(File Nos. 33-8120 and 811-4808)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE RODNEY SQUARE STRATEGIC EQUITY FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
1) Title of each class of securities to which transaction applies:
---------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
INTERNATIONAL EQUITY PORTFOLIO
RODNEY SQUARE NORTH
1100 NORTH MARKET STREET
WILMINGTON, DE 19890-0001
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 17, 1998
To the Shareholders:
A Special Meeting of Shareholders (the "Meeting") of the International
Equity Portfolio (the "Portfolio") of The Rodney Square Strategic Equity Fund
(the "Fund") will be held at the offices of Wilmington Trust Company, 1100 North
Market Street, 9th Floor, Wilmington, Delaware 19890-0001, on December 17, 1998,
at 10 a.m. eastern time,
1. To approve or disapprove a new sub-advisory agreement with Scudder
Kemper Investments, Inc., one of the sub-advisers to the Portfolio; and
2. To transact any other business as may properly come before the Meeting
or any adjournment thereof.
You are entitled to vote at the Meeting and any adjournments thereof if
you owned shares of beneficial interest in the Portfolio at the close of
business on November 16, 1998. If you attend the Meeting, you may vote your
shares in person. If you do not expect to attend, please complete, date, sign,
and mail the enclosed proxy card in the enclosed postage prepaid envelope.
By Order of the Board of Trustees,
Carl M. Rizzo, Secretary
November __, 1998
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WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
POSTAGE PAID RETURN ENVELOPE ENCLOSED, SO THAT A QUORUM WILL BE PRESENT AND A
MAXIMUM NUMBER OF SHARES MAY BE VOTED. IT IS MOST IMPORTANT AND IN YOUR
INTEREST FOR YOU TO SIGN YOUR PROXY CARD AND RETURN IT. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
INTERNATIONAL EQUITY PORTFOLIO
RODNEY SQUARE NORTH
1100 NORTH MARKET STREET
WILMINGTON, DE 19890-0001
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 17, 1998
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This Proxy Statement is furnished to shareholders of the International
Equity Portfolio (the "Portfolio") in connection with the solicitation of
proxies by the Board of Trustees of The Rodney Square Strategic Equity Fund (the
"Fund") for use at a Special Meeting of Shareholders of the Portfolio (the
"Meeting") to be held on December 17, 1998 at 10 a.m. eastern time at the
offices of Wilmington Trust Company ("WTC"), 1100 North Market Street, 9th
Floor, Wilmington, Delaware 19890-0001 and at any adjournment thereof. Copies of
this Proxy Statement and the accompanying materials were first sent to
shareholders on or about November __, 1998.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, the duly appointed proxies will vote your shares in
accordance with the recommendation of your Board of Trustees as to the approval
of a new sub-advisory agreement for the Portfolio, and at the discretion of the
proxies on any other matter that may properly come before the Meeting. Any
person giving a proxy may revoke it at any time prior to its use by giving
written notice of such revocation to the Fund prior to the Meeting, by
delivering a subsequently dated proxy to the Fund prior to the Meeting, or by
attending and voting at the Meeting in person. Proxies will be solicited
principally by mail, but officers of the Fund or agents appointed by the Fund
may also solicit proxies by other means.
The Board of Trustees has fixed the close of business on November 16, 1998
as the record date ("Record Date") for the determination of the shareholders
entitled to notice of and to vote at the Meeting or any adjournment thereof. As
of that date, there were approximately __________ outstanding shares of the
Portfolio. Each shareholder is entitled to one vote for each share held on the
Record Date. As of November 16, 1998, no shareholder other than WTC owned of
record or beneficially more than 5% of the outstanding shares of the Portfolio.
As of that date, WTC owned of record _____% of the shares of the Portfolio, of
which it owned beneficially with power to vote, on behalf of its customer
accounts, ____% of the shares of the Portfolio.
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The presence at the Meeting, in person or by proxy, of the holders of at
least a majority of the Portfolio's outstanding shares as of the Record Date is
required to constitute a quorum for the purpose of transacting business at the
Meeting. In the event that a quorum is not represented at the Meeting or at any
adjournment thereof, or, even if a quorum is so represented, in the event that
sufficient votes in favor of any of the proposals set forth in the Notice of the
Meeting are not received, the persons named as proxies may propose and vote for
one or more adjournments of the Meeting and further solicitation of proxies may
be made without the necessity of further notice. The persons named as proxies
will vote in favor of any such adjournment if such proxies instruct them to vote
in favor of any of the proposals to be considered at the adjourned meeting, and
will vote against any such adjournment if such proxies instruct them to vote
against or to abstain from voting on all of the proposals to be considered at
the adjournment meetings. A shareholder vote may be taken on one or more of the
proposals prior to an adjournment if sufficient votes have been received and it
is otherwise appropriate.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining whether a quorum is present but will not be voted for or
against any proposal or for or against any adjournment to permit further
solicitation of proxies. Accordingly, abstentions and broker non-votes
effectively will be a vote against such adjournment or against any proposal
where the required vote is a percentage of the shares present or outstanding.
Abstentions and broker non-votes will not be counted, however, as votes cast for
purposes of determining whether sufficient votes have been received to approve a
proposal. Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other person entitled to vote and the broker does not have discretionary voting
authority.
A COPY OF THE FUND'S MOST RECENT ANNUAL REPORT AND SEMI-ANNUAL REPORT TO
SHAREHOLDERS WILL BE AVAILABLE TO ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN
REQUEST TO: PFPC INC., 400 BELLEVUE PARKWAY, WILMINGTON, DE 19809 OR BY PHONE,
TOLL-FREE AT 800-336-9970.
PROPOSAL 1. TO APPROVE A NEW SUB-ADVISORY AGREEMENT FOR THE
INTERNATIONAL EQUITY PORTFOLIO
INTRODUCTION
Scudder Kemper Investments, Inc. ("Scudder Kemper") acts as a sub-adviser
to the Portfolio pursuant to a sub-advisory agreement (the "Sub-Advisory
Agreement") entered into by the Fund, WTC, as the Fund's investment adviser, and
Scudder Kemper. The Sub-Advisory Agreement in effect prior to the consummation
of the transaction between Zurich Insurance Company ("Zurich") and B.A.T.
