
solicitation costs. Class A shares of the Fund will pay
$35,459, which represents 100% of the estimated costs
allocable to such class. Class B and Class C shares will pay
a portion of
<PAGE>
their allocable costs of the Reorganization ($3,467 out of
$9,974 (34.76%) for Class B shares and $231 out of $2,616
(8.83%) for Class C shares). Scudder Kemper is bearing the
remaining costs, including any cost overruns (except that
Scudder Global Bond Fund is bearing the SEC and state
registration and notice fees which are estimated to be
$_________).
The estimated costs of the Reorganization borne by the Fund
have been expensed, resulting in a reduction of net asset
value per share of $0.0064, $0.0050 and $0.0014 for Class A,
Class B and Class C shares, respectively. Management of the
Fund expects that reduced operating expenses resulting from
the Reorganization should allow for recovery of the
allocated costs of the Reorganization within six months
after the Closing.
Portfolio Transaction Costs. To consider the potential costs
of any necessary rebalancing of the Fund's portfolio as a
result of the Reorganization, the Independent Trustees asked
for, and Scudder Kemper provided, an estimate of the
expected turnover of the securities of the Fund, as a
percentage of the assets of the combined fund, as a result
of the Reorganization. Scudder Kemper estimated such
turnover to be 0%.
Potential Tax Consequences. Although the Reorganizations
will be achieved on a federally tax-free basis (see "Federal
Income Tax Consequences" below), there are differences in
the Funds' realized or unrealized capital gains or losses
and capital loss carry forwards, which at [ ], 2000 were as
follows (although they may differ at the time of the
Closing):
[Charts to be inserted]
As noted above, under the terms of the Plan, shareholders of
the Fund will receive shares of Scudder Global Bond Fund in
an amount equal to the relative net asset value of their
Fund shares. The Trustees considered whether an adjustment
in this formula should be made for the above tax
differentials. The Trustees determined that no adjustment
should be made because the potential tax consequences were
not material, quantifiable or predictable because of (1)
uncertainties as to the amounts of any actual future
realization of capital gains or losses in view of future
changes in portfolio values, (2) the exemption of some
shareholders from federal income taxation, and (3) the
differing consequences of federal and various other income
taxation upon a distribution received by each shareholder
whose tax liability (if any) is determined by the net effect
of a multitude of considerations that are individual to the
shareholder. Shareholders should, however, review their own
tax situation to determine what effect, if any, these
potential tax differences may have on them.
<PAGE>
The Trustees also gave extensive consideration to possible economies of
scale that might be realized by Scudder Kemper in connection with the
Reorganization, as well as the other fund combinations included in Scudder
Kemper's restructuring proposal.
Based on all the foregoing, the Board concluded that the Fund's
participation in the Reorganization would be in the best interests of the Fund
and would not dilute the interests of the Fund's shareholders. The Board of
Trustees, including the Independent Trustees, unanimously recommends that
shareholders of the Fund approve the Reorganization.
Description of the Securities to Be Issued
Scudder Global Bond Fund is a series of the Acquiring Corporation, a
corporation organized under the laws of the state of Maryland on May 15, 1986.
The Acquiring Corporation's authorized capital consists of approximately 1.55
billion shares of capital stock, par value $0.01 per share, approximately 529
million shares of which are allocated to Scudder Global Bond Fund. The
Directors of the Acquiring Corporation are authorized to divide the shares of
the Acquiring Corporation into separate series. Scudder Global Bond Fund is one
of four series of the Acquiring Corporation. The Directors of the Acquiring
Corporation are also authorized to further divide the shares of the series of
the Acquiring Corporation into classes. The shares of Scudder Global Bond Fund
are currently divided into five classes, Class S, Class AARP, Class A, Class B
and Class C. Although shareholders of different classes of a series have an
interest in the same portfolio of assets, shareholders of different classes bear
different expense levels because distribution costs and certain other expenses
approved by the Directors of the Acquiring Corporation are borne directly by the
class incurring such expenses.
Each share of each class of Scudder Global Bond Fund represents an interest
in Scudder Global Bond Fund that is equal to and proportionate with each other
share of that class of Scudder Global Bond Fund. Scudder Global Bond Fund
shareholders are entitled to one vote per share held on matters on which they
are entitled to vote. In the areas of shareholder voting and the powers and
conduct of the Trustees/Directors, there are no material differences between the
rights of shareholders of the Fund and the rights of shareholders of Scudder
Global Bond Fund, other than as set forth under "Other Differences Between the
Funds" above.
The Acquiring Corporation is organized in Maryland, while the Fund is
established in Massachusetts. Under Massachusetts law, shareholders of a trust
such as the Fund may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. The Fund's Declaration of Trust
contains a disclaimer of liability and provides for indemnification out of the
Fund property of any shareholder held personally liable for the claims and
liabilities to which a shareholder may become subject by reason of being or
having been a shareholder. Thus, the risk of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its obligations.
The Acquiring Corporation does not provide such a disclaimer of liability or
indemnification to its shareholders, because Maryland law generally does not
impose such liability on shareholders.
Federal Income Tax Consequences
The Reorganization is conditioned upon the receipt by each Fund of an
opinion from Willkie Farr & Gallagher substantially to the effect that, based
upon certain facts, assumptions and representations of the parties, for federal
income tax purposes: (i) the transfer to Scudder Global Bond Fund of all or
substantially all of the assets of the Fund in exchange solely for Class A,
Class B and Class C shares and
<PAGE>
the assumption by Scudder Global Bond Fund of all of the liabilities of the
Fund, followed by the distribution of such shares to the Fund's shareholders in
exchange for their shares of the Fund in complete liquidation of the Fund, will
constitute a "reorganization" within the meaning of Section 368(a)(1) of the
Code, and Scudder Global Bond Fund and the Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code; (ii) no gain
or loss will be recognized by the Fund upon the transfer of all or substantially
all of its assets to Scudder Global Bond Fund in exchange solely for Class A,
Class B and Class C shares and the assumption by Scudder Global Bond Fund of all
of the liabilities of the Fund or upon the distribution of the Class A, Class B
and Class C shares to shareholders of the Fund in exchange for their shares of
the Fund; (iii) the basis of the assets of the Fund in the hands of Scudder
Global Bond Fund will be the same as the basis of such assets of the Fund
immediately prior to the transfer; (iv) the holding period of the assets of the
Fund in the hands of Scudder Global Bond Fund will include the period during
which such assets were held by the Fund; (v) no gain or loss will be recognized
by Scudder Global Bond Fund upon the receipt of the assets of the Fund in
exchange for Class A, Class B and Class C shares and the assumption by Scudder
Global Bond Fund of all of the liabilities of the Fund; (vi) no gain or loss
will be recognized by the shareholders of the Fund upon the receipt of the Class
A, Class B and Class C shares solely in exchange for their shares of the Fund as
part of the transaction; (vii) the basis of the Class A, Class B and Class C
shares received by each shareholder of the Fund will be the same as the basis of
the shares of the Fund exchanged therefor; and (viii) the holding period of
Class A, Class B and Class C shares received by each shareholder of the Fund
will include the holding period during which the shares of the Fund exchanged
therefor were held, provided that at the time of the exchange the shares of the
Fund were held as capital assets in the hands of such shareholder of the Fund.
After the Closing, Scudder Global Bond Fund may dispose of certain
securities received by it from the Fund in connection with the Reorganization,
which may result in transaction costs and capital gains.
While the Fund is not aware of any adverse state or local tax consequences
of the proposed Reorganization, it has not requested any ruling or opinion with
respect to such consequences and shareholders may wish to consult their own tax
adviser with respect to such matters.
Legal Matters
Certain legal matters concerning the federal income tax consequences of the
Reorganization will be passed on by Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, New York 10019. Certain legal matters concerning the issuance
of shares of Scudder Global Bond Fund will be passed on by Dechert, Ten Post
Office Square - South, Boston, Massachusetts 02109.
<PAGE>
Capitalization
The following table shows on an unaudited basis the capitalization of
Scudder Global Bond Fund and the Fund as of September 30, 2000 and on a pro
forma basis as of that date, giving effect to the Reorganization(1):
<TABLE>
<CAPTION>
Scudder Global Bond Pro Forma Pro Forma
Fund Fund Adjustments (Combined)
<S> <C> <C> <C> <C>
Net Assets
Class S Shares $ 146,819,340 /(3)/ $ 146,819,340
Class A Shares $ 39,487,513 /(4)/ $ 39,487,513
Class B Shares $ 4,451,809 /(4)/ $ 4,451,809
Class C Shares $ 1,184,918 /(4)/ $ 1,184,918
------------------
Total Net Assets $ 191,943,580 /(2)/
==================
Shares Outstanding
Class S Shares 16,526,539 16,526,539
Class A Shares 5,133,050 (686,258) 4,446,792
Class B Shares 577,021 (75,691) 501,330
Class C Shares 153,262 (19,825) 133,437
Net Asset Value per Share
Class S Shares $ 8.88 $ 8.88
Class A Shares $ 7.69 $ 8.88
Class B Shares $ 7.72 $ 8.88
Class C Shares $ 7.73 $ 8.88
</TABLE>
(1) Assumes the Reorganization had been consummated on September 30, 2000, and
is for informational purposes only. No assurance can be given as to how
many shares of Scudder Global Bond Fund will be received by the
shareholders of the Fund on the date the Reorganization takes place, and
the foregoing should not be relied upon to reflect the number of shares of
Scudder Global Bond Fund that actually will be received on or after such
date.
(2) Pro forma (combined) net assets do not reflect expense reductions that
would result from implementation of an administrative fee.
(3) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by Scudder Global Bond Fund.
(4) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by the Fund.
<PAGE>
The Board of Trustees unanimously recommends that the shareholders of the
Fund vote in favor of this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT AUDITORS
The Board of Trustees, including all of the Independent Trustees, has
selected Ernst & Young LLP to act as independent auditors of the Fund for the
Fund's current fiscal year and recommends that shareholders ratify such
selection. However, if the Plan is approved, as described under Proposal 2,
PricewaterhouseCoopers LLP will serve as the independent auditors for the
combined fund. One or more representatives of Ernst & Young LLP are expected to
be present at the 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.
The Board of Trustees unanimously recommends that shareholders of the
Fund vote in favor of this Proposal 3.
ADDITIONAL INFORMATION
Information about the Funds
Additional information about the Acquiring Corporation and the Acquired
Trust, the Funds and the Reorganization has been filed with the SEC and may be
obtained without charge by writing to Scudder Investor Services, Inc., Two
International Place, Boston, MA 02110-4103, or by calling 1-800-[ ].
The Acquiring Corporation and the Acquired Trust are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and the 1940 Act, and in accordance therewith, file reports, proxy material and
other information about each of the Funds with the SEC. Such reports, proxy
material and other information filed by the Acquiring Corporation, and those
filed by the Acquired Trust, can be inspected and copied at the Public Reference
Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the following SEC Regional Offices: Northeast Regional Office, 7 World Trade
Center, Suite 1300, New York, NY 10048; Southeast Regional Office, 1401 Brickell
Avenue, Suite 200, Miami, FL 33131; Midwest Regional Office, Citicorp Center,
500 W. Madison Street, Chicago, IL 60661-2511; Central Regional Office, 1801
California Street, Suite 4800, Denver, CO 80202-2648; and Pacific Regional
Office, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA 90036-3648. Copies
of such material can also be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
The SEC maintains an Internet World Wide Web site (at http://www.sec.gov) which
contains the prospectuses and statements of additional information for the
Funds, materials that are incorporated by reference into the prospectuses and
statements of additional information, and other information about the Acquiring
Corporation, the Acquired Trust and the Funds.
<PAGE>
General
Proxy Solicitation. Proxy solicitation costs will be considered
Reorganization expenses and will be allocated accordingly. See "The Proposed
Transaction - Board Approval of the Proposed Transaction." In addition to
solicitation by mail, certain officers and representatives of the Fund, officers
and employees of Scudder Kemper 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.
Any shareholder of the Fund giving a proxy has the power to revoke it by
mail (addressed to the Secretary at the principal executive office of the Fund,
c/o Scudder Kemper Investments, Inc., at the address for the Fund shown at the
beginning of this Proxy Statement/Prospectus) or in person at the Meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the Meeting will be
voted as specified in the proxy or, if no specification is made, in favor of
each Proposal.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of at least 30% of the shares of the Fund entitled to be cast shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the event that the necessary quorum to transact business or the vote required
to approve any Proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law to permit further solicitation of proxies with respect to that
Proposal. Any such adjournment as to a matter will require the affirmative vote
of the holders of a majority of the Fund's shares present in person or by proxy
at the Meeting. The persons named as proxies will vote in favor of any such
adjournment those proxies which they are entitled to vote in favor of that
Proposal 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 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.
The election of the Trustees under Proposal 1 requires the affirmative vote
of a plurality of the shares of the Fund voting on such election. Approval of
Proposal 2 requires the affirmative vote of the holders of a majority of the
Fund's shares outstanding and entitled to vote thereon. Approval of Proposal 3
requires the affirmative vote of a majority of the shares of the Fund voting at
the Meeting. Abstentions and broker non-votes will not be counted in favor of,
but will have no other effect on, Proposals 1 and 3, and will have the effect of
a "no" vote on Proposal 2.
Holders of record of the shares of the Fund at the close of business on
March 5, 2001 will be entitled to one vote per share on all business of the
Meeting. As of February 5, 2001, there were [ ] Class A shares, [ ] Class
B shares and [ ] Class C shares of the Fund outstanding.
[As of December 31, 2000, the officers and Directors of the Acquiring
Corporation as a group owned beneficially less than 1% of the outstanding shares
of each class of Scudder Global Bond Fund.] Appendix 2 hereto sets forth the
beneficial owners of more than 5% of each class of each Fund's shares. To the
best of each Fund's knowledge, as of December 31, 2000, no person owned
beneficially more than 5% of any class of either Fund's outstanding shares,
except as stated on Appendix 2.
<PAGE>
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies, at an estimated cost of $[ ]. As the Meeting
date approaches, certain shareholders of the Fund may receive a telephone call
from a representative of SCC if their votes have not yet been received.
Authorization to permit SCC to execute proxies may be obtained by telephonic or
electronically transmitted instructions from shareholders of the Fund. Proxies
that are obtained telephonically will be recorded in accordance with the
procedures described below. The Trustees believe that these procedures are
reasonably designed to ensure that both the identity of the shareholder casting
the vote and 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 and address, or the last
four digits of the shareholder's social security or employer identification
number, or both, and to confirm that the shareholder has received the proxy
materials in the mail. If the shareholder is a corporation or other entity, the
SCC representative is required to ask for the person's title and confirmation
that the person is authorized to direct the voting of the shares. 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
on the proxy card(s), and ask for the shareholder's instructions on the
Proposals. Although the SCC representative is permitted to answer questions
about the process, he or she is not permitted to recommend to the shareholder
how to vote, other than to read any recommendation set forth in the Proxy
Statement/Prospectus. 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.
Shareholders may also provide their voting instructions through telephone
touch-tone voting or Internet voting. These options require shareholders to
input a control number which is located on each voting instruction card. After
inputting this number, shareholders will be prompted to provide their voting
instructions on the Proposals. Shareholders will have an opportunity to review
their voting instructions and make any necessary changes before submitting their
voting instructions and terminating their telephone call or Internet link.
Shareholders who vote on the Internet, in addition to confirming their voting
instructions prior to submission, will also receive an e-mail confirming their
instructions.
If a shareholder wishes to participate in the Meeting, but does not wish to
give a proxy by telephone or electronically, the shareholder may still submit
the proxy card(s) originally sent with the Proxy Statement/Prospectus or attend
in person. Should shareholders require additional information regarding the
proxy or replacement proxy card(s), they may contact SCC toll-free at
1-800-[ ]. Any proxy given by a shareholder is revocable until voted at the
Meeting.
Shareholder Proposals for Subsequent Meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a shareholder meeting
subsequent to the Meeting, if any, should send their written proposals to the
Secretary of the Fund, c/o Scudder Kemper Investments, Inc., 222 South Riverside
Plaza, Chicago, Illinois 60606, within a reasonable time before the solicitation
of proxies for such meeting. The timely submission of a proposal does not
guarantee its inclusion.
Other Matters to Come Before the Meeting. The Board is not aware of any
matters that will be presented for action at the Meeting other than the matters
described in this material. 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 the Fund.
<PAGE>
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE ADVANTAGE
OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES) PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
/s/ Philip J. Collora
Philip J. Collora
Secretary
<PAGE>
INDEX OF EXHIBITS AND APPENDICES
<TABLE>
<S> <C>
EXHIBIT A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION.........................................
EXHIBIT B: MANAGEMENT'S DISCUSSION OF SCUDDER GLOBAL BOND FUND'S PERFORMANCE....................
APPENDIX 1: TRUSTEE AND NOMINEE SHAREHOLDINGS....................................................
APPENDIX 2: BENEFICIAL OWNERS OF FUND SHARES.....................................................
</TABLE>
<PAGE>
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this [ ] day of [ ], 2001, by and among Global/International Fund, Inc.
(the "Acquiring Corporation"), a Maryland corporation, on behalf of Scudder
Global Bond Fund (the "Acquiring Fund"), a separate series of the Acquiring
Corporation, Kemper Global Income Fund (the "Acquired Trust"), a Massachusetts
business trust, on behalf of Kemper Global Income Fund (the "Acquired Fund" and,
together with the Acquiring Fund, each a "Fund" and collectively the "Funds"),
the only active series of the Acquired Trust, and Scudder Kemper Investments,
Inc. ("Scudder Kemper"), investment adviser to the Funds (for purposes of
Paragraph 10.2 of the Agreement only). The principal place of business of the
Acquiring Corporation is 345 Park Avenue, New York, New York 10154. The
principal place of business of the Acquired Trust is 222 South Riverside Plaza,
Chicago, Illinois 60606.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all or substantially all of
the assets of the Acquired Fund to the Acquiring Fund in exchange solely for
Class A, Class B and Class C voting shares of capital stock ($.01 par value per
share) of the Acquiring Fund (the "Acquiring Fund Shares"), the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund and the
distribution of the Acquiring Fund Shares to the Class A, Class B and Class C
shareholders of the Acquired Fund in complete liquidation of the Acquired Fund
as provided herein, all upon the terms and conditions hereinafter set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired Fund
agrees to transfer to the Acquiring Fund all or substantially all of the
Acquired Fund's assets as set forth in section 1.2, and the Acquiring Fund
agrees in exchange therefor (i) to deliver to the Acquired Fund that number of
full and fractional Class A, Class B and Class C Acquiring Fund Shares
determined by dividing the value of the Acquired Fund's assets net of any
liabilities of the Acquired Fund with respect to the Class A, Class B and Class
C shares of the Acquired Fund, computed in the manner and as of the time and
date set forth in section 2.1, by the net asset value of one Acquiring Fund
Share of the corresponding class, computed in the manner and as of the time and
date set forth in section 2.2; and (ii) to assume all of the liabilities of the
Acquired Fund, including, but not limited to, any deferred compensation to the
Acquired Fund board members. All Acquiring Fund Shares delivered to the
Acquired Fund shall be delivered at net asset value without sales load,
commission or other similar fee being imposed. Such transactions shall take
place at the closing provided for in section 3.1 (the "Closing").
<PAGE>
1.2. The assets of the Acquired Fund to be acquired by the Acquiring
Fund (the "Assets") shall consist of all assets, including, without limitation,
all cash, cash equivalents, securities, commodities and futures interests and
dividends or interest or other receivables that are owned by the Acquired Fund
and any deferred or prepaid expenses shown on the unaudited statement of assets
and liabilities of the Acquired Fund prepared as of the effective time of the
Closing in accordance with generally accepted accounting principles ("GAAP")
applied consistently with those of the Acquired Fund's most recent audited
balance sheet. The Assets shall constitute at least 90% of the fair market
value of the net assets, and at least 70% of the fair market value of the gross
assets, held by the Acquired Fund immediately before the Closing (excluding for
these purposes assets used to pay the dividends and other distributions paid
pursuant to section 1.4).
1.3. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in section 3.6.
1.4. On or as soon as practicable prior to the Closing Date as defined
in section 3.1, the Acquired Fund will declare and pay to its shareholders of
record one or more dividends and/or other distributions so that it will have
distributed substantially all of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in section
1.1, the Acquired Fund will distribute to the Acquired Fund's shareholders of
record with respect to each class of its shares (the "Acquired Fund
Shareholders"), determined as of the Valuation Time (as defined in section 2.1),
on a pro rata basis within that class, the Acquiring Fund Shares of the same
class received by the Acquired Fund pursuant to section 1.1 and will completely
liquidate. Such distribution and liquidation will be accomplished with respect
to each class of the Acquired Fund by the transfer of the Acquiring Fund Shares
then credited to the account of the Acquired Fund on the books of the Acquiring
Fund to open accounts on the share records of the Acquiring Fund in the names of
the Acquired Fund Shareholders. The Acquiring Fund shall have no obligation to
inquire as to the validity, propriety or correctness of such records, but shall
assume that such transaction is valid, proper and correct. The aggregate net
asset value of Class A, Class B and Class C Acquiring Fund Shares to be so
credited to the Class A, Class B and Class C Acquired Fund Shareholders shall,
with respect to each class, be equal to the aggregate net asset value of the
Acquired Fund shares of the same class owned by such shareholders as of the
Valuation Time. All issued and outstanding shares of the Acquired Fund will
simultaneously be cancelled on the books of the Acquired Fund, although share
certificates representing interests in Class A, Class B and Class C shares of
the Acquired Fund will represent a number of Acquiring Fund Shares after the
Closing Date as determined in accordance with section 2.3. The Acquiring Fund
will not issue certificates representing Acquiring Fund Shares in connection
with such exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of the Acquired Fund including,
without limitation, the responsibility for filing of regulatory reports, tax
returns, or other documents with the Securities and Exchange Commission (the
"Commission"), any state securities commission, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Acquired Fund.
<PAGE>
1.8. All books and records of the Acquired Fund, including all books
and records required to be maintained under the Investment Company Act of 1940,
as amended (the "1940 Act"), and the rules and regulations thereunder, shall be
available to the Acquiring Fund from and after the Closing Date and shall be
turned over to the Acquiring Fund as soon as practicable following the Closing
Date.
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of
regular trading on The New York Stock Exchange, Inc. (the "NYSE") on the
business day immediately preceding the Closing Date, as defined in section 3.1
(the "Valuation Time") after the declaration and payment of any dividends and/or
other distributions on that date, using the valuation procedures set forth in
the Acquiring Corporation's Charter, as amended, and then-current prospectus or
statement of additional information, copies of which have been delivered to the
Acquired Fund.
2.2. The net asset value of a Class A, Class B or Class C Acquiring
Fund Share shall be the net asset value per share computed with respect to that
class as of the Valuation Time using the valuation procedures referred to in
section 2.1. Notwithstanding anything to the contrary contained in this
Agreement, in the event that, as of the Valuation Time, there are no Class A,
Class B and/or Class C Acquiring Fund Shares issued and outstanding, then, for
purposes of this Agreement, the per share net asset value of a Class A, Class B
and/or Class C share, as applicable, shall be equal to the net asset value of
one Class S Acquiring Fund Share.
2.3. The number of the Class A, Class B and Class C Acquiring Fund
Shares to be issued (including fractional shares, if any) in exchange for the
Assets shall be determined with respect to each such class by dividing the value
of the Assets with respect to Class A, Class B and Class C shares of the
Acquired Fund, as the case may be, determined in accordance with section 2.1 by
the net asset value of an Acquiring Fund Share of the same class determined in
accordance with section 2.2.
2.4. All computations of value hereunder shall be made by or under the
direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act and
shall be subject to confirmation by each Fund's respective independent
accountants upon the reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement
shall be June 18, 2001, or such later date as the parties may agree in writing
(the "Closing Date"). All acts taking place at the Closing shall be deemed to
take place simultaneously as of 9:00 a.m., Eastern time, on the Closing Date,
unless otherwise agreed to by the parties. The Closing shall be held at the
offices of Dechert, Ten Post Office Square - South, Boston, MA 02109, or at such
other place and time as the parties may agree.
3.2. The Acquired Fund shall deliver to Acquiring Fund on the Closing
Date a schedule of Assets.