Industries p.l.c. ("B.A.T.") (the "Transaction"), which is described below, is
referred to in this Proxy Statement as the "Former Sub-Advisory Agreement." The
Former Sub-Advisory Agreement was approved by WTC as the initial shareholder of
the Portfolio on June __, 1998. The Sub-Advisory Agreement currently in effect,
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which is also described below, was executed as of September 7, 1998, the date of
the consummation of the Transaction, and is referred to in this Proxy Statement
as the "New Sub-Advisory Agreement."
The information set forth in this Proxy Statement concerning the
Transaction, Scudder Kemper, Zurich, B.A.T. and their respective affiliates has
been provided to the Fund by Scudder Kemper based upon information that Scudder
Kemper received from Zurich and its affiliates.
THE TRANSACTION. On December 22, 1997, Zurich and B.A.T. entered into a
definitive agreement pursuant to which businesses of Zurich (including Zurich's
almost 70% ownership interest in Scudder Kemper) were to be combined with the
financial services businesses of B.A.T. in a new company. In order to effect
this combination, Zurich and B.A.T. first reorganized their respective
operations. Zurich became a subsidiary of a new Swiss holding company, Zurich
Allied AG, and Zurich shareholders became shareholders of Zurich Allied AG. At
the same time, B.A.T. separated its financial services business from its
tobacco-related businesses by spinning off to its shareholders a new British
company, Allied Zurich p.l.c., which held B.A.T.'s financial services
businesses.
Zurich Allied AG then contributed its interest in Zurich, and Allied
Zurich p.l.c. contributed the B.A.T. financial services businesses, to a jointly
owned company, Zurich Financial Services, in each case in exchange for shares of
Zurich Financial Services. These transactions were completed on September 7,
1998. As a result, upon the completion of the Transaction, the former Zurich
shareholders became the owners (through Zurich Allied AG) of 57% of the voting
stock of Zurich Financial Services, and the former B.A.T. shareholders became
the owners (through Allied Zurich p.l.c.) of 43% of the voting stock of Zurich
Financial Services. Zurich Financial Services now owns Zurich and the financial
services businesses previously owned by B.A.T.
As a result of the Transaction, the former shareholders of B.A.T. now
indirectly own a 43% interest in Zurich through Allied Zurich p.l.c. Because of
Zurich's ownership interest in Scudder Kemper, this change in ownership of
Zurich may be deemed to have caused a "change in control" of Scudder Kemper,
even though Scudder Kemper's operations will not change as a result. This change
in control of Scudder Kemper may be deemed to have effected an "assignment," as
that term is defined in the Investment Company Act of 1940 ("1940 Act"), of the
Former Sub-Advisory Agreement. As required by the 1940 Act, the Former
Sub-Advisory Agreement provided for its automatic termination in the event of
its assignment. Accordingly, a new Sub-Advisory Agreement between the Fund, WTC
and Scudder Kemper was approved by the Board of Trustees ("Board") of the Fund
and is now being proposed for approval by the Portfolio's shareholders.
Scudder Kemper has received an exemptive order from the Securities and
Exchange Commission ("SEC") permitting the Fund to obtain the approval of the
New Sub-Advisory Agreement by the Portfolio's shareholders within 150 days after
the consummation of the Transaction (and, consequently, within 150 days after
the termination of the Former Sub-Advisory Agreement), instead of before the
consummation of the Transaction. Pursuant to the exemptive order, Scudder
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Kemper's sub-advisory fees are being held in escrow until the earlier of
shareholder approval of the Portfolio's New Sub-Advisory Agreement or the
expiration of the 150 day period. A copy of the New Sub-Advisory Agreement is
attached hereto as Exhibit A. The material terms of the Sub-Advisory Agreement
are described below.
DESCRIPTION OF THE NEW SUB-ADVISORY AGREEMENT. The New Sub-Advisory
Agreement is identical to the Former Sub-Advisory Agreement, except for the
dates of execution and termination, and the portfolio managers for the Portfolio
will not change. Under the New Sub-Advisory Agreement, Scudder Kemper agrees:
(1) to provide portfolio management services for the Portfolio assets assigned
to it, subject to and in accordance with the Portfolio's investment objective,
policies and limitations; (2) to purchase and sell securities and other
investments of the Portfolio; (3) and to maintain certain records on behalf of
the Fund.
The New Sub-Advisory Agreement permits Scudder Kemper to purchase and sell
portfolio securities to and from dealers who provide Scudder Kemper or the Fund
with research services. In placing such portfolio transactions, Scudder Kemper
may pay a brokerage commission in excess of that which another broker might
charge for executing the same transaction on account of the receipt of research,
market or statistical information. In addition, with the consent of WTC, Scudder
Kemper may execute portfolio transactions with a broker or dealer that is an
affiliated person of the Fund, including WTC or any Sub-Adviser for any
Portfolio of the Fund (including Scudder Kemper).
Under the New Sub-Advisory Agreement, Scudder Kemper will provide these
services for a monthly fee at an annual rate of .50% of the portion of the
Portfolio's average daily net assets assigned to Scudder Kemper, which is the
same as the fee specified in the Former Sub-Advisory Agreement. The fees paid to
Scudder Kemper under the Former Sub-Advisory Agreement for the period from June
29, 1998 (date of inception) to September 7, 1998 totaled $________. For a list
of funds with investment objectives similar to that of the Portfolio for which
Scudder Kemper acts as investment adviser and the fees paid by such funds to
Scudder Kemper, see Exhibit B.
The New Sub-Advisory Agreement further provides that, in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
obligations or duties hereunder on the part of Scudder Kemper, Scudder Kemper
shall not be subject to liability for any act or omission in the course of, or
connected with, rendering services thereunder. The Former Sub-Advisory Agreement
contains an identical provision.
The New Sub-Advisory Agreement may be terminated without penalty upon 60
days' written notice by any party to the Agreement. The Fund may terminate the
New Sub-Advisory Agreement either by the vote of a majority of the outstanding
voting securities of the Portfolio, or by a vote of the Board. As stated above,
the New Sub-Advisory Agreement automatically terminates in the event of its
assignment.