3.3. The Chase Manhattan Bank, custodian for the Acquired Fund, shall
deliver at the Closing a certificate of an authorized officer stating that (a)
the Assets shall have been delivered in proper form to Brown Brothers Harriman &
Company, custodian for the Acquiring Fund, prior to or on the Closing Date and
(b) all necessary taxes in connection with the delivery of the Assets, including
all applicable federal
<PAGE>
and state stock transfer stamps, if any, have been paid or provision for payment
has been made. The Acquired Fund's portfolio securities represented by a
certificate or other written instrument shall be presented by the custodian for
the Acquired Fund to the custodian for the Acquiring Fund for examination no
later than five business days preceding the Closing Date and transferred and
delivered by the Acquired Fund as of the Closing Date by the Acquired Fund for
the account of Acquiring Fund duly endorsed in proper form for transfer in such
condition as to constitute good delivery thereof. The Acquired Fund's portfolio
securities and instruments deposited with a securities depository, as defined in
Rule 17f-4 under the 1940 Act, shall be delivered as of the Closing Date by book
entry in accordance with the customary practices of such depositories and the
custodian for the Acquiring Fund. The cash to be transferred by the Acquired
Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.4. Kemper Service Company, as transfer agent for the Acquired Fund,
on behalf of the Acquired Fund, shall deliver at the Closing a certificate of an
authorized officer stating that its records contain the names and addresses of
the Acquired Fund Shareholders and the number and percentage ownership (to three
decimal places) of outstanding Class A, Class B and Class C Acquired Fund shares
owned by each such shareholder immediately prior to the Closing. The Acquiring
Fund shall issue and deliver a confirmation evidencing the Acquiring Fund Shares
to be credited on the Closing Date to the Acquired Fund or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request to effect the transactions
contemplated by this Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the
NYSE or another primary trading market for portfolio securities of the Acquiring
Fund or the Acquired Fund shall be closed to trading or trading thereupon shall
be restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Class A, Class B and Class C shares of the Acquiring
Fund or the Acquired Fund is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
3.6. The liabilities of the Acquired Fund shall include all of the
Acquired Fund's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Closing Date, and whether or not specifically referred to in this Agreement
including but not limited to any deferred compensation to the Acquired Fund's
board members.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Trust, on behalf of the Acquired Fund, represents
and warrants to the Acquiring Fund as follows:
(a) The Acquired Trust is a voluntary association with
transferable shares commonly referred to as a Massachusetts business trust duly
organized and validly existing under the laws of The Commonwealth of
Massachusetts with power under the Acquired Trust's Declaration of Trust, as
amended, to own all of its properties and assets and to carry on its business as
it is now being conducted and, subject to approval of shareholders of the
Acquired Fund, to carry out the Agreement. The Acquired
<PAGE>
Fund, the only active series of the Acquired Trust, is duly designated in
accordance with the applicable provisions of the Acquired Trust's Declaration of
Trust. The Acquired Trust and Acquired Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have material adverse
effect on the Acquired Trust or Acquired Fund. The Acquired Fund has all
material federal, state and local authorizations necessary to own all of the
properties and assets and to carry on its business as now being conducted,
except authorizations which the failure to so obtain would not have a material
adverse effect on the Acquired Fund;
(b) The Acquired Trust is registered with the Commission as an
open-end management investment company under the 1940 Act, and such registration
is in full force and effect and the Acquired Fund is in compliance in all
material respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court
or governmental authority is required for the consummation by the Acquired Fund
of the transactions contemplated herein, except such as have been obtained under
the Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the 1940 Act and such as may be
required by state securities laws;
(d) Other than with respect to contracts entered into in
connection with the portfolio management of the Acquired Fund which shall
terminate on or prior to the Closing Date, the Acquired Trust is not, and the
execution, delivery and performance of this Agreement by the Acquired Trust will
not result (i) in violation of Massachusetts law or of the Acquired Trust's
Declaration of Trust, as amended, or By-Laws, (ii) in a violation or breach of,
or constitute a default under, any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquired Fund is a party or by
which it is bound, and the execution, delivery and performance of this Agreement
by the Acquired Fund will not result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquired Fund is a party or by
which it is bound, or (iii) in the creation or imposition of any lien, charge or
encumbrance on any property or assets of the Acquired Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Fund or any properties or
assets held by it. The Acquired Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and
Changes in Net Assets, the Financial Highlights, and the Investment Portfolio of
the Acquired Fund at and for the [fiscal year ended December 31, 2000, have been
audited] by Ernst & Young LLP, independent auditors, and are in accordance with
GAAP consistently applied, and such statements (a copy of each of which has been
furnished to the Acquiring Fund) present fairly, in all material respects, the
financial position of the Acquired Fund as of such date in accordance with GAAP,
and there are no known contingent liabilities of the Acquired Fund required to
be reflected on a balance sheet (including the notes thereto) in accordance with
GAAP as of such date not disclosed therein;
<PAGE>
(g) [Since December 31, 2000], there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred except as otherwise disclosed to and
accepted in writing by the Acquiring Fund. For purposes of this subsection (g),
a decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired
Fund Shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquired Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquired Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company and
has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code, and will have distributed all
of its investment company taxable income and net capital gain (as defined in the
Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws, (ii) are, and on the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable and not
subject to preemptive or dissenter's rights (recognizing that, under
Massachusetts law, Acquired Fund Shareholders, under certain circumstances,
could be held personally liable for obligations of the Acquired Fund), and (iii)
will be held at the time of the Closing by the persons and in the amounts set
forth in the records of Kemper Service Company, as provided in section 3.4. The
Acquired Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of the Acquired Fund shares, nor is there
outstanding any security convertible into any of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Fund's assets to be transferred to the
Acquiring Fund pursuant to section 1.2 and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder free of any liens or
other encumbrances, except those liens or encumbrances as to which the Acquiring
Fund has received notice at or prior to the Closing, and upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act and the 1940 Act,
except those restrictions as to which the Acquiring Fund has received notice and
necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquired Trust (including the
determinations required by Rule 17a-8(a) under the 1940 Act), and, subject to
the approval of the Acquired Fund Shareholders, this Agreement constitutes a
valid and binding obligation of the Acquired Trust, on behalf of the Acquired
Fund, enforceable in accordance with its
<PAGE>
terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the National Association of Securities Dealers,
Inc. (the "NASD")), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of
the Acquired Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading; and
(o) The proxy statement of the Acquired Fund to be included in the
Registration Statement referred to in section 5.7 (the "Proxy Statement"),
insofar as it relates to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date, (i) comply in all material
respects with the provisions and Regulations of the 1933 Act, 1934 Act and 1940
Act, as applicable, and (ii) not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements are made, not materially misleading; provided, however, that the
representations and warranties in this section shall not apply to statements in
or omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished or should
have been furnished by the Acquiring Fund for use therein.
4.2. The Acquiring Corporation, on behalf of the Acquiring Fund, represents
and warrants to the Acquired Fund as follows:
(a) The Acquiring Corporation is a corporation duly organized and
validly existing under the laws of the State of Maryland with power under the
Acquiring Corporation's Charter, as amended, to own all of its properties and
assets and to carry on its business as it is now being conducted and, subject to
the approval of shareholders of the Acquired Fund, to carry out the Agreement.
The Acquiring Fund is a separate series of the Acquiring Corporation duly
designated in accordance with the applicable provisions of the Acquiring
Corporation's Charter. The Acquiring Corporation and Acquiring Fund are
qualified to do business in all jurisdictions in which they are required to be
so qualified, except jurisdictions in which the failure to so qualify would not
have material adverse effect on the Acquiring Corporation or Acquiring Fund.
The Acquiring Fund has all material federal, state and local authorizations
necessary to own all of the properties and assets and to carry on its business
as now being conducted, except authorizations which the failure to so obtain
would not have a material adverse effect on the Acquiring Fund;
(b) The Acquiring Corporation is registered with the Commission as an
open-end management investment company under the 1940 Act, and such registration
is in full force and effect and the Acquiring Fund is in compliance in all
material respects with the 1940 Act and the rules and regulations thereunder;
<PAGE>
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The Acquiring Corporation is not, and the execution, delivery and
performance of this Agreement by the Acquiring Corporation will not result (i)
in violation of Maryland law or of the Acquiring Corporation's Charter, as
amended, or By-Laws, or (ii) in a violation or breach of, or constitute a
default under, any material agreement, indenture, instrument, contract, lease or
other undertaking known to counsel to which the Acquiring Fund is a party or by
which it is bound, and the execution, delivery and performance of this Agreement
by the Acquiring Fund will not result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquiring Fund is a party or by
which it is bound, or (iii) in the creation or imposition of any lien, charge or
encumbrance on any property or assets of the Acquiring Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any properties or
assets held by it. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquiring Fund at and for the [fiscal year ended October 31, 2000, have been
audited] by PricewaterhouseCoopers LLP, independent accountants, and are in
accordance with GAAP consistently applied, and such statements (a copy of each
of which has been furnished to the Acquired Fund) present fairly, in all
material respects, the financial position of the Acquiring Fund as of such date
in accordance with GAAP, and there are no known contingent liabilities of the
Acquiring Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(g) [Since October 31, 2000], there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred except as otherwise disclosed to
and accepted in writing by the Acquired Fund. For purposes of this subsection
(g), a decline in net asset value per share of the Acquiring Fund due to
declines in market values of securities in the Acquiring Fund's portfolio, the
discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund
shares by Acquiring Fund shareholders shall not constitute a material adverse
change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquiring Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquiring Fund's knowledge, no such return is currently under audit and
no assessment has been asserted with respect to such returns;
<PAGE>
(i) For each taxable year of its operation, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such, has been eligible to
and has computed its federal income tax under Section 852 of the Code, and will
do so for the taxable year including the Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws and (ii) are, and on the Closing Date will be,
duly and validly issued and outstanding, fully paid and non-assessable, and not
subject to preemptive or dissenter's rights. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of the Acquiring Fund shares, nor is there outstanding any security
convertible into any of the Acquiring Fund shares;
(k) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Agreement, will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued and
outstanding Acquiring Fund Shares, and will be fully paid and non-assessable;
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens or other
encumbrances, except those liens or encumbrances as to which the Acquired Fund
has received notice at or prior to the Closing;
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquiring Corporation (including the
determinations required by Rule 17a-8(a) under the 1940 Act) and this Agreement
will constitute a valid and binding obligation of the Acquiring Corporation, on
behalf of the Acquiring Fund, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(n) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the NASD), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(o) The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading;
(p) The Proxy Statement to be included in the Registration Statement,
only insofar as it relates to the Acquiring Fund, will, on the effective date of
the Registration Statement and on the Closing Date, (i) comply in all material
respects with the provisions and Regulations of the 1933 Act, 1934 Act, and 1940
Act and (ii) not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the
<PAGE>
circumstances under which such statements were made, not materially misleading;
provided, however, that the representations and warranties in this section shall
not apply to statements in or omissions from the Proxy Statement and the
Registration Statement made in reliance upon and in conformity with information
that was furnished or should have been furnished by the Acquired Fund for use
therein; and
(q) The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state securities laws as may be necessary in order to continue its
operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each covenants to
operate its business in the ordinary course between the date hereof and the
Closing Date, it being understood that (a) such ordinary course of business will
include (i) the declaration and payment of customary dividends and other
distributions and (ii) such changes as are contemplated by the Funds' normal
operations; and (b) each Fund shall retain exclusive control of the composition
of its portfolio until the Closing Date. No party shall take any action that
would, or reasonably would be expected to, result in any of its representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect. The Acquired Fund and Acquiring Fund covenant and agree to
coordinate the respective portfolios of the Acquired Fund and Acquiring Fund
from the date of the Agreement up to and including the Closing Date in order
that at Closing, when the Assets are added to the Acquiring Fund's portfolio,
the resulting portfolio will meet the Acquiring Fund's investment objective,
policies and restrictions, as set forth in the Acquiring Fund's Prospectus, a
copy of which has been delivered to the Acquired Fund.
5.2. Upon reasonable notice, the Acquiring Fund's officers and agents
shall have reasonable access to the Acquired Fund's books and records necessary
to maintain current knowledge of the Acquired Fund and to ensure that the
representations and warranties made by the Acquired Fund are accurate.
5.3. The Acquired Fund covenants to call a meeting of the Acquired
Fund Shareholders entitled to vote thereon to consider and act upon this
Agreement and to take all other reasonable action necessary to obtain approval
of the transactions contemplated herein. Such meeting shall be scheduled for no
later than May 24, 2001.
5.4. The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.5. The Acquired Fund covenants that it will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund shares.
5.6. Subject to the provisions of this Agreement, the Acquiring Fund
and the Acquired Fund will each take, or cause to be taken, all actions, and do
or cause to be done, all things reasonably necessary, proper, and/or advisable
to consummate and make effective the transactions contemplated by this
Agreement.
<PAGE>
5.7. Each Fund covenants to prepare in compliance with the 1933 Act,
the 1934 Act and the 1940 Act the Registration Statement on Form N-14 (the
"Registration Statement") in connection with the meeting of the Acquired Fund
Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquiring Fund will file the Registration Statement,
including the Proxy Statement, with the Commission. The Acquired Fund will
provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the Proxy Statement referred to
in section 4.1(o), all to be included in the Registration Statement, in
compliance in all material respects with the 1933 Act, the 1934 Act and the 1940
Act.
5.8. The Acquired Fund covenants that it will, from time to time, as
and when reasonably requested by the Acquiring Fund, execute and deliver or
cause to be executed and delivered all such assignments and other instruments,
and will take or cause to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.9. The Acquiring Fund covenants to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act and 1940 Act,
and such of the state securities laws as it deems appropriate in order to
continue its operations after the Closing Date and to consummate the
transactions contemplated herein; provided, however, that the Acquiring Fund may
take such actions it reasonably deems advisable after the Closing Date as
circumstances change.
5.10. The Acquiring Fund covenants that it will, from time to time, as
and when reasonably requested by the Acquired Fund, execute and deliver or cause
to be executed and delivered all such assignments, assumption agreements,
releases, and other instruments, and will take or cause to be taken such further
action, as the Acquired Fund may reasonably deem necessary or desirable in order
to (i) vest and confirm to the Acquired Fund title to and possession of all
Acquiring Fund shares to be transferred to the Acquired Fund pursuant to this
Agreement and (ii) assume the liabilities from the Acquired Fund.
5.11. As soon as reasonably practicable after the Closing, the Acquired
Fund shall make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares received at the Closing.
5.12. The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.13. The intention of the parties is that the transaction will qualify
as a reorganization within the meaning of Section 368(a) of the Code. Neither
the Acquiring Corporation, the Acquired Trust, the Acquiring Fund nor the
Acquired Fund shall take any action, or cause any action to be taken (including,
without limitation, the filing of any tax return) that is inconsistent with such
treatment or results in the failure of the transaction to qualify as a
reorganization within the meaning of Section 368(a) of the Code. At or prior to
the Closing Date, the Acquiring Corporation, the Acquired Trust, the Acquiring
Fund and the Acquired Fund will take such action, or cause such action to be
taken, as is reasonably necessary to enable Willkie Farr & Gallagher to render
the tax opinion contemplated herein in section 8.5.
5.14. At or immediately prior to the Closing, the Acquired Fund may
declare and pay to its stockholders a dividend or other distribution in an
amount large enough so that it will have distributed
<PAGE>
substantially all (and in any event not less than 98%) of its investment company
taxable income (computed without regard to any deduction for dividends paid) and
realized net capital gain, if any, for the current taxable year through the
Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of the Acquiring Corporation,
on behalf of the Acquiring Fund, contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as they may
be affected by the transactions contemplated by this Agreement, as of the
Closing Date, with the same force and effect as if made on and as of the Closing
Date; and there shall be (i) no pending or threatened litigation brought by any
person (other than the Acquired Fund, its adviser or any of their affiliates)
against the Acquiring Fund or its investment adviser(s), Board members or
officers arising out of this Agreement and (ii) no facts known to the Acquiring
Fund which the Acquiring Fund reasonably believes might result in such
litigation.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund on
the Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquired Trust, on behalf of
the Acquired Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement are
true and correct on and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Acquired Fund shall reasonably request.
6.3. The Acquired Fund shall have received on the Closing Date an
opinion of Dechert, in a form reasonably satisfactory to the Acquired Fund, and
dated as of the Closing Date, to the effect that:
(a) The Acquiring Corporation has been duly formed and is an
existing corporation; (b) the Acquiring Fund has the power to carry on its
business as presently conducted in accordance with the description thereof in
the Acquiring Fund's registration statement under the 1940 Act; (c) the
Agreement has been duly authorized, executed and delivered by the Acquiring
Corporation, on behalf of the Acquiring Fund, and constitutes a valid and
legally binding obligation of the Acquiring Corporation, on behalf of the
Acquiring Fund, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; (d) the execution and delivery of the Agreement did not, and the
exchange of the Acquired Fund's assets for Acquiring Fund Shares pursuant to the
Agreement will not, violate the Acquiring Corporation's Charter, as amended, or
By-laws; and (e) to the knowledge of such counsel, and without any independent
investigation, (i) the Acquiring Corporation is not subject to any litigation or
other proceedings that might have a materially adverse effect on the operations
of the Acquiring Corporation, (ii) the Acquiring Corporation is duly registered
as an investment company with the Commission and is not subject to any stop
order; and (iii) all regulatory consents, authorizations, approvals or filings
required to be obtained or made by the Acquiring Fund under the federal laws of
the United States or the laws of the State of Maryland for the exchange of the
Acquired Fund's assets for Acquiring Fund Shares, pursuant to the Agreement have
been obtained or made.
<PAGE>
The delivery of such opinion is conditioned upon receipt by
Dechert of customary representations it shall reasonably request of each of the
Acquiring Corporation and the Acquired Trust.
6.4. The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
6.5. The Acquiring Fund shall have [(i) adopted a new investment
management agreement and (ii) entered into an administrative services agreement
with Scudder Kemper, each] in a form reasonably satisfactory to the Acquired
Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of the Acquired Trust, on
behalf of the Acquired Fund, contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as they may
be affected by the transactions contemplated by this Agreement, as of the
Closing Date, with the same force and effect as if made on and as of the Closing
Date; and there shall be (i) no pending or threatened litigation brought by any
person (other than the Acquiring Fund, its adviser or any of their affiliates)
against the Acquired Fund or its investment adviser(s), Board members or
officers arising out of this Agreement and (ii) no facts known to the Acquired
Fund which the Acquired Fund reasonably believes might result in such
litigation.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities as of the Closing Date,
certified by the Treasurer of the Acquired Fund.
7.3. The Acquired Fund shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquiring Corporation, on
behalf of the Acquiring Fund, and dated as of the Closing Date, to the effect
that the representations and warranties of the Acquired Trust with respect to
the Acquired Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund shall
reasonably request.
7.4. The Acquiring Fund shall have received on the Closing Date an
opinion of Dechert, in a form reasonably satisfactory to the Acquiring Fund, and
dated as of the Closing Date, to the effect that:
(a) The Acquired Trust has been duly formed and is an existing
business trust; (b) the Acquired Fund has the power to carry on its business as
presently conducted in accordance with the description thereof in the Acquired
Trust's registration statement under the 1940 Act; (c) the Agreement has been
duly authorized, executed and delivered by the Acquired Trust, on behalf of the
Acquired Fund, and constitutes a valid and legally binding obligation of the
Acquired Trust, on behalf of the Acquired Fund, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
<PAGE>
reorganization, moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity principles; (d) the execution
and delivery of the Agreement did not, and the exchange of the Acquired Fund's
assets for Acquiring Fund Shares pursuant to the Agreement will not, violate the
Acquired Trust's Declaration of Trust, as amended, or By-laws; and (e) to the
knowledge of such counsel, and without any independent investigation, (i) the
Acquired Trust is not subject to any litigation or other proceedings that might
have a materially adverse effect on the operations of the Acquired Trust, (ii)
the Acquired Trust is duly registered as an investment company with the
Commission and is not subject to any stop order, and (iii) all regulatory
consents, authorizations, approvals or filings required to be obtained or made
by the Acquired Fund under the federal laws of the United States or the laws of
The Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by
Dechert of customary representations it shall reasonably request of each of the
Acquiring Corporation and the Acquired Trust.
7.5. The Acquired Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquired Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been met on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the outstanding
shares of the Acquired Fund in accordance with the provisions of the Acquired
Trust's Declaration of Trust, as amended, and By-Laws, applicable Massachusetts
law and the 1940 Act, and certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Acquired
Fund may waive the conditions set forth in this section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain material damages or
other relief in connection with, this Agreement or the transactions contemplated
herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions.
8.4. The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the
<PAGE>
parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act.
8.5. The parties shall have received an opinion of Willkie Farr &
Gallagher addressed to each of the Acquiring Fund and the Acquired Fund, in a
form reasonably satisfactory to each such party to this Agreement, substantially
to the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to the Acquiring
Fund of all or substantially all of the assets of the Acquired Fund in exchange
solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund, followed by the distribution of such
shares to the Acquired Fund Shareholders in exchange for their shares of the
Acquired Fund in complete liquidation of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Acquiring Fund and the Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Acquired Fund upon the transfer of all or substantially all of
its assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund; (iii) the basis of the assets of the Acquired Fund in the hands
of the Acquiring Fund will be the same as the basis of such assets of the
Acquired Fund immediately prior to the transfer; (iv) the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which such assets were held by the Acquired Fund; (v) no gain or
loss will be recognized by the Acquiring Fund upon the receipt of the assets of
the Acquired Fund in exchange for Acquiring Fund Shares and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund; (vi) no gain
or loss will be recognized by Acquired Fund Shareholders upon the receipt of the
Acquiring Fund Shares solely in exchange for their shares of the Acquired Fund
as part of the transaction; (vii) the basis of the Acquiring Fund Shares
received by Acquired Fund Shareholders will be the same as the basis of the
shares of the Acquired Fund exchanged therefor; and (viii) the holding period of
Acquiring Fund Shares received by Acquired Fund Shareholders will include the
holding period during which the shares of the Acquired Fund exchanged therefor
were held, provided that at the time of the exchange the shares of the Acquired
Fund were held as capital assets in the hands of Acquired Fund Shareholders.
The delivery of such opinion is conditioned upon receipt by Willkie Farr &
Gallagher of representations it shall request of each of the Acquiring
Corporation and Acquired Trust. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
condition set forth in this section 8.5.
9. INDEMNIFICATION
9.1. The Acquiring Fund agrees to indemnify and hold harmless the
Acquired Fund and each of the Acquired Fund's Board members and officers from
and against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which jointly and severally, the Acquired
Fund or any of its Board members or officers may become subject, insofar as any
such loss, claim, damage, liability or expense (or actions with respect thereto)
arises out of or is based on any breach by the Acquiring Fund of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
9.2. The Acquired Fund agrees to indemnify and hold harmless the
Acquiring Fund and each of the Acquiring Fund's Board members and officers from
and against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which jointly and severally, the
Acquiring Fund or any of its Board members or officers may become subject,
insofar as any such loss, claim, damage, liability or expense (or
<PAGE>
actions with respect thereto) arises out of or is based on any breach by the
Acquired Fund of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
10. FEES AND EXPENSES
10.1. Each of the Acquiring Corporation, on behalf of the Acquiring
Fund, and the Acquired Trust, on behalf of the Acquired Fund, represents and
warrants to the other that it has no obligations to pay any brokers or finders
fees in connection with the transactions provided for herein.
10.2. The anticipated costs of the Reorganization allocable to the
Acquired Fund are $48,049, which includes board meeting fees, legal, accounting
and other consultant fees, and proxy solicitation costs. Class A shares of the
Acquired Fund will pay $35,459, which represents 100% of the estimated costs
allocable to such class. Class B and Class C shares will pay a portion of their
allocable costs of the Reorganization or $3,467 out of $9,974 (34.76%) for Class
B shares and $231 out of $2,616 (8.83%) for Class C shares. Scudder Kemper is
bearing the remaining costs, including any cost overruns [(except that the
Acquiring Fund is bearing the SEC and state registration and notice fees which
are estimated to be $_________)]. Any such expenses which are so borne by
Scudder Kemper will be solely and directly related to the Reorganization within
the meaning of Revenue Ruling 73-54, 1973-1 C.B. 187. [Acquired Fund
Shareholders will pay their own expenses, if any, incurred in connection with
the Reorganization.]
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Acquiring Fund and the Acquired Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this
section 11.2, the representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing and the obligations of each of
the Acquiring Fund and Acquired Fund in sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
12.1. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned by either party by (i) mutual agreement of
the parties, or (ii) by either party if the Closing shall not have occurred on
or before [ ], 2001, unless such date is extended by mutual agreement of the
parties, or (iii) by either party if the other party shall have materially
breached its obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Board members or
officers, except for any such material breach or intentional misrepresentation,
as to each of which all remedies at law or in equity of the party adversely
affected shall survive.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by any authorized officer of the Acquired
Fund and any authorized officer of the
<PAGE>
Acquiring Fund; provided, however, that following the meeting of the Acquired
Fund Shareholders called by the Acquired Fund pursuant to section 5.3 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to be issued to the Acquired
Fund Shareholders under this Agreement to the detriment of such shareholders
without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
Acquired Fund, 222 South Riverside Plaza, Chicago, Illinois 60606, with a copy
to Dechert, Ten Post Office Square South, Boston, MA 02109-4603, Attention:
Joseph R. Fleming, Esq., or to the Acquiring Fund, 345 Park Avenue, New York,
New York 10154, with a copy to Dechert, Ten Post Office Square South, Boston, MA
02109-4603, Attention: Joseph R. Fleming, Esq., or to any other address that the
Acquired Fund or the Acquiring Fund shall have last designated by notice to the
other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of the
Acquiring Fund and the Acquired Fund and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
15.4. References in this Agreement to the Acquired Trust mean and refer
to the Board members of the Acquired Trust from time to time serving under its
Declaration of Trust on file with the Secretary of State of The Commonwealth of
Massachusetts, as the same may be amended from time to time, pursuant to which
the Acquired Trust conducts its business. It is expressly agreed that the
obligations of the Acquired Trust hereunder shall not be binding upon any of the
Board members, shareholders, nominees, officers, agents, or employees of the
Acquired Trust or the Acquired Fund personally, but bind only the respective
property of the Acquired Fund, as provided in the Acquired Trust's Declaration
of Trust. Moreover, no series of the Acquired Trust other than the Acquired
Fund shall be responsible for the obligations of the Acquired Trust hereunder,
and all persons shall look only to the assets of the Acquired Fund to satisfy
the obligations of the Acquired Trust hereunder. The execution and the delivery
of this Agreement have been authorized by the Acquired Trust's Board members, on
behalf of the Acquired Fund, and this Agreement has been signed by authorized
officers of the Acquired Fund acting as such, and neither such authorization by
such Board members, nor such execution and delivery by such officers, shall be
deemed to have been made by any of them individually or to impose
<PAGE>
any liability on any of them personally, but shall bind only the property of the
Acquired Fund, as provided in the Acquired Trust's Declaration of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations, agreements, representations and warranties with respect to each
Fund shall constitute the obligations, agreements, representations and
warranties of that Fund only (the "Obligated Fund"), and in no event shall any
other series of the Acquiring Corporation or the Acquired Trust or the assets of
any such series be held liable with respect to the breach or other default by
the Obligated Fund of its obligations, agreements, representations and
warranties as set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of The Commonwealth of Massachusetts, without
regard to its principles of conflicts of laws.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by an authorized officer and its seal to be affixed thereto and
attested by its Secretary or Assistant Secretary.
Attest: GLOBAL/INTERNATIONAL FUND, INC.
on behalf of Scudder Global Bond Fund
_________________________
Secretary
_____________________________________
By:__________________________________
Its:_________________________________
Attest: KEMPER GLOBAL INCOME FUND
_________________________
Secretary
_____________________________________
By:__________________________________
Its:_________________________________
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
________________________________
By:_____________________________
Its:____________________________
<PAGE>
EXHIBIT B
Management's Discussion of Scudder Global Bond Fund's Performance
<PAGE>
Performance Update
--------------------------------------------------------------------------------
October 31, 2000
--------------------------------------------------------------------------------
Growth of a $10,000 Investment
--------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Salomon Brothers
Currency-Hedged
Salomon Brothers World Government
Scudder Global World Government Bond Index
Bond Fund -- Class S Bond Index* (1-3 years)**
-------------------- ----------- -------------
3/91*** 10000 10000 10000
'91 10665 10572 10075
'92 11500 12040 10896
'93 12321 13484 11072
'94 12290 13972 12058
'95 12958 16098 12748
'96 13472 16962 13625
'97 13560 17405 0
'98 14769 19588 0
'99 14623 19107 0
'00 14500 18138 0
Yearly periods ended October 31
--------------------------------------------------------------------------------
Fund Index Comparison
--------------------------------------------------------------------------------
Total Return
Growth of Average
Period ended 10/31/2000 $10,000 Cumulative Annual
--------------------------------------------------------------------------------
Scudder Global Bond Fund -- Class S
--------------------------------------------------------------------------------
1 year $ 9,916 -.84% -.84%
--------------------------------------------------------------------------------
5 year $ 11,190 11.90% 2.27%
--------------------------------------------------------------------------------
Life of Fund** $ 14,500 45.00% 3.92%
--------------------------------------------------------------------------------
Salomon Brothers World Government Bond Index*
--------------------------------------------------------------------------------
1 year $ 9,492 -5.08% -5.08%
--------------------------------------------------------------------------------
5 year $ 11,268 12.68% 2.41%
--------------------------------------------------------------------------------
Life of Fund** $ 18,138 81.38% 6.34%
--------------------------------------------------------------------------------
1
<PAGE>
* The unmanaged Salomon Brothers World Government Bond Index consists of
worldwide fixed-rate government bonds with remaining maturities greater
than one year. Index returns assume reinvestment of dividends and, unlike
Fund returns, do not reflect any fees or expenses.
** On December 27, 1995, the Fund adopted its current name and objectives.
Prior to that date, the Fund was known as the Scudder Short Term Global
Income Fund and its investment objective was to provide high current income
through short-term instruments. Since adopting its current objectives, the
cumulative return is 10.27%. Prior to December 27, 1995, the Salomon
Brothers Currency-Hedged World Government Bond Index (1-3 years) was used
as a comparative index.
*** The Fund commenced operations on March 1, 1991.
On September 22, 2000, existing shares of the Fund were redesignated as Class S
shares. On October 2, 2000, the Fund commenced offering Class AARP shares. The
total return information provided is for the Fund's Class S shares.
All performance is historical, assumes reinvestment of all dividends and capital
gains, and is not indicative of future results. Investment return and principal
value will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than when purchased. If the Adviser had not maintained expenses, the
total returns for the Fund for the one year, five year and life of Fund periods
would have been lower.