SCUDDER KEMPER. Scudder Kemper is one of the largest and most experienced
investment counsel firms in the United States. It was formed in 1997 from the
combination of the businesses of Scudder Stevens & Clark, Inc. ("Scudder"),
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which was established in 1919, and Zurich Kemper Investments, Inc. ("Kemper").
Scudder launched its first fund in 1928, and Kemper launched its first fund in
1948. Since December 31, 1997, Scudder Kemper has served as investment adviser
to both Scudder and Kemper funds. As of August 31, 1998, Scudder Kemper had more
than $241.1 billion in assets under management. The principal source of Scudder
Kemper's income is professional fees received from providing continuing
investment advice. Scudder Kemper provides investment counsel for many
individuals and institutions, including insurance companies, endowments,
industrial corporations and financial and banking organizations.
Scudder Kemper is a Delaware corporation. Rolf Huppi(1) is the Chairman of the
Board and Director, Edmond D. Villani(2) is the President, Chief Executive
Officer and Director, Stephen R. Beckwith(2) is the Treasurer and Chief
Financial Officer, Kathryn L. Quirk(2) is the General Counsel, Chief Compliance
Officer and Secretary, Lynn S. Birdsong(2) is a Corporate Vice President and
Director, Cornelia M. Small(2) is a Corporate Vice President and Director,
Laurence Cheng(1) is a Director, Gunther Gose is a Director, and William H.
Bolinder(3) is a Director. The principal occupation of each of Edmond D.
Villani, Stephen R. Beckwith, Kathryn L. Quirk, Lynn S. Birdsong and Cornelia M.
Small is serving as a Managing Director of Scudder Kemper; the principal
occupation of Rolf Huppi is serving as an officer of Zurich; the principal
occupation of Laurence Cheng is serving as a senior partner of Capital Z
Partners, an investment fund; the principal occupation of Gunther Gose is
serving as Chief Financial Officer of Zurich Financial Services; the principal
occupation of William H. Bolinder is serving as a member of the Group Executive
Board of Zurich Financial Services.
The outstanding voting securities of Scudder Kemper are held of record
36.63% by Zurich Holding Company of America ("ZHCA"), a subsidiary of Zurich;
32.85% by ZKI Holding Corp. ("ZKIH"), a subsidiary of Zurich; 20.86% by Stephen
R. Beckwith, Lynn S. Birdsong, Kathryn L. Quirk, Cornelia M. Small and Edmond D.
Villani, in their capacity as representatives (the "Management Representatives")
of Scudder Kemper's management holders and retiree holders pursuant to a Second
Amended and Restated Security Holders Agreement among Scudder Kemper, Zurich,
ZHCA, ZKIH, the Management Representatives, the management holders, the retiree
holders and Edmond D. Villani, as trustee of Scudder Kemper Investments, Inc.
Executive Defined Contribution Plan Trust (the "Plan Trust"); and 9.66% by the
Plan Trust. There are no outstanding non-voting securities of Scudder Kemper.
BOARD'S RECOMMENDATION. The New Sub-Advisory Agreement was presented to
the Board at its meeting on August 17, 1998. Scudder Kemper furnished the Board
with information regarding the Transaction, including information regarding the
structure of the Transaction, the resulting ownership and governance
arrangements of Zurich and the investment management business of B.A.T. expected
to be acquired by Scudder Kemper following completion of the Transaction. In
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1 Mythenquai 2, Zurich, Switzerland.
2 345 Park Avenue, New York, New York.
3 1400 American Lane, Schaumburg, Illinois.
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approving the New Sub-Advisory Agreement, the Board analyzed the factors they
deemed relevant, including the nature, quality and extent of the services
furnished by Scudder Kemper to the Portfolio; the increased complexity of the
international securities markets; the investment record of Scudder Kemper;
comparative data as to investment performance, advisory fees and expense ratios;
possible benefits to Scudder Kemper from serving as sub-adviser to the
Portfolio; current and developing conditions in the financial services industry,
including the entry into the industry of large and well-capitalized companies
that are spending and appear to be prepared to continue to spend substantial
sums to engage personnel and to provide services to competing investment
companies; and the financial resources of Scudder Kemper and the continuance of
appropriate incentives to assure that Scudder Kemper will continue to furnish
high quality services to the Portfolio. The Board also considered that the terms
of the New Sub-Advisory Agreement were the same as those of the Former
Sub-Advisory Agreement, the fees for investment advisory services under the New
Sub-Advisory Agreement would be the same as those under the Former Sub-Advisory
Agreement and the portfolio managers for the Portfolio would not change. After
full consideration of these and other factors, the Board, including a majority
of the Trustees who are not "interested persons" (as defined under the 1940 Act)
(the "Independent Trustees") approved the New Sub-Advisory Agreement and
recommended that it be submitted to shareholders for approval.
The Board was advised that Zurich intends to rely on Section 15(f) of the
1940 Act, which provides a non-exclusive safe harbor for an investment adviser
to an investment company or any of the investment adviser's affiliated persons
(as defined in the 1940 Act) to receive any amount or benefit in connection with
a change in control of the investment adviser so long as two conditions are met.
First, for a period of three years after the transaction, at least 75% of the
board members of the investment company must not be "interested persons" of the
investment company's investment adviser or its predecessor adviser. On or prior
to the consummation of the Transaction, the Board was in compliance with this
provision of Section 15(f). Second, an "unfair burden" must not be imposed upon
the investment company as a result of such transaction or any express or implied
terms, conditions or understandings applicable thereto. The term "unfair burden"
is defined in Section 15(f) to include any arrangement during the two-year
period after the transaction whereby the investment adviser, or any interested
person of any such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its shareholders (other
than fees for bona fide investment advisory or other services) or from any
person in connection with the purchase or sale of securities or other property
to, from or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter for such investment company). No such
compensation agreements are contemplated in connection with the Transaction.
Zurich or its affiliates will pay the costs of preparing and distributing proxy
materials to, and of holding the meeting of the Portfolio's shareholders, as
well as other fees and expenses in connection with the Transaction, including
the fees and expenses of legal counsel to the Fund and the Independent Trustees.
REQUIRED VOTE. Approval of Proposal 1 requires the affirmative vote of a
"majority of the outstanding voting securities" of the Portfolio, which for this
purpose means the affirmative vote of the lesser of (1) 67% or more of the
shares of the Portfolio present at the Meeting or represented by Proxy if more
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than 50% of the outstanding shares of the Portfolio are so present or
represented or (2) more than 50% of the outstanding shares of the Portfolio.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 1.