2
<PAGE>
Portfolio Management Discussion
--------------------------------------------------------------------------------
October 31, 2000
In the following interview, lead portfolio manager Jan Faller and portfolio
manager Jeremy Ragus discuss Scudder Global Bond Fund's strategy and the market
environment for the 12-month period ended October 31, 2000.
Q: How did the fund perform over the 12 months ended October 31, 2000?
A: The fund's Class S shares returned -0.84%, outperforming the Salomon Brothers
World Government Bond Index (the Salomon Index), which had a -5.08% return over
the same period. The negative return of the index is attributable entirely to
weakening currencies. While every country in the index had positive bond returns
for the year, the currency of every country, with the exception of Canada, lost
more value relative to the U.S. dollar than the bonds gained. The two weakest
currencies were the euro, which dropped by approximately 20% over the past year,
and the Australian dollar, which fell by over 23%. The weak euro has a very
significant impact on the index performance as euro-bloc issues represent over
30% of the index, while Australia's much lower weighting makes its influence on
overall return correspondingly much lower. The Japanese yen's decline was
relatively less severe, at 4.5%, but because the yen constitutes over 25% of the
index, the fall in the yen also hurt the performance of the index.
Q: How would you characterize market conditions during this period?
A: The past year has been characterized by low price volatility in nearly all
sectors of the interest rate markets. While dollar bloc countries such as the
United States and Canada have provided the best returns over the period, all
countries had positive returns. The one laggard was Japan, whose very low
interest rates and continued borrowing to pay for fiscal spending held back the
performance of Japanese government bonds.
Much of the positive performance and low volatility of bonds is attributable to
the benign inflation environment around the globe. Meanwhile, although emerging
markets
3
<PAGE>
also exhibited low volatility and positive performance over the past year, that
situation has begun to deteriorate over the past couple of months as investors
begin to anticipate the beginnings of a global economic slowdown. The other
sector beginning to show more volatility is the U.S. credit market, where
high-yield credit spreads, or the difference in yield between high-yield bonds
and comparable maturity Treasury securities, have increased dramatically, while
investment-grade credit spreads also are increasing.
Q: What were some of the key factors affecting the fund's performance?
A: The dominant driver of the fund's performance was the currency hedging used
over the past year. The fund consistently hedged a substantial portion of its
euro and yen exposure, protecting it from the decrease in value of those
currencies. Further, the fund had little or no exposure to the Australian
dollar, which fell substantially relative to the U.S. dollar over the past year.
Another significant factor driving the fund's performance was its exposure to
emerging markets. The J.P. Morgan EMBI+ Index, an unmanaged index of emerging
market bond performance, was up over 20% in the past year, and the fund has
consistently had a small amount of exposure to a number of the countries in this
index, including Mexico, Venezuela, Brazil, and Panama.
Other than emerging market securities, the fund held no below-investment-grade
securities over the past year and only a moderate amount of high-quality
investment-grade bonds. The fund predominantly held developed-country government
bonds, such as U.S. Treasuries, German bunds, and British gilts. Prices of
high-yield securities have declined as this market has sold off markedly, while
investment-grade spreads have also widened, so the fund benefited from this
cautious credit posture.
4
<PAGE>
Q: How has renewed global growth, along with rising commodity prices, especially
oil, affected your strategy?
A: Typically, growth is the first warning signal that it's time to start
reducing exposure to potential changes in interest rates, because growth is seen
as a harbinger of inflation. This is not good for bond prices because as
inflation expectations increase, interest rates demanded by bond investors also
increase, resulting in lower bond prices. Furthermore, rising prices for oil and
other energy products have a history of leading to higher inflation. For this
reason, we have become cautious about the potential for a pickup in inflation,
although we do not want to simply assume that history is going to repeat itself.
In fact, the United States has enjoyed several years of above-average growth
without significant inflation. And, while the United States has enjoyed such
strong economic growth, it also has had the best bond returns of any country in
the Salomon Index. This is due in part to remarkable increases in worker
productivity, and in part to a dwindling supply of U.S. government debt as the
budget continues to operate at a surplus.
Similarly in Europe, economic growth has begun to pick up and oil prices have
increased even more than in the United States due to the fall in the value of
the euro. Yet there is no significant evidence of price pressure, and European
countries also are benefiting from budget surpluses which reduce the supply of
outstanding government debt. Thus, we are carefully watching the mitigating
factors which have so far prevented the traditional "growth leads to inflation"
scenario from playing out. It currently appears that growth will moderate both
in the United States and Europe before inflation has a chance to take hold,
which would be positive for those bond markets.
5
<PAGE>
Q: What effect has the continued weakness of the euro had on European bonds?
A: The weak euro has caused a number of market participants to be more cautious
about holding European bonds than they might be otherwise. This has certainly
contributed to the underperformance of the European bond markets relative to the
dollar bloc. Aside from direct currency risk, the weakening euro has caused a
number of market participants to be concerned about increasing inflation in the
euro-bloc. This concern reduces demand for euro-denominated bonds.
One benefit worth noting is that short-term interest rates in the U.S. are 1.75%
higher than they are in Europe. This interest rate differential means that a
hedge on euro-denominated bonds increases the yield on a hedged euro bond by
1.75%. This results from the hedge transaction, where the investor is selling
the euro, which yields 4.75%, and buying the dollar, which yields 6.5%. Thus, a
hedged-dollar investor does not incur a hedging expense but rather gets a
hedging benefit, and incurs no currency risk. So, while the weak currency has
certainly not helped the European bond market, the ability of the dollar
investor to hedge has limited the harm from the weak euro.
Q: What percentage of the portfolio consists of emerging market bonds, and what
impact have they had on the fund?
A: As noted earlier, the fund has consistently held a small amount of emerging
market securities. On average, the range has been approximately 3% to 7% over
the past year. The exposure has been beneficial as emerging market countries
generally have performed quite well. In particular, the increase in oil prices
helped the debt of Venezuela and other oil-producing countries. Strong global
growth also helped emerging market debt to perform positively. In an effort to
be defensive, we have attempted to remain out of countries that are experiencing
political turmoil such as Peru and the Philippines. Furthermore,
6
<PAGE>
we have been avoiding most Asian countries due to the lack of economic growth in
that region of the globe.
Q: How significant was the fund's U.S. exposure?
A: The fund had substantial exposure to the U.S. interest rate market and to the
U.S. dollar over the entire period. The United States represents over 25% of the
Salomon Index; it and Japan are the two largest countries in the index. U.S.
holdings are very high quality, consisting of Treasuries, mortgage-backed
securities, and a small percentage of investment-grade corporate bonds. As far
as currency, the fund consistently held more U.S. dollars than the index, so its
currency exposure benefited performance relative to the Salomon Index.
Q: Can you discuss some investments that did not fare well?
A: While the fund consistently held less euros than the benchmark, it did have
some exposure to the euro over the past year. As we have already noted, the euro
fell substantially relative to the dollar, so any euro exposure hurt
performance. We did not want to fully hedge our euro exposure due to the
conflicting fundamentals and technicals of the euro. Fundamentally, we believe
the euro is undervalued, and has been driven lower primarily due to technical
selling (selling that attempts to take advantage of short-term price movements
rather than long-term investment considerations) and capital flows from the
euro-bloc to the United States. We believe that the euro could turn and
strengthen relative to the dollar in the short term if economic fundamentals
begin to have more influence over the currency, though it is possible that
technical factors could continue to dominate for some time, which would push the
euro lower. With such a mixed outlook, we currently believe it would be
imprudent and risky to have no exposure to the euro.
Other investments that have not fared well are those holdings with higher credit
spreads relative to Treasuries. While emerging markets did well, other
higher-rated debt
7
<PAGE>
securities have lost value relative to government securities. The fund reduced
its exposure to spread product over the past year; however, the benchmark
contains only government securities so the spread widening which has occurred on
those bonds has hurt the performance of the fund relative to the benchmark.
Other than its emerging markets allocation, the fund currently holds only very
high quality investment-grade securities. We anticipate that we will maintain
those holdings as they offer a yield advantage relative to government bonds and
should not widen much further due to their high credit quality.
Q: You have been managing the fund for a little over a year. What changes or
enhancements have you made to the investment process?
A: We have focused on two particular aspects relating to the fund. First, we
have sought to enhance the process for forecasting potential returns from
countries. Second, we have attempted to improve risk control. The return
forecasting process is based on a model which helps us determine which of the
major interest-rate blocs may outperform or underperform the index. The output
from that model serves as a baseline which we combine with fundamental research
to provide an overall outlook for the relative performance of interest rates in
developed market countries.
Enhancements relating to risk control involve measuring risk relative to both
the index and the peer group. This helps us understand how much risk we are
taking compared to our published benchmark as well as to our competitors (as
determined by Lipper, Inc., an independent analyst of investment performance).
Our process allows us to identify sources of risk, such as interest rates,
currency, and credit. This risk management, combined with our forecasting
process, helps us make investments that we believe offer the best return
opportunity -- taking into account the risk associated with the trade. We
believe this emphasis on risk management can help keep the fund from
8
<PAGE>
underperforming either competitors or the benchmark by too great a degree.
Q: What is your strategy going forward?
A: We are closely watching the behavior of the euro and the U.S. economy and our
strategy depends largely on what we observe taking place there. If relative
growth rates between the euro-bloc and the United States narrow, and capital
flows between the euro-bloc and the United States slow, we believe that the euro
could rally relative to the U.S. dollar. Should this scenario unfold, we would
consider reducing the fund's euro hedge in an effort to benefit from the
strengthening euro.
Our current strategy is very conservative as the U.S. economy appears to be
headed for slower growth. Should the slowdown be a "soft landing" in which we
return to growth levels that are close to longer-term trends without developing
into a recession, this would create a more favorable environment for corporate
bond issuers, who would find it easier to meet coupon payments. We would take
this opportunity to increase the fund's exposure to quality issuers. Also, this
would improve the yield of the fund, enhancing income. If, on the other hand, we
experience a "hard landing" in which we experience recessionary conditions,
credit spreads in relation to Treasuries could widen, or increase further before
improving. In this case, we would maintain the conservative credit strategy for
a longer time to avoid holding bonds which have increased risk during slow
economic periods.
The opinions expressed are those of the portfolio management team as of October
31, 2000, and may not actually come to pass.
9
<PAGE>
APPENDIX 1
Trustee and Nominee Shareholdings
The following table sets forth, for each nominee and Trustee, the number of
shares owned in each series of the Acquired Trust as of December 31, 2000.
[Each nominee's and Trustee's individual shareholdings of any series of the
Acquired Trust constitute less than 1% of the outstanding shares of such fund.]
[As a group, the Trustees and officers own less than 1% of each class of shares
of any series of the Acquired Trust.]
[To be provided]
<PAGE>
APPENDIX 2
Beneficial Owners of Fund Shares
<PAGE>
This Proxy Statement/Prospectus is accompanied by Scudder Global Bond
Fund's prospectus offering Class A, Class B and Class C shares dated March 1,
2001, which was previously filed with the Securities and Exchange Commission
(the "Commission") via EDGAR on December 26, 2000 (File No. 811-04670) and is
incorporated by reference herein.
Kemper Global Income Fund's prospectus dated March 1, 2000, which was
previously filed with the Commission via EDGAR on March 6, 2000 (File No. 811-
05829), is incorporated by reference herein.
Scudder Global Bond Fund's statement of additional information offering
Class A, Class B and Class C shares dated March 1, 2001, which was previously
filed with the Commission via EDGAR on December 26, 2000 (File No. 811-04670),
is incorporated by reference herein.
<PAGE>
PART B
GLOBAL/INTERNATIONAL FUND, INC.
--------------------------------------------------------------
Statement of Additional Information
March [ ], 2001
--------------------------------------------------------------
Acquisition of the Assets of By and in Exchange for Shares of
Kemper Global Income Fund Scudder Global Bond Fund, a series of
222 South Riverside Plaza Global/International Fund, Inc.
Chicago, IL 60606 (the "Acquiring Corporation")
345 Park Avenue
New York, NY 10154-0010
This Statement of Additional Information is available to the shareholders
of Kemper Global Income Fund in connection with a proposed transaction whereby
Scudder Global Bond Fund will acquire all or substantially all of the assets and
all of the liabilities of Kemper Global Income Fund in exchange for shares of
the Scudder Global Bond Fund (the "Reorganization").
This Statement of Additional Information of the Acquiring Corporation
contains material which may be of interest to investors but which is not
included in the Proxy Statement/Prospectus of the Acquiring Corporation relating
to the Reorganization. This Statement of Additional Information consists of
this cover page and the following documents:
1. Scudder Global Bond Fund's statement of additional information offering
Class A, Class B and Class C shares dated March 1, 2001, which was previously
filed with the Securities and Exchange Commission (the "Commission") via EDGAR
on December 26, 2000 (File No. 811-04670) and is incorporated by reference
herein.
2. Scudder Global Bond Fund's annual report to shareholders for the fiscal
year ended October 31, 2000, which was previously filed with the Commission via
EDGAR on January 2, 2001 (File No. 811-04670) and is incorporated by reference
herein.
3. Kemper Global Income Fund's prospectus dated March 1, 2000, which was
previously filed with the Commission via EDGAR on March 6, 2000 (File No. 811-
05829) and is incorporated by reference herein.
4. Kemper Global Income Fund's statement of additional information dated March
1, 2000, which was previously filed with the Commission via EDGAR on March 6,
2000 (File No. 811-05829) and is incorporated by reference herein.
5. Kemper Global Income Fund's annual report to shareholders for the fiscal
year ended December 31, 1999, which was previously filed with the Commission via
EDGAR on March 2, 2000 (File No. 811-05829) and is incorporated by reference
herein.
<PAGE>
6. Kemper Global Income Fund's semiannual report to shareholders for the
period ended June 30, 2000, which was previously filed with the Commission via
EDGAR on August 23, 2000 (File No. 811-05829) and is incorporated by reference
herein.
7. The financial statements and schedules of Scudder Global Bond Fund and
Kemper Global Income Fund required by Regulation S-X for the periods specified
in Article 3 thereof, which are filed herein.
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated March [ ], 2001 relating to the Reorganization may
be obtained by writing Kemper Global Income Fund at 222 South Riverside Drive,
Chicago, IL 60606 or by calling [ ] at 1-800-[ ]. This
Statement of Additional Information should be read in conjunction with the Proxy
Statement/Prospectus.
<PAGE>
ANNEX A
The following is a description of the ratings given by Moody's and Standard
& Poor's to corporate and municipal bonds.
Ratings of Municipal and Corporate Bonds
Standard & Poor's Corporation:
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong. Debt rated AA has a very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree. Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major exposures to adverse
conditions.
Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating. Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.
Moody's:
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Bonds which are rated Aa are
judged to be of high quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks appear
somewhat larger than in Aaa securities. Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
<PAGE>
Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this class. Bonds
which are rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Standard & Poor's Corporation Earnings and Dividend Rankings for Common
Stocks
The investment process involves assessment of various factors -- such as
product and industry position, corporate resources and financial policy -- with
results that make some common stocks more highly esteemed than others. In this
assessment, Standard & Poor's Corporation believes that earnings and dividend
performance is the end result of the interplay of these factors and that, over
the long run, the record of this performance has a considerable bearing on
relative quality. The rankings, however, do not pretend to reflect all of the
factors, tangible or intangible, that bear on stock quality.
Relative quality of bonds or other debt, that is, degrees of protection for
principal and interest, called creditworthiness, cannot be applied to common
stocks, and therefore rankings are not to be confused with bond quality ratings
which are arrived at by a necessarily different approach.
Growth and stability of earnings and dividends are deemed key elements in
establishing Standard & Poor's earnings and dividend rankings for common stocks,
which are designed to capsulize the nature of this record in a single symbol. It
should be noted, however, that the process also takes into consideration certain
adjustments and modifications deemed desirable in establishing such rankings.
The point of departure in arriving at these rankings is a computerized
scoring system based on per-share earnings and dividend records of the most
recent ten years -- a period deemed long enough to measure significant time
segments of secular growth, to capture indications of basic change in trend as
they develop, and to encompass the full peak-to-peak range of the business
cycle. Basic scores are computed for earnings and dividends, then adjusted as
indicated by a set of predetermined modifiers for growth, stability within long-
term trend, and cyclicality. Adjusted scores for earnings and dividends are then
combined to yield a final score.
Further, the ranking system makes allowance for the fact that, in general,
corporate size imparts certain recognized advantages from an investment
standpoint. Conversely, minimum size limits (in terms of corporate sales volume)
are set for the various rankings, but the system provides for making exceptions
where the score reflects an outstanding earnings-dividend record.
The final score for each stock is measured against a scoring matrix
determined by analysis of the scores of a large and representative sample of
stocks. The range of scores in the array of this sample has been aligned with
the following ladder of rankings:
A+ Highest B+ Average C Lowest
A High B Below Average D In Reorganization
<PAGE>
A- Above Average B- Lower
NR signifies no ranking because of insufficient data or because the stock
is not amenable to the ranking process.
The positions as determined above may be modified in some instances by
special considerations, such as natural disasters, massive strikes, and non-
recurring accounting adjustments.
A ranking is not a forecast of future market price performance, but is
basically an appraisal of past performance of earnings and dividends, and
relative current standing. These rankings must not be used as market
recommendations; a high-score stock may at times be so overpriced as to justify
its sale, while a low-score stock may be attractively priced for purchase.
Rankings based upon earnings and dividend records are no substitute for complete
analysis. They cannot take into account potential effects of management
changes, internal company policies not yet fully reflected in the earnings and
dividend record, public relations standing, recent competitive shifts, and a
host of other factors that may be relevant to investment status and decision.
<PAGE>
<TABLE>
<CAPTION>
Kemper Global
Security Name Scudder Global Bond Income Par/Share Pro-Forma Combined
Par/Share Amount Par/Share Amount
-----------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements 2.2%
Repurchase Agreements with DLJ, 6.50%, 10/02/2000 4,060,000 4,060,000
Total Repurchase Agreements (Cost of $4,060,000, $0, and
$4,060,000 respectively)
Short Term Obligations 0.1%
US DOLLAR
Chase Euro Time Deposit, 6.375%, 10/02/2000 156,000 156,000
TURKISH LIRE
JP Morgan Time Deposit, 26%, 10/30/2000 72,625,163,070 72,625,163,070
Total Short Term Obligations (Cost of $111,958, $156,000, and
$267,958 respectively)
Foreign Denominated Debt Obligations 61%
ARGENTINEAN PESOS 0.6%
Argentine Republic, 6.8125%, 3/31/2005 340,000 144,000 484,000
Argentine Republic, 7.625%, 1/30/2017 525,000 205,000 730,000
BELGIAN FRANCS 2.2%
Belgium Kingdom, 8.5%, 10/01/2007 4,000,000 4,000,000
BRAZILIAN REALES 1.2%
Federative Republic of Brazil, 7%, 4/15/2009 285,000 150,000 435,000
Federative Republic of Brazil, 8%, 4/15/2014 471,630 162,547 634,176
Federative Republic of Brazil, 10.125%, 5/15/2027 379,000 161,000 540,000
Federative Republic of Brazil, 11.625%, 4/15/2004 312,000 130,000 442,000
Federal Republic of Brazil, 14.5%, 10/15/2009 280,000 125,000 405,000
BRITISH POUNDS 5.0%
United Kingdom Treasury Bond, 9%, 7/12/2011 2,100,000 750,000 2,850,000
Midland Bank PLC, 7.625%, 6/15/2006 1,500,000 1,500,000
United Kingdom Treasury Bond, 5.75%, 12/07/2009 1,500,000 1,500,000
BULGARIAN LEV 0.7%
Republic of Bulgaria, 3%, 7/28/2012 320,000 115,000 435,000
Republic of Bulgaria, 7.75%, 7/28/2011 845,000 380,000 1,225,000
CANADIAN DOLLARS 7.0%
Government of Canada, 8.5%, 4/01/2002 5,550,000 3,450,000 9,000,000
Province of Ontario, 1.875%, 1/25/2010 642,000,000 110,000,000 752,000,000
CAYMAN DOLLARS 1.9%
Sunamerica Institute Fund, 5.75%, 2/16/2009 4,000,000 4,000,000
COLOMBIAN PESO 0.4%
Republic of Columbia, 9.75%, 4/23/2009 575,000 245,000 820,000
DANISH KRONER 2.9%
Bundesschatzeisungen, 4%, 12/14/2001 6,300,000 6,300,000
EURO 24.5%
French Government, 5.5%, 4/25/2010 2,000,000 2,000,000
Federal Republic of Germany, 6.25%, 1/04/2024 9,000,000 3,600,000 12,600,000
Depfa Pfandbrief Bank, 4.75%, 7/15/2008 4,250,000 2,200,000 6,450,000
Kingdom of Spain, 5.875%, 7/28/2008 4,000,000 4,000,000
French Treasury Note, 4.5%, 7/12/2003 4,000,000 3,850,000 7,850,000
Caisse D'Amort Dette Cades, 3.375%, 7/12/2004 6,150,000 6,150,000
Ford Motor Credit Corp., 3.75%, 7/12/2004 930,000 1,400,000 2,330,000
Rheinische Hypo Bank, 4.5%, 8/26/2003 4,300,000 1,120,000 5,420,000
Government of Spain, 4.5%, 7/30/2004 2,050,000 2,050,000
European Investment Bank, 2.125%, 9/20/2007 300,000,000 300,000,000
JAPANESE YEN 6.3%
FNMA Global, 2.125%, 10/09/2007 630,000,000 630,000,000
KFW International Finance, 1.75%, 3/23/2010 325,000,000 325,000,000
Tokyo Electric Power Co., 4.375%, 5/14/2009 3,600,000 3,600,000
MEXICAN PESOS 1.2%
Mexican Value Recovery Rights, 6/30/2003 385,000 461,000 846,000
United Mexican States, 11.5%, 5/15/2026 425,000 180,000 605,000
United Mexican States, 11.375%, 9/15/16 595,000 255,000 850,000
United Mexican States Global Bond, 9.875%, 2/01/2010 300,000 125,000 425,000
NORWEGIAN KRONER 6.7%
Norweigan Government, 7%, 5/31/2001 75,000,000 39,570,000 114,570,000
PHILIPPINE PESOS 0.3%
Republic of Philippines, 10.625%, 3/16/2025 520,000 225,000 745,000
VENEZUELAN BOLIVARS 0.3%
Republic of Venezuela, 7.875%, 12/18/2007 357,140 178,570 535,710
Republic of Venezuela Global, 9.25%, 9/15/2027 50,000 50,000
Total Foreign Denominated Debt Obligations (Cost of $92,854,579,
$35,756,677, and $128,611,256 respectively)
U.S. Denominated Debt Obligations 36.7%
DaimlerChrysler AG, 7.45%, 3/01/2027 1,825,000 1,825,000
IBM Corp., 5.375%, 2/01/2009 2,300,000 2,300,000
General Motors Acceptance Corp., 6.875%, 9/09/2004 1,700,000 1,670,000 3,370,000
Government National Mortgage Association Pass-thru, 7%,
various to 4/15/2029 4,312,019 4,312,019
U.S. Treasury Bond, 7.5%, 11/15/2016 5,375,000 1,300,000 6,675,000
U.S. Treasury Bond, 8.5%, 2/21/2020 1,810,000 1,495,000 3,305,000
<CAPTION>
Scudder Global Kemper Global Pro-Forma
Bond Market Value Income Market Combined Market
Security Name ($) Value ($) Value ($)
------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements 2.2%
Repurchase Agreements with DLJ, 6.50%, 10/02/2000 4,060,000 4,060,000
------------------------------------------------------
Total Repurchase Agreements (Cost of $4,060,000, $0, and
$4,060,000 respectively) 4,060,000 4,060,000
======================================================
Short Term Obligations 0.1%
US DOLLAR
Chase Euro Time Deposit, 6.375%, 10/02/2000 156,000 156,000
TURKISH LIRE
JP Morgan Time Deposit, 26%, 10/30/2000 109,272 109,272
------------------------------------------------------
Total Short Term Obligations (Cost of $111,958, $156,000, and
$267,958 respectively) 109,272 156,000 265,272
======================================================
Foreign Denominated Debt Obligations 61%
ARGENTINEAN PESOS 0.6%
Argentine Republic, 6.8125%, 3/31/2005 311,100 131,760 442,860
Argentine Republic, 7.625%, 1/30/2017 469,875 183,475 653,350
------------------------------------------------------
780,975 315,235 1,096,210
------------------------------------------------------
BELGIAN FRANCS 2.2%
Belgium Kingdom, 8.5%, 10/01/2007 4,125,550 4,125,550
------------------------------------------------------
BRAZILIAN REALES 1.2%
Federative Republic of Brazil, 7%, 4/15/2009 249,731 131,437 381,168
Federative Republic of Brazil, 8%, 4/15/2014 360,796 124,348 485,144
Federative Republic of Brazil, 10.125%, 5/15/2027 293,725 124,775 418,500
Federative Republic of Brazil, 11.625%, 4/15/2004 322,296 134,290 456,586
Federal Republic of Brazil, 14.5%, 10/15/2009 309,400 138,125 447,525
------------------------------------------------------
1,535,948 652,975 2,188,923
------------------------------------------------------
BRITISH POUNDS 5.0%
United Kingdom Treasury Bond, 9%, 7/12/2011 4,047,060 1,445,376 5,492,436
Midland Bank PLC, 7.625%, 6/15/2006 1,522,170 1,522,170
United Kingdom Treasury Bond, 5.75%, 12/07/2009 2,301,104 2,301,104
------------------------------------------------------
7,870,334 1,445,376 9,315,710
------------------------------------------------------
BULGARIAN LEV 0.7%
Republic of Bulgaria, 3%, 7/28/2012 232,400 83,518 315,918
Republic of Bulgaria, 7.75%, 7/28/2011 640,619 288,089 928,708
------------------------------------------------------
873,019 371,607 1,244,626
------------------------------------------------------
CANADIAN DOLLARS 7.0%
Government of Canada, 8.5%, 4/01/2002 3,832,610 2,382,433 6,215,043
Province of Ontario, 1.875%, 1/25/2010 5,912,907 1,013,115 6,926,022
------------------------------------------------------
9,745,517 3,395,548 13,141,065
======================================================
CAYMAN DOLLARS 1.9%
Sunamerica Institute Fund, 5.75%, 2/16/2009 3,599,760 3,599,760
------------------------------------------------------
COLOMBIAN PESO 0.4%
Republic of Columbia, 9.75%, 4/23/2009 461,437 196,612 658,049
------------------------------------------------------
DANISH KRONER 2.9%
Bundesschatzeisungen, 4%, 12/14/2001 5,489,832 5,489,832
------------------------------------------------------
EURO 24.5%
French Government, 5.5%, 4/25/2010 1,778,187 1,778,187
Federal Republic of Germany, 6.25%, 1/04/2024 8,530,485 3,412,194 11,942,679
Depfa Pfandbrief Bank, 4.75%, 7/15/2008 3,517,018 1,820,574 5,337,592
Kingdom of Spain, 5.875%, 7/28/2008 3,759,720 3,759,720
French Treasury Note, 4.5%, 7/12/2003 3,471,002 3,340,840 6,811,842
Caisse D'Amort Dette Cades, 3.375%, 7/12/2004 5,071,433 5,071,433
Ford Motor Credit Corp., 3.75%, 7/12/2004 761,584 1,146,471 1,908,055
Rheinische Hypo Bank, 4.5%, 8/26/2003 3,701,747 964,176 4,665,923
Government of Spain, 4.5%, 7/30/2004 1,759,181 1,759,181
European Investment Bank, 2.125%, 9/20/2007 2,878,801 2,878,801
------------------------------------------------------
29,710,257 16,203,156 45,913,413
------------------------------------------------------
JAPANESE YEN 6.3%
FNMA Global, 2.125%, 10/09/2007 6,012,153 6,012,153
KFW International Finance, 1.75%, 3/23/2010 2,981,060 2,981,060
Tokyo Electric Power Co., 4.375%, 5/14/2009 2,814,020 2,814,020
------------------------------------------------------
11,807,233 11,807,233
------------------------------------------------------
MEXICAN PESOS 1.2%
Mexican Value Recovery Rights, 6/30/2003 - - -
United Mexican States, 11.5%, 5/15/2026 514,781 218,025 732,806