OTHER BUSINESS
The Trustees know of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matter in accordance with the judgment of the persons
therein designated.
ADDITIONAL INFORMATION
The cost of preparing, printing and mailing the enclosed proxy card and
proxy statement and all other costs incurred in connection with the solicitation
of proxies, including any additional solicitation made by letter, telephone or
telegraph, will be paid by Zurich or its affiliates. Broker-dealer firms holding
Fund shares in "street name" for the benefit of their customers and clients will
request the instructions of such customers and clients on how to vote their
shares on the proposals before the Meeting. The Fund will include shares held of
record by broker-dealers as to which such authority has been granted in its
tabulation of the total number of votes present for purposes of determining
whether the necessary quorum of shareholders exists.
FUND MANAGEMENT. The Fund's investment adviser is Wilmington Trust Company
and the Fund's distributor is Rodney Square Distributors, Inc., both of which
are located at 1100 North Market Street, Wilmington, DE 19890-0001. PFPC, Inc.,
which is located at 400 Bellevue Parkway, Wilmington, DE 19809, is the Fund's
administrator.
SHAREHOLDER PROPOSALS
The Fund does not hold annual shareholder meetings. Accordingly, no
anticipated date of the next shareholder meeting can be provided at this time.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent shareholder meeting or to propose persons to be considered by the
Fund's Nominating Committee as nominees for Trustees should send their written
request or proposal to the Secretary of the Fund.
All shareholders are urged to mark, date, sign and return the Proxy Card
in the enclosed envelope, which requires no postage if mailed in the United
States.
By Order of the Trustees,
Carl M. Rizzo
Secretary
Dated: November __, 1998
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EXHIBITS
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NUMBER DESCRIPTION
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A. Proposed Sub-Advisory Agreement
B. Other Funds Advised by Scudder Kemper with Similar
Investment Objectives and Policies
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EXHIBIT A
THE RODNEY SQUARE STRATEGIC EQUITY FUND
NEW SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT is made as of the 7th day of September, 1998,
among The Rodney Square Strategic Equity Fund, a Massachusetts business trust
(the "Fund"), Wilmington Trust Company (the "Adviser"), a corporation organized
under the laws of the State of Delaware and Scudder Kemper Investments, Inc., a
corporation organized under the laws of the State of Delaware (the
"Sub-Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and
offers for public sale distinct series of shares of beneficial interest; and
WHEREAS, The International Equity Portfolio (the "Portfolio") is a series
of the Fund; and
WHEREAS, the Adviser acts as the investment adviser for the Portfolio
pursuant to the terms of an Investment Advisory Agreement between the Fund and
the Adviser under which the Adviser is responsible for the coordination of
investment of the Portfolio's assets in portfolio securities; and
WHEREAS, the Adviser is authorized under the Investment Advisory Agreement
to delegate its investment responsibilities to one or more persons or companies;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the Fund, the Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT OF SUB-ADVISER. The Fund hereby appoints and employs the
Sub-Adviser as a discretionary portfolio manager, on the terms and
conditions set forth herein, of those assets of the Portfolio which the
Adviser determines to assign to the Sub-Adviser (those assets being
referred to as the "Portfolio Account"). The Adviser may, from time to
time, make additions to and withdrawals, including cash and cash
equivalents, from the Portfolio Account.
2. ACCEPTANCE OF APPOINTMENT. The Sub-Adviser accepts its appointment as a
discretionary portfolio manager and agrees to use its professional judgment
to make investment decisions for the Portfolio with respect to the
investments of the Portfolio Account and to implement such decisions on a
timely basis in accordance with the provisions of this Agreement.
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3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following and
will promptly provide the Sub-Adviser with copies properly certified or
authenticated of any amendment or supplement thereto:
(a) The Portfolio's Investment Advisory Agreement;
(b) The Fund's most recent effective registration statement and financial
statements as filed with the Securities and Exchange Commission;
(c) The Fund's Declaration of Trust and By-Laws; and
(d) Any policies, procedures or instructions adopted or approved by the
Fund's Board of Trustees relating to obligations and services provided
by the Sub-Adviser.
4. PORTFOLIO MANAGEMENT SERVICES OF THE SUB-ADVISER. The Sub-Adviser is hereby
employed and authorized to select portfolio securities for investment by
the Portfolio, to purchase and to sell securities for the Portfolio
Account, and upon making any purchase or sale decision, to place orders for
the execution of such portfolio transactions in accordance with Sections 6
and 7 hereof and Schedule A hereto (as amended from time to time). In
providing portfolio management services to the Portfolio Account, the
Sub-Adviser shall be subject to and shall conform to such investment
restrictions as are set forth in the 1940 Act and the rules thereunder, the
Internal Revenue Code, applicable state securities laws, applicable
statutes and regulations of foreign jurisdictions, the supervision and
control of the Board of Trustees of the Fund, such specific instructions as
the Board of Trustees may adopt and communicate to the Sub-Adviser, the
investment objective, policies and restrictions of the Fund applicable to
the Portfolio furnished pursuant to Section 5 of this Agreement, the
provisions of Schedule A and Schedule B hereto and other instructions
communicated to the Sub-Adviser by the Adviser. The Sub-Adviser is not
authorized by the Fund to take any action, including the purchase or sale
of securities for the Portfolio Account, in contravention of any
restriction, limitation, objective, policy or instruction described in the
previous sentence. The Sub-Adviser shall maintain on behalf of the Fund the
records listed in Schedule B hereto (as amended from time to time). At the
Fund's reasonable request, the Sub-Adviser will consult with the Fund or
with the Adviser with respect to any decision made by it with respect to
the investments of the Portfolio Account.
5. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS. The Fund will provide the
Sub-Adviser with the statement of investment objective, policies and
restrictions applicable to the Portfolio as contained in the Portfolio's
Prospectus and Statement of Additional Information, all amendments or
supplements to the Prospectus and Statement of Additional Information, and
any instructions adopted by the Board of Trustees supplemental thereto. The
Fund agrees, on an ongoing basis, to notify the Sub-Adviser in writing of
each change in the fundamental and non-fundamental investment policies of
the Portfolio and will provide the Sub-Adviser with such further
information concerning the investment objective, policies, restrictions and
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such other information applicable thereto as the Sub-Adviser may from time
to time reasonably request for performance of its obligations under this
Agreement. The Fund retains the right, on written notice to the Sub-Adviser
from the Fund or the Adviser, to modify any such objective, policies or
restrictions in any manner at any time.