United Mexican States, 11.375%, 9/15/16 691,687 296,437 988,124
United Mexican States Global Bond, 9.875%, 2/01/2010 318,750 132,812 451,562
------------------------------------------------------
1,525,218 647,274 2,172,492
------------------------------------------------------
NORWEGIAN KRONER 6.7%
Norweigan Government, 7%, 5/31/2001 8,223,924 4,338,942 12,562,866
------------------------------------------------------
PHILIPPINE PESOS 0.3%
Republic of Philippines, 10.625%, 3/16/2025 440,700 190,687 631,387
------------------------------------------------------
VENEZUELAN BOLIVARS 0.3%
Republic of Venezuela, 7.875%, 12/18/2007 305,354 152,677 458,031
Republic of Venezuela Global, 9.25%, 9/15/2027 33,625 33,625
------------------------------------------------------
338,979 152,677 491,656
------------------------------------------------------
------------------------------------------------------
Total Foreign Denominated Debt Obligations (Cost of $92,854,579,
$35,756,677, and $128,611,256 respectively) 82,928,923 31,509,849 114,438,772
======================================================
U.S. Denominated Debt Obligations 36.7%
DaimlerChrysler AG, 7.45%, 3/01/2027 1,733,202 1,733,202
IBM Corp., 5.375%, 2/01/2009 2,069,839 2,069,839
General Motors Acceptance Corp., 6.875%, 9/09/2004 2,517,177 2,472,757 4,989,934
Government National Mortgage Association Pass-thru, 7%,
various to 4/15/2029 4,247,338 4,247,338
U.S. Treasury Bond, 7.5%, 11/15/2016 6,126,640 1,481,792 7,608,432
U.S. Treasury Bond, 8.5%, 2/21/2020 2,293,034 1,893,970 4,187,004
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
U S Treasuy Bond, 5.25%, 11/15/2028 2,400,000 2,400,000 2,151,000 2,151,000
U.S. Treasury Note, 5.25%, 10/15/2006 3,725,000 3,725,000 3,828,033 3,828,033
U.S. Treasury Note, 5.625%, 12/31/2002 12,390,000 1,730,000 14,120,000 12,293,230 1,716,488 14,009,718
U.S. Treasury Note, 6%, 8/15/2004 1,485,000 1,360,000 2,845,000 1,489,410 1,364,039 2,853,449
U.S. Treasury Note, 6%, 8/15/2009 5,000,000 5,000,000 5,025,000 5,025,000
U.S. Treasury Note, 7.875%, 8/15/2001 600,000 1,000,000 1,600,000 607,686 1,012,810 1,620,496
U.S. Treasury Note, 6.5%, 8/15/2005 9,725,000 9,725,000 9,969,681 9,969,681
Federal National Mortgage Association,
2.125%, 10/09/2007 210,000,000 210,000,000 2,004,063 2,004,063
Federal National Mortgage Association,
5.125%, 2/13/2004 2,593,000 2,593,000 2,481,186 2,481,186
----------------------------------------
Total U.S. Denominated Debt Obligations
(Cost of $57,142,479, $12,097,272, and
$69,239,751 respectively) 56,832,456 11,945,919 68,778,375
========================================
----------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100% (Cost
of $154,169,016, $48,009,949, and
$202,178,965 respectively) 143,930,651 43,611,768 187,542,419
========================================
</TABLE>
<PAGE>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Kemper Pro Forma Pro Forma
Global Bond Global Income Adjustments Combined
-------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Investments, at value $ 143,930,651 $ 43,611,768 $ 187,542,419
Cash 1,009,840 622,234 1,632,074
Other assets less liabilities 1,878,849 890,238 $ - (2) 2,769,087
-------------- ---------------- ------------- ----------------
Total Net assets $ 146,819,340 $ 45,124,240 $ - $ 191,943,580
============== ================ ============= ================
Net Assets
Class S Shares $ 146,819,340 $ 146,819,340
Class A Shares $ 39,487,513 $ 39,487,513
Class B Shares $ 4,451,809 $ 4,451,809
Class C Shares $ 1,184,918 $ 1,184,918
Shares Outstanding
Class S Shares 16,526,539 16,526,539
Class A Shares 5,133,050 (686,258) 4,446,792
Class B Shares 577,021 (75,691) 501,330
Class C Shares 153,262 (19,825) 133,437
Net Asset Value per Share
Class S Shares $ 8.88 $ 8.88
Class A Shares $ 7.69 $ 8.88
Class B Shares $ 7.72 $ 8.88
Class C Shares $ 7.73 $ 8.88
</TABLE>
<PAGE>
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Kemper Pro Forma Pro Forma
Global Bond Global Income Adjustments Combined
--------------------- ----------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 4,639,367 3,133,713 $ - $ 7,773,080
------------------------------------------------------------------------------
Total Investment Income 4,639,367 3,133,713 7,773,080
Expenses
Management fees 569,315 397,332 - 966,647
12B-1 - 172,806 - 172,806
Trustees Fees 47,805 25,519 - (3) 73,324
All other expenses 466,578 428,813 (395,473) (4) 499,918
-----------------------------------------------------------------------------
Total expenses before reductions 1,083,698 1,024,470 (395,473) 1,712,695
Expense reductions (78,142) - 78,142 (5) -
-----------------------------------------------------------------------------
Expenses, net 1,005,556 1,024,470 (317,331) 1,712,695
-----------------------------------------------------------------------------
Net investment income (loss) 3,633,811 2,109,243 317,331 6,060,385
-----------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain (loss) from investments (2,828,946) (1,097,733) - (3,926,679)
Net unrealized appreciation (depreciation)
of investments (7,973,446) (1,899,746) - (9,873,192)
-----------------------------------------------------------------------------
Net increase in net assets from operations $(7,168,581) $ (888,236) $ 317,331 $(7,739,486)
==============================================================================
</TABLE>
Notes to Pro Forma Combining Financial Statements
(Unaudited)
September 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
Statement of Assets and Liabilities as of September 30, 2000, and the
unaudited pro forma condensed Statement of Operations for the twelve month
period ended September 30, 2000 for Scudder Global Bond Fund and Kemper
Global Income Fund as adjusted giving effect to the Reorganization as if it
had occurred as of the beginning of the period. These statements have been
derived from the books and records utilized in calculating daily net asset
value for each fund.
2. Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxxx and $xxxxxx to be borne by the Scudder Global Bond
Fund and Kemper Global Income Fund, respectively.
3. Reduction in trustee fees resulting from the Reorganization.
4. Represents reduction in other expenses resulting from the utilization of
Scudder Global Bond Fund's administrative fee for the entire year.
5. Represents elimination of fee waivers.
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification.
-------- ----------------
A policy of insurance covering Scudder Kemper Investments, Inc.,
its subsidiaries, including Scudder Investor Services, Inc., and
all of the registered investment companies advised by Scudder
Kemper Investments, Inc. insures the Registrant's Directors and
officers and others against liability arising by reason of an
alleged breach of duty caused by any negligent error or accidental
omission in the scope of their duties.
Article Tenth of Registrant's Articles of Incorporation (Exhibits
(1)(a)(1)(a)(11) hereto, which are incorporated herein by
reference) states as follows:
TENTH Liability and Indemnification
----- -----------------------------
To the fullest extent permitted by the Maryland General
Corporation Law and the Investment Company Act of 1940, no
director or officer of the Corporation shall be liable to the
Corporation or to its stockholders for damages. This limitation on
liability applies to events occurring at the time a person serves
as a director or officer of the Corporation, whether or not such
person is a director or officer at the time of any proceeding in
which liability is asserted. No amendment to these Articles of
Amendment and Restatement or repeal of any of its provisions shall
limit or eliminate the benefits provided to directors and officers
under this provision with respect to any act or omission which
occurred prior to such amendment or repeal. The Corporation,
including its successors and assigns, shall indemnify its
directors and officers and make advance payment of related
expenses to the fullest extent permitted, and in accordance with
the procedures required by Maryland law, including Section 2-418
of the Maryland General Corporation Law, as may be amended from
time to time, and the Investment Company Act of 1940. The By-laws
may provide that the Corporation shall indemnify its employees
and/or agents in any manner and within such limits as permitted by
applicable law. Such indemnification shall be in addition to any
other right or claim to which any director, officer, employee or
agent may otherwise be entitled.
The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise or employee benefit plan
against any liability asserted against and incurred by such person
in any such capacity or arising out of such person's position,
whether or not the Corporation would have had the power to
indemnify against such liability.
The rights provided to any person by this Article shall be
enforceable against the Corporation by such person who shall be
presumed to have relied upon such rights in serving or continuing
to serve in the capacities indicated herein. No amendment of these
Articles of Amendment and Restatement shall impair the rights of
any person
<PAGE>
arising at any time with respect to events occurring prior to such
amendment.
Nothing in these Articles of Amendment and Restatement shall
be deemed to (i) require a waiver of compliance with any provision
of the Securities Act of 1933, as amended, or the Investment
Company Act of 1940, as amended, or of any valid rule, regulation
or order of the Securities and Exchange Commission under those
Acts or (ii) protect any director or officer of the Corporation
against any liability to the Corporation or its stockholders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
his or her duties or by reason of his or her reckless disregard of
his or her obligations and duties hereunder.
Item 16. Exhibits.
-------- ---------
(1) (a)(1) Articles of Amendment and Restatement, dated
December 13, 1990, are incorporated by
reference to Post-Effective Amendment No. 8
to the Registration Statement of
Global/International Fund, Inc. on Form N-1A,
as amended (the "Registration Statement").
(a)(2) Articles of Amendment, dated December 29,
1997, are incorporated by reference to Post-
Effective Amendment No. 34 to the
Registration Statement.
(a)(3) Articles of Amendment, dated May 29, 1998,
are incorporated by reference to Post-
Effective Amendment No. 34 to the
Registration Statement.
(a)(4) Articles Supplementary, dated February 14,
1991, are incorporated by reference to Post-
Effective Amendment No. 9 to the Registration
Statement.
(a)(5) Articles Supplementary, dated July 11, 1991,
are incorporated by reference to Post-
Effective Amendment No. 12 to the
Registration Statement.
(a)(6) Articles Supplementary, dated November 24,
1992, are incorporated by reference to Post-
Effective Amendment No. 18 to the
Registration Statement.
(a)(7) Articles Supplementary, dated October 20,
1993, are incorporated by reference to Post-
Effective Amendment No. 19 to the
Registration Statement.
<PAGE>
(a)(8) Articles Supplementary, dated December 14, 1995, are
incorporated by reference to Post-Effective Amendment
No. 26 to the Registration Statement.
(a)(9) Articles Supplementary, dated March 6, 1996, are
incorporated by reference to Post-Effective Amendment
No. 28 to the Registration Statement.
(a)(10) Articles Supplementary, dated April 15, 1998 are
incorporated by reference to Post-Effective Amendment
No. 34 to the Registration Statement.
(a)(11) Articles Supplementary, dated March 31, 2000, are
incorporated by reference to Post-Effective Amendment
No. 44 to the Registration Statement.
(2) (b)(1) By-Laws, dated May 15, 1986, are incorporated by
reference to the original Registration Statement.
(b)(2) Amendment to the By-Laws , dated May 4, 1987, is
incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement.
(b)(3) Amendment to the By-Laws, dated September 14, 1987, is
incorporated by reference to Post-Effective Amendment
No. 5 to the Registration Statement.
(b)(4) Amendment to the By-Laws, dated July 27, 1988, is
incorporated by reference to Post-Effective Amendment
No. 5 to the Registration Statement.
(b)(5) Amendment to the By-Laws, dated September 15, 1989, is
incorporated by reference to Post-Effective Amendment
No. 7 to the Registration Statement.
(b)(6) Amended and Restated By-Laws, dated March 4, 1991, are
incorporated by reference to Post-Effective Amendment
No. 12 to the Registration Statement.
(b)(7) Amendment to the By-Laws, dated September 20, 1991, is
incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement.
(b)(8) Amendment to the By-Laws, dated December 12, 1991, is
incorporated by reference to Post-Effective Amendment
No. 23 to the Registration Statement.
<PAGE>
(b)(9) Amendment to the By-Laws, dated October 1, 1996, is
incorporated by reference to Post-Effective Amendment
No. 27 to the Registration Statement.
(b)(10) Amendment to the By-Laws, dated December 3, 1997, is
incorporated by reference to Post-Effective Amendment
No. 34 to the Registration Statement.
(b)(11) Amendment to the By-Laws, dated February 7, 2000, is
incorporated by reference to Post-Effective Amendment
No. 43 to the Registration Statement.
(3) Inapplicable.
(4) Form of Agreement and Plan of Reorganization is filed
herein as Exhibit A to Part A.
(5) (c)(1) Specimen Share Certificate representing shares of
capital stock of $.01 par value of Scudder Global Fund
is incorporated by reference to Post-Effective
Amendment No. 6 to the Registration Statement.
(c)(2) Specimen Share Certificate representing shares of
capital stock of $.01 par value of Scudder
International Bond Fund is incorporated by reference to
Post-Effective Amendment No. 6 to the Registration
Statement.