6. TRANSACTION PROCEDURES. All transactions will be consummated by payment to
or delivery by the custodian designated by the Fund (the "Custodian"), or
such depositories or agents as may be designated by the Custodian in
writing, of all cash and/or securities due to or from the Portfolio
Account, and the Sub-Adviser shall not have possession or custody thereof.
The Sub-Adviser shall advise the Custodian and confirm in writing to the
Fund and to the administrator designated by the Fund or any other
designated agent of the Fund, all investment orders for the Portfolio
Account placed by it with brokers and dealers at the time and in the manner
set forth in Schedule B hereto (as amended from time to time). The Fund
shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the
Sub-Adviser. The Fund shall be responsible for all custodial arrangements
and the payment of all custodial charges and fees, and, upon giving proper
instructions to the Custodian, the Sub-Adviser shall have no responsibility
or liability with respect to custodial arrangements or the acts, omissions
or other conduct of the Custodian, except that it shall be the
responsibility of the Sub-Adviser to take appropriate action if the
Custodian fails to confirm in writing proper execution of the instructions.
7. ALLOCATION OF BROKERAGE. The Sub-Adviser shall have authority and
discretion to select brokers and dealers (including brokers that may be
affiliates of the Sub-Adviser to the extent permitted by Section 7(c)
hereof) to execute portfolio transactions initiated by the Sub-Adviser, and
for the selection of the markets on or in which the transactions will be
executed, subject to the following and subject to conformance with the
policies and procedures disclosed in the Fund's Prospectus and Statement of
Additional Information and the policies and procedures adopted by the
Fund's Board of Trustees.
(a) In executing portfolio transactions, the Sub-Adviser will give primary
consideration to securing the best price and execution. Consistent
with this policy, the Sub-Adviser may consider the financial
responsibility, research and investment information and other services
provided by brokers or dealers who may effect or be a party to any
such transaction or other transactions to which other clients of the
Sub-Adviser may be a party. It is understood that neither the Fund,
the Adviser nor the Sub-Adviser has adopted a formula for allocation
of the Fund's investment transaction business. It is also understood
that it is desirable for the Fund that the Sub-Adviser have access to
supplemental investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage
transactions at a higher commission to the Fund than may result when
allocating brokerage to other brokers on the basis of seeking the
lowest commission. Therefore, the Sub-Adviser is authorized to place
orders for the purchase and sale of securities for the Portfolio with
such certain brokers, subject to review by the Fund's Board of
A-3
<PAGE>
Trustees from time to time with respect to the extent and continuation
of this practice. It is understood that the services provided by such
brokers may be useful to the Sub-Adviser in connection with its
services to other clients. The Sub-Adviser is also authorized to place
orders with certain brokers for services deemed by the Adviser to be
beneficial for the Fund; and the Sub-Adviser shall follow the
directions of the Adviser or the Fund in this regard.
(b) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients, the Sub-Adviser, to the extent permitted by applicable laws
and regulations, may, but shall be under no obligation to, aggregate
the securities to be sold or purchased in order to obtain the best
price and execution. In such event, allocation of the securities so
purchased or sold, as well as expenses incurred in the transaction,
will be made by the Sub-Adviser in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the
Fund in respect of the Portfolio and to such other clients.
(c) The Sub-Adviser agrees that it will not execute without the prior
written approval of the Adviser any portfolio transactions for the
Portfolio Account with a broker or dealer which is (i) an affiliated
person of the Fund, including the Adviser or any Sub-Adviser for any
Portfolio of the Fund; (ii) a principal underwriter of the Fund's
shares; or (iii) an affiliated person of such an affiliated person or
principal underwriter. The Adviser agrees that it will provide the
Sub-Adviser with a list of such brokers and dealers.
(d) The Adviser shall render regular reports to the Fund of the total
brokerage business placed and the manner in which the allocation has
been accomplished.
8. PROXIES. The Sub-Adviser will vote all proxies solicited by or with respect
to issuers of securities in which assets of the Portfolio Account may be
invested from time to time. At the request of the Sub-Adviser, the Adviser
shall provide the Sub-Adviser with its recommendations as to the voting of
such proxies.
9. REPORTS TO THE SUB-ADVISER. The Fund will provide the Sub-Adviser with such
periodic reports concerning the status of the Portfolio Account as the
Sub-Adviser may reasonably request.
10. FEES FOR SERVICES. The compensation of the Sub-Adviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the provisions of the
Investment Advisory Agreement between the Fund and the Adviser, the Adviser
is solely responsible for the payment of fees to the Sub-Adviser, and the
Sub-Adviser agrees to seek payment of the Sub-Adviser's fees solely from
the Adviser.
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<PAGE>
11. OTHER INVESTMENT ACTIVITIES OF THE SUB-ADVISER. The Fund acknowledges that
the Sub-Adviser or one or more of its affiliated persons may have
investment responsibilities or render investment advice to or perform other
investment advisory services for other individuals or entities and that the
Sub-Adviser, its affiliated persons or any of its or their directors,
officers, agents or employees may buy, sell or trade in any securities for
its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of Section 7(b) hereof, the Fund agrees that the Sub-Adviser or
its affiliated persons may give advice or exercise investment
responsibility and take such other action with respect to other Affiliated
Accounts which may differ from the advice given or the timing or nature of
action taken with respect to the Portfolio Account, provided that the
Sub-Adviser acts in good faith, and provided further, that it is the
Sub-Adviser's policy to allocate, within its reasonable discretion,
investment opportunities to the Portfolio Account over a period of time on
a fair and equitable basis relative to the Affiliated Accounts, taking into
account the investment objective and policies of the Portfolio and any
specific investment restrictions applicable thereto. The Fund acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in
investments in which the Portfolio Account may have an interest from time
to time, whether in transactions which involve the Portfolio Account or
otherwise. The Sub-Adviser shall have no obligation to acquire for the
Portfolio Account a position in any investment which any Affiliated Account
may acquire, and the Fund shall have no first refusal, co-investment or
other rights in respect of any such investment, either for the Portfolio
Account or otherwise.