(6) (d)(1) Investment Management Agreement between the Registrant
(on behalf of Scudder Global Fund) and Scudder Kemper
Investments, Inc., dated September 7, 1998, is
incorporated by reference to Post-Effective Amendment
No. 36 to the Registration Statement.
(d)(2) Investment Management Agreement between the Registrant
(on behalf of Scudder International Bond Fund) and
Scudder Kemper Investments, Inc., dated September 7,
1998, is incorporated by reference to Post-Effective
Amendment No. 36 to the Registration Statement.
(d)(3) Investment Management Agreement between the Registrant
(on behalf of Scudder Global Bond Fund) and Scudder
Kemper Investments, Inc., dated September 7, 1998, is
incorporated by reference to Post-Effective Amendment
No. 36 to the Registration Statement.
<PAGE>
(d)(4) Investment Management Agreement between the Registrant
(on behalf of Scudder Global Discovery Fund) and
Scudder Kemper Investments, Inc., dated September 7,
1998, is incorporated by reference to Post Effective
Amendment No. 36 to the Registration Statement.
(d)(5) Investment Management Agreement between the Registrant
(on behalf of Scudder Emerging Markets Income Fund) and
Scudder Kemper Investments, Inc., dated September 7,
1998 is incorporated by reference to Post-Effective
Amendment No. 36 to the Registration Statement.
(7) (e)(1) Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc., dated September 7,
1998, is incorporated by reference to Post-Effective
Amendment No. 36 to the Registration Statement.
(e)(2) Underwriting and Distribution Services Agreement
between the Registrant (on behalf of Global Discovery
Fund) and Kemper Distributors, Inc., dated August 6,
1998, is incorporated by reference to Post Effective
Amendment 36 to the Registration Statement.
(e)(3) Underwriting and Distribution Services Agreement
between the Registrant (on behalf of Global Discovery
Fund) and Kemper Distributors, Inc., dated September 7,
1998, is incorporated by reference to Post Effective
Amendment No. 37 to the Registration Statement.
(e)(4) Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc. dated May 8, 2000, is
incorporated by reference to Post Effective Amendment
No. 45 to the Registrant Statement.
(8) Inapplicable.
(9) (g)(1) Custodian Agreement between the Registrant and State
Street Bank and Trust Company, dated July 24, 1986, is
incorporated by reference to Post-Effective Amendment
No. 1 to the Registration Statement.
(g)(2) Fee schedule for Exhibit (g)(1) is incorporated by
reference to Post-Effective Amendment No. 4 to the
Registration Statement.
(g)(3) Custodian Agreement between the Registrant (on behalf
of Scudder International Bond Fund) and Brown Brothers
Harriman & Co., dated July 1, 1988, is incorporated by
reference to Post-Effective Amendment No. 5 to the
Registration Statement.
<PAGE>
(g)(4) Fee schedule for Exhibit 8(g)(3) is incorporated by
reference to Post-Effective Amendment No. 5 to the
Registration Statement.
(g)(5) Amendment, dated September 16, 1988, to the Custodian
Contract between the Registrant and State Street Bank
and Trust Company, dated July 24, 1986, is incorporated
by reference to Post-Effective Amendment No. 6 to the
Registration Statement.
(g)(6) Amendment, dated December 7, 1988, to the Custodian
Contract between the Registrant and State Street Bank
and Trust Company dated July 24, 1986 is incorporated
by reference to Post-Effective Amendment No. 6 to the
Registration Statement.
(g)(7) Amendment, dated November 30, 1990, to the Custodian
Contract between the Registrant and State Street Bank
and Trust Company, dated July 24, 1986, is incorporated
by reference to Post-Effective Amendment No. 10 to the
Registration Statement.
(g)(8) Custodian Agreement between the Registrant (on behalf
of Scudder Short Term Global Income Fund) and Brown
Brothers Harriman & Co., dated February 28, 1991, is
incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement.
(g)(9) Custodian Agreement between the Registrant (on behalf
of Scudder Global Small Company Fund) and Brown
Brothers Harriman & Co., dated August 30, 1991, is
incorporated by reference to Post-Effective Amendment
No. 16 to the Registration Statement.
(g)(10) Custodian Agreement between the Registrant (on behalf
of Scudder Emerging Markets Income Fund) and Brown
Brothers Harriman & Co., dated December 31, 1993, is
incorporated by reference to Post-Effective Amendment
No. 23 to the Registration Statement.
(g)(11) Amendment (on behalf of Scudder Global Fund) dated
October 3, 1995 to the Custodian Agreement between the
Registrant and Brown Brothers Harriman & Co., dated
March 7, 1995, is incorporated by reference to Post-
Effective Amendment No. 24 to the Registration
Statement.
(g)(12) Amendment, dated September 29, 1997, to the Custodian
Contract between the Registrant and Brown Brothers
Harriman & Co., dated March 7, 1995, is incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement.
<PAGE>
(g)(13) Amendment (on behalf of Scudder International Bond
Fund), dated April 16, 1998, to the Custodian Agreement
between the Registrant and Brown Brothers Harriman &
Co., dated March 7, 1995, is incorporated by reference
to Post-Effective Amendment No. 34 to the Registration
Statement.
(g)(14) Amendment (on behalf of Scudder Global Discovery Fund),
dated April 16, 1998, to the Custodian Agreement
between the Registrant and Brown Brothers Harriman &
Co., dated March 7, 1998, is incorporated by reference
to Post-Effective Amendment No. 34 to the Registration
Statement.
(g)(15) Amendment (on behalf of Scudder Emerging Markets Income
Fund), dated June 17, 1998, to the Custodian Agreement
between the Registrant and Brown Brothers Harriman &
Co., dated March 7, 1995, is incorporated by reference
to Post-Effective Amendment No. 34 to the Registration
Statement.
(10) (m)(1) Amended and Restated Rule 12b-1 Plan for Global
Discovery Fund Class B Shares, dated August 6, 1998, is
incorporated by reference to Post Effective Amendment
No. 36 to the Registration Statement.
(m)(2) Amended and Restated Rule 12b-1 Plan for Global
Discovery Fund Class C Shares, dated August 6, 1998, is
incorporated by reference to Post Effective Amendment
No. 36 to the Registration Statement.
(m)(3) Mutual Funds Multi-Distribution System Plan pursuant to
Rule 18f-3 is incorporated by reference to Post-
Effective Amendment No. 33 to the Registration
Statement.
(m)(4) Plan with respect to Scudder Emerging Markets Income
Fund pursuant to Rule 18f-3 is incorporated by
reference to Post Effective Amendment No. 45 to the
Registration Statement.
(m)(5) Plan with respect to Scudder Global Fund pursuant to
Rule 18f-3 is incorporated by reference to Post
Effective Amendment No. 45 to the Registration
Statement.
(m)(6) Plan with respect to Scudder Global Bond Fund pursuant
to Rule 18f-3 is incorporated by reference to Post
Effective Amendment No. 45 to the Registration
Statement.
(m)(7) Amended and Restated Plan with respect to Scudder
Emerging Markets Income Fund pursuant to Rule 18f-3 is
incorporated by reference to Post Effective Amendment
No. 45 to the Registration Statement.
<PAGE>
(m)(8) Amended and Restated Plan with respect to Scudder
Global Fund pursuant to Rule 18f-3 is incorporated by
reference to Post Effective Amendment No. 45 to the
Registration Statement.
(m)(9) Amended and Restated Plan with respect to Scudder
Global Bond Fund pursuant to Rule 18f-3 is incorporated
by reference to Post Effective Amendment No. 45 to the
Registration Statement.
(m)(10) Amended and Restated Plan with respect to Scudder
International Bond Fund pursuant to Rule 18f-3 is
incorporated by reference to Post Effective Amendment
No. 45 to the Registration Statement.
(m)(11) Scudder Funds Amended and Restated Multi-Distribution
System Plan is filed herewith.
(11) Opinion and Consent of Dechert is filed herewith.
(12) Opinion and Consent of Willkie, Farr and Gallagher to
be filed by post-effective amendment.
(13) (h)(1) Transfer Agency and Service Agreement between the
Registrant and Scudder Service Corporation, dated
October 2, 1989, is incorporated by reference to Post-
Effective Amendment No. 7 to the Registration
Statement.
(h)(2) Revised fee schedule, dated October 1, 1996, for
Exhibit 9(a)(1) is incorporated by reference to Post-
Effective Amendment No. 28 to the Registration
Statement.
(h)(3) Agency agreement between the Registrant, (on behalf of
Global Discovery Fund) and Kemper Service Company,
dated April 16,1998, is incorporated by reference to
Post-Effective Amendment No. 35 to the Registration
Statement.
(h)(4) COMPASS Service Agreement between Scudder Trust Company
and the Registrant, dated October 1, 1995, is
incorporated by reference to Post-Effective Amendment
No. 26 to the Registration Statement.
(h)(5) Revised fee schedule, dated October 1, 1996, for
Exhibit 9(b)(4) is incorporated by reference to Post-
Effective Amendment No. 28 to the Registration
Statement.
(h)(6) Shareholder Services Agreement with Charles Schwab &
Co., Inc., dated June 1, 1990, is incorporated by
reference to Post-Effective Amendment No. 7 to the
Registration Statement.
<PAGE>
(h)(7) Service Agreement between Copeland Associates, Inc. and
Scudder Service Corporation (on behalf of Scudder
Global Fund and Scudder Global Small Company Fund),
dated June 8, 1995, is incorporated by reference to
Post-Effective Amendment No. 24 to the Registration
Statement.
(h)(8) Administrative Services Agreement between McGladrey &
Pullen, Inc. and the Registrant, dated September 30,
1995, is incorporated by reference to Post-Effective
Amendment No. 26 to the Registration Statement.
(h)(9) Administrative Services Agreement between the
Registrant (on behalf of Global Discovery Fund) and
Kemper Distributors, Inc., dated April 16, 1998, is
incorporated by reference to Post-Effective Amendment
No. 34 to the Registration Statement.
(h)(10) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder Global Fund) and
Scudder Fund Accounting Corporation, dated March 14,
1995, is incorporated by reference to Post-Effective
Amendment No. 24 to the Registration Statement.
(h)(11) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder International Bond
Fund) and Scudder Fund Accounting Corporation, dated
August 3, 1995, is incorporated by reference to Post-
Effective Amendment No. 25 to the Registration
Statement.
(h)(12) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder Global Small Company
Fund) and Scudder Fund Accounting Corporation, dated
June 15, 1995, is incorporated by reference to Post-
Effective Amendment No. 25 to the Registration
Statement.
(h)(13) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder Global Bond Fund
(formerly Scudder Short Term Global Income Fund)) and
Scudder Fund Accounting Corporation, dated November 29,
1995, is incorporated by reference to Post-Effective
Amendment No. 26 to the Registration Statement.
(h)(14) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder Emerging Markets
Income Fund) and Scudder Fund Accounting Corporation,
dated February 1, 1996, is incorporated by reference to
Post-Effective Amendment No. 27 to the Registration
Statement.
<PAGE>
(h)(15) Administrative Agreement between the Registrant (on
behalf of Global/International Fund, Inc.) and Scudder
Kemper Investments, Inc., dated September 11, 2000, to
be filed by post-effective amendment.
(14) Consents of Independent Accountants are filed herewith.
(15) Inapplicable.
(16) Powers of Attorney are filed herewith.
(17) Form of Proxy is filed herewith.
Item 17. Undertakings.
-------- -------------
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act of 1933 (the "1933
Act") [17 CFR 230.145c], the reoffering prospectus will contain the
information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used until
the amendment is effective, and that, in determining any liability
under the 1933 Act, each post-effective amendment shall be deemed to
be a new registration statement for the securities offered therein,
and the offering of the securities at that time shall be deemed to
be the initial bona fide offering of them.
(3) The undersigned Registrant undertakes to file, by post-effective
amendment, an opinion of counsel supporting the tax consequences of
the proposed reorganization within a reasonable time after receipt
of such opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Global/International Fund, Inc. has duly caused
this Registration Statement on Form N-14 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 3rd day of January, 2001.
GLOBAL/INTERNATIONAL FUND, INC.
By: /s/ Linda C. Coughlin
-----------------------------
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Linda C. Coughlin President and Director January 3, 2001
------------------------------
Linda C. Coughlin
/s/ Henry P. Becton, Jr* Director January 3, 2001
------------------------------
Henry P. Becton, Jr.
/s/ Dawn-Marie Driscoll* Director January 3, 2001
------------------------------
Dawn-Marie Driscoll
/s/ Edgar R. Fiedler* Director January 3, 2001
------------------------------
Edgar R. Fiedler
/s/ Keith R. Fox* Director January 3, 2001
------------------------------
Keith R. Fox
/s/ Joan E. Spero* Director January 3, 2001
------------------------------
Joan E. Spero
/s/ Jean Gleason Stromberg* Director January 3, 2001
------------------------------
Jean Gleason Stromberg
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Jean C. Tempel* Director January 3, 2001
------------------------------
Jean C. Tempel
/s/ Steven Zaleznick* Director January 3, 2001
------------------------------
Steven Zaleznick
/s/ John R. Hebble Treasurer (Principal Financial and January 3, 2001
------------------------------ Accounting Officer)
John R. Hebble
</TABLE>
*By: /s/ Joseph R. Fleming
-------------------------------- January 3, 2001
Joseph R. Fleming, Attorney-in-fact
*Executed pursuant to powers of attorney filed herein as an exhibit to the
Registrant's Registration Statement on Form N-14.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GLOBAL/INTERNATIONAL FUND, INC.
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
EXHIBIT INDEX
Exhibit 10 Scudder Funds Amended and Restated Multi-Distribution System Plan
Exhibit 11 Opinion and Consent of Dechert
Exhibit 14 Consents of Independent Accountants
Exhibit 16 Powers of Attorney
Exhibit 17 Form of Proxy