12. CERTIFICATE OF AUTHORITY. The Fund, the Adviser and the Sub-Adviser shall
furnish to each other from time to time certified copies of the resolutions
of their Boards of Trustees/Directors or executive committees, as the case
may be, evidencing the authority of officers and employees who are
authorized to act on behalf of the Fund, a Portfolio Account, the Adviser
and/or the Sub-Adviser.
13. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any action
taken, omitted or suffered to be taken by it in its reasonable judgment, in
good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement, or in accordance with
(or in the absence of) specific directions or instructions from the Fund or
the Adviser, provided, however, that such acts or omissions shall not have
resulted from the Sub-Adviser's willful misfeasance, bad faith, gross
negligence or a reckless disregard of duty. Nothing in this Section 13
shall be construed in a manner inconsistent with Section 17(i) of the 1940
Act.
14. CONFIDENTIALITY. Subject to the duty of the Sub-Adviser, the Adviser and
the Fund to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto
shall treat as confidential all material nonpublic information pertaining
to the Portfolio Account and the actions of the Sub-Adviser, the Adviser
and the Fund in respect thereof.
A-5
<PAGE>
15. ASSIGNMENT. No assignment of this Agreement shall be made by the
Sub-Adviser, and this Agreement shall terminate automatically in the event
of such assignment. The Sub-Adviser shall notify the Fund and the Adviser
in writing sufficiently in advance of any proposed change of control within
the meaning of the 1940 Act to enable the Fund and the Adviser to take the
steps necessary to enter into a new contract with the Sub-Adviser.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE FUND. The Fund
represents, warrants and agrees that:
(a) The Sub-Adviser has been duly appointed by the Board of Trustees of
the Fund to provide investment services to the Portfolio Account as
contemplated hereby.
(b) The Fund will deliver to the Sub-Adviser a true and complete copy of
its then current Prospectus and Statement of Additional Information as
effective from time to time and such other documents or instruments
governing the investment of the Portfolio Account and such other
information as is necessary for the Sub-Adviser to carry out its
obligations under this Agreement.
(c) The Fund is currently in compliance and shall at all times continue to
comply with the requirements imposed upon the Fund by applicable law
and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISER. The Adviser
represents, warrants and agrees that:
(a) The Adviser has been duly authorized by the Board of Trustees of the
Fund to delegate to the Sub-Adviser the provision of investment
services to the Portfolio Account as contemplated hereby.
(b) The Adviser is currently in compliance and shall at all times continue
to comply with the requirements imposed upon the Adviser by applicable
law and regulations.
18. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SUB-ADVISER. The
Sub-Adviser represents, warrants and agrees that:
(a) The Sub-Adviser is registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act") or is a "bank" as
defined in Section 202(a)(2) of the Advisers Act.
(b) The Sub-Adviser will maintain, keep current and preserve on behalf of
the Fund, in the manner required or permitted by the 1940 Act, the
records identified in Schedule B. The Sub-Adviser agrees that such
records (unless otherwise indicated on Schedule B) are the property of
the Fund, and will be surrendered to the Fund promptly upon request.
The Sub-Adviser agrees to keep confidential all records of the Fund
and information relating to the Fund, unless the release of such
A-6
<PAGE>
records or information is otherwise consented to in writing by the
Fund or the Adviser. The Fund and the Adviser agree that such consent
shall not be unreasonably withheld and may not be withheld where the
Sub-Adviser may be exposed to civil or criminal contempt proceedings
or when required to divulge such information or records to duly
constituted authorities.
(c) The Sub-Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Portfolio Account as the Adviser
or the Fund may from time to time require to ensure compliance with
the 1940 Act, the Internal Revenue Code, applicable state securities
laws and applicable statutes and regulations of foreign jurisdictions.
(d) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and Section 204A of
the Advisers Act and has provided the Fund with a copy of the code of
ethics and evidence of its adoption. Within forty-five (45) days of
the end of the last calendar quarter of each year while this Agreement
is in effect, the president or a vice president or general partner of
the Sub-Adviser shall certify to the Fund that the Sub-Adviser has
complied with the requirements of Rule 17j-1 and Section 204A during
the previous year and that there has been no violation of the
Sub-Adviser's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon
the written request of the Fund, the Sub-Adviser shall permit the
Fund, its employees or its agents to examine the reports required to
be made to the Sub-Adviser by Rule 17j-1(c)(1).
(e) The Sub-Adviser will promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV furnish a copy of
such amendment to the Fund and the Adviser.
(f) The Sub-Adviser will immediately notify the Fund and the Adviser of
the occurrence of any event which would disqualify the Sub-Adviser
from serving as an investment adviser of an investment company
pursuant to Section 9 of the 1940 Act or otherwise. The Sub-Adviser
will also immediately notify the Fund and the Adviser if it is served
or otherwise receives notice of any action, suit, proceeding, inquiry
or investigation, at law or in equity, before or by any court, public
board or body, involving the affairs of the Portfolio.
19. AMENDMENT. This Agreement may be amended at any time, but only by written
agreement among the Sub-Adviser, the Adviser and the Fund, which amendment,
other than amendments to Schedules A and B, is subject to the approval of
the Board of Trustees and, to the extent required by the 1940 Act, the
shareholders of the Portfolio in the manner required by the 1940 Act and
the rules thereunder, subject to any applicable orders of exemption issued
by the Securities and Exchange Commission.
A-7
<PAGE>
20. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
first written above and shall remain in force for a period of time of two
years from such date, and from year to year thereafter but only so long as
such continuance is specifically approved at least annually by the vote of
a majority of the Directors who are not interested persons of the Fund, the
Adviser or the Sub-Adviser, cast in person at a meeting called for the
purpose of voting on such approval, and by a vote of the Board of Directors
or of a majority of the outstanding voting securities of the Portfolio. The
aforesaid requirement that this Agreement may be continued "annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
21. TERMINATION.
(a) This Agreement may be terminated by the Fund (by a vote of the Board
of Directors of the Fund or by a vote of a majority of the outstanding
voting securities of the Portfolio), without the payment of any
penalty, immediately upon written notice to the other parties hereto,
in the event of a material breach of any provision thereof by the
party so notified or otherwise by the Fund, upon sixty (60) days'
written notice to the other parties hereto, but any such termination
shall not affect the status, obligations or liabilities of any party
hereto to the others.
(b) This Agreement may also be terminated by the Adviser or the
Sub-Adviser, without the payment of any penalty immediately upon
written notice to the other parties hereto, in the event of a material
breach of any provision thereof by the party so notified if such
breach shall not have been cured within a 20-day period after notice
of such breach or otherwise by the Adviser or the Sub-Adviser upon
sixty (60) days' written notice to the other parties hereto, but any
such termination shall not affect the status, obligations or
liabilities of any party hereto to the others.
22. SHAREHOLDER LIABILITY. The Adviser and Sub-Adviser are hereby expressly put
on notice of the limitation of shareholder liability as set forth in the
Declaration of Trust of the Fund and agree that obligations assumed by the
Fund pursuant to this Agreement shall be limited in all cases to the Fund
and its assets, and if the liability relates to one or more Portfolios, the
obligations hereunder shall be limited to the respective assets of such
Portfolio or Portfolios. The Adviser and Sub-Adviser further agree that
they shall not seek satisfaction of any such obligation from the
shareholders or any individual shareholder of the Portfolios of the Fund,
nor from the Trustees or any individual Trustee of the Fund.
23. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person," "principal underwriter" and
"vote of a majority of the outstanding voting securities" shall have the
meanings set forth in the 1940 Act and the rules and regulations
thereunder, subject to any applicable orders of exemption issued by the
Securities and Exchange Commission.
A-8
<PAGE>
24. NOTICE. Any notice under this Agreement shall be given in writing addressed
and delivered or mailed, postage prepaid, to the other parties to this
Agreement at their principal place of business.
25. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
26. GOVERNING LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Delaware.
27. ENTIRE AGREEMENT. This Agreement and the Schedules attached hereto embodies
the entire agreement and understanding between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
THE RODNEY SQUARE STRATEGIC EQUITY FUND
on behalf of
THE INTERNATIONAL EQUITY PORTFOLIO
By: _____________________________________
Robert J. Christian, President
SCUDDER KEMPER INVESTMENTS, INC.
By: _____________________________________
Title: __________________________________
WILMINGTON TRUST COMPANY
By: ____________________________________
Robert J. Christian,
Senior Vice President
SCHEDULES: A. Operating Procedures
B. Record Keeping Requirements
C. Fee Schedule
A-9
<PAGE>
SCHEDULE A
OPERATING PROCEDURES
From time to time the Adviser shall issue written Operating Procedures which
shall govern reporting of transactions and other matters so as to facilitate (i)
the monitoring of the Fund's compliance with the restrictions and limitations
applicable to the operations of a registered investment company and (ii) the
preparation of reports to the Board of Trustees, regulatory authorities and
shareholders.
SUBSTANTIVE LIMITATIONS
A. The Sub-Adviser will manage the Portfolio Account as if the Portfolio
Account were a registered investment company subject to the investment
objective, policies and limitations applicable to the Portfolio stated in
the Fund's Prospectus and Statement of Additional Information, as from time
to time in effect, included in the Fund's registration statement or a
supplement thereto under the Securities Act of 1933 and the Investment
Company Act of 1940 (the "1940 Act"), as each may be amended from time to
time; provided, however, that if a more stringent restriction or limitation
than any of the foregoing is stated in Section B of this Schedule, the more
stringent restriction or limitation shall apply to the Portfolio Account.
B. The Sub-Adviser shall not, without the written approval of the Adviser, on
behalf of the Portfolio Account:
1. purchase securities of any issuer if such purchase would cause more
than 3.33% of the voting securities of such issuer to be held in the
Portfolio Account (1940 Act Section 5(b)(1); IRC* Section
851(b)(4)(a)(ii));
2. purchase securities if such purchase would cause:
a. more than 1% of the outstanding voting stock of any other
investment company to be held in the Portfolio Account (1940 Act
Section 12(d)(1)(A)(i)),
b. securities issued by any other investment company having an
aggregate value in excess of 5% of the value of the total assets
in the Portfolio Account to be held in the Portfolio Account
(1940 Act Section 12(d)(1)(A)(i)),
c. securities issued by all other investment companies having an
aggregate value in excess of 10% of the value of the total assets
of the Portfolio Account to be held in the Portfolio Account
(1940 Act Section 12(d)(1)(A)(iii)),
_______________________________
* Internal Revenue Code
A-10
<PAGE>
d. more than 3.33% of the outstanding voting stock of any registered
closed-end investment company to be held in the Portfolio
Account, and by any other investment company having as its
investment adviser any of the Sub-Advisers, the Adviser, or any
other investment adviser to the Fund (1940 Act Section
12(d)(1)(C));
3. purchase securities of any insurance company if such purchase would
cause more than 3.33% of the outstanding voting securities of any
insurance company to be held in the Portfolio Account (1940 Act
Section 12(d)(2)); or
4. purchase securities of or any interest in any person who is a broker,
a dealer, is engaged in the business of underwriting, is an investment
adviser to an investment company or is a registered investment adviser
under the Investment Advisers Act of 1940, unless
a. such purchase is of a security of any issuer that, in its most
recent fiscal year, derived 15% or less of its gross revenues
from securities-related activities (1940 Act Rule 12d3-l(a)), or
b. despite the fact that such purchase is of any security of any
issuer that derived more than 15% of its gross revenues from
securities-related activities:
(1) immediately after the purchase of any equity security, the
Portfolio Account would not own more than 5% of outstanding
securities of that class of the issuer's equity securities
(1940 Act Rule 12d3-1(b)(1));
(2) immediately after the purchase of any debt security, the
Portfolio Account would not own more than 10% of the
outstanding principal amount of the issuer's debt securities
(1940 Act Rule 12d3-1(b)(2)); and
(3) immediately after the purchase, not more than 5% of the
value of the Portfolio Account's total assets would be
invested in the issuer's securities (1940 Act Rule
12d3-1(b)(3)).
C. In the event that the number of Sub-Advisers shall vary from three (3), the
percentage limitations of Subsections B1, B2a, B2d, B3, B4b(1) and B4b(4)
of this Schedule shall be adjusted (i) in the case of an increase in the
number of Sub-Advisers, proportionately downward and (ii) in the case of a
decrease of the number of Sub-Advisers, proportionately upward.
A-11
<PAGE>
The Adviser shall notify the Sub-Adviser of an increase or decrease in the
number of Sub-Advisers and the proportionate decrease or increase in the
percentages specified in the subsections enumerated in the preceding
sentence, but the Adviser's failure to do so shall not affect the operation
of this Section C of this Schedule.
D. The Sub-Adviser will manage the Portfolio Account so that no more than 10%
of the gross income of the Portfolio Account is derived from any source
other than dividends, interest, payments with respect to securities loans
(as defined in IRC Section 512(a)(5)), and gains from the sale or other
disposition of stock or securities (as defined in the 1940 Act Section
2(a)(36)) or foreign currencies, or other income (including, but not
limited to, gains from options, futures, or forward contracts) derived with
respect to the Portfolio's business of investing in such stock, securities,
or currencies (IRC Section 851(b)(2)).
A-12
<PAGE>
SCHEDULE B
RECORD KEEPING REQUIREMENTS
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER:
A. (Rule 31a-l(b)(5) and (6)). A record of each brokerage order, and all other
portfolio purchases and sales, given by the Sub-Adviser on behalf of the
Portfolio Account for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
1. the name of the broker;
2. the terms and conditions of the order and of any modification or
cancellation thereof;
3. the time of entry or cancellation;
4. the price at which executed;
5. the time of receipt of a report of execution; and
6. the name of the person who placed the order on behalf of the Portfolio
Account.
B. (Rule 31a-l(b)(9)). A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases (e.g., execution ability, execution and research) upon which the
allocation of orders for the purchase and sale of portfolio securities to
named brokers or dealers was effected, and the division of brokerage
commissions or other compensation on such purchase and sale orders. Such
record:
1. shall include the consideration given to:
a. the sale of shares of the Fund by brokers or dealers;
b. the supplying of services or benefits by brokers or dealers to:
(1) the Fund,
(2) the Adviser,
(3) the Sub-Adviser, and
(4) any person other than the foregoing; and
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<PAGE>
c. any other consideration other than the technical qualifications
of the brokers and dealers as such;
2. shall show the nature of the services or benefits made available;
3. shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation; and
4. shall show the name of the person responsible for making the
determination of such allocation and such division of brokerage
commissions or other compensation.
C. (Rule 31a-l(b)(10)). A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
D. (Rule 31a-1(f)). Such accounts, books and other documents as are required
to be maintained by registered investment advisers by rule adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Sub-Adviser's
transactions with respect to the Portfolio Account.
_______________________________
* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation, i.e., buy, sell, hold) or any internal reports or
portfolio adviser reviews.
A-14
<PAGE>
SCHEDULE C
FEE SCHEDULE
For the services to be provided to the Portfolio pursuant to the attached
Sub-Advisory Agreement, the Adviser shall pay the Sub-Adviser a monthly fee in
accordance with the following formula:
Monthly Fee = (.50% x net asset value of the Sub-Adviser's Portfolio Account on
the last business day of the month) / 12
Such fee shall be payable in arrears within 15 business days following the end
of each month.
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<PAGE>
EXHIBIT B
OTHER FUNDS ADVISED BY SCUDDER KEMPER
WITH SIMILAR INVESTMENT OBJECTIVES AND POLICIES
FUND FEE RATE ASSETS(1)
---- -------- ---------
Scudder International Fund 0.90% on first $500 million $ 2,884,919,345
of avg. daily net assets;
0.85% on next $500 million;
0.80% on next $1 billion;
0.75% on next $1 billion;
0.70% on assets over $3
billion
Scudder International Growth and 1.00% of avg. daily net $ 48,880,164
Income Fund assets2
Scudder Pathway Series: N/A $ 11,728,045
International Portfolio
Scudder Variable Life
Investment Fund 0.875% to $500 million $ 427,237,880
International Portfolio 0.725% thereafter
AARP International Growth and 0.350% to $2 billion $ 20,259,062
Income Fund 0.330% next $2 billion
0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter(2)
INDIVIDUAL FUND FEE
0.600% of net assets
Kemper International Growth and 1.00% of net assets N/A
Income Portfolio
Kemper International Portfolio 0.750% of net assets $ 200,046,000
Kemper International Fund 0.750% to $250 million $ 588,069,000
0.720% next $750 million
0.700% next $1.5 billion
0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
B-1
<PAGE>
FUND FEE RATE ASSETS(1)
---- -------- ---------
0.620% thereafter
Kemper International Growth 1.00% of net assets(2) $ 1,556,000(3)
and Income Fund
- -------------------------
1. The information provided is as of the end of each Fund's last fiscal year.
2. Subject to waivers and/or reimbursements or expense limitations.
3. The information is provided as of semi-annual period ended March 31, 1998.
B-2
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
PROXY FOR MEETING OF SHAREHOLDERS
December __, 1998
KNOW ALL MEN BY THESE PRESENTS that the undersigned shareholder(s) of the
International Equity Portfolio of The Rodney Square Strategic Equity Fund (the
"Fund") hereby appoints Carl M. Rizzo and Joseph M. Fahey, Jr. or any one of
them true and lawful attorneys, with power of substitution of each, to vote all
shares which the undersigned is entitled to vote, at the Special Meeting of
Shareholders to be held on ___day, December __, 1998 and at any adjournment
thereof ("Meeting").
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES. The attorneys named will
vote the shares represented by this proxy in accordance with the choices made on
this card. IF NO CHOICE IS INDICATED AS TO ANY ITEM, THIS PROXY WILL BE VOTED
AFFIRMATIVELY ON THESE MATTERS.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Meeting.
1. To approve a new sub-advisory agreement for the International Equity
Portfolio.
FOR / / AGAINST / / ABSTAIN / /
2. To transact any other business as may properly come before the Meeting or
any adjournment thereof.
Date , 1998
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Please sign exactly as your name or names appear
hereon. If shares are held jointly, either holder
may sign. Corporate proxies should be signed by an
authorized officer.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSE TO
THE FUND.
