<PAGE>
As filed with the Securities and Exchange Commission
on December 14, 2000
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. /___/
KEMPER VARIABLE SERIES
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, Massachusetts 02110-4103
(Address of Principal Executive Offices) (Zip Code)
Philip J. Collora, Vice President
Secretary
KEMPER VARIABLE SERIES
222 South Riverside Plaza
Chicago, IL 60606
(Name and Address of Agent for Service)
(312) 781-1121
(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 Beneficial Interest (no par value)
of Kemper Growth Portfolio, a series of the Registrant
________________________________________________________________________________
It is proposed that this filing will become effective on January 13, 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
LARGE COMPANY GROWTH PORTFOLIO
Please take notice that a Special Meeting of Shareholders (the
"Meeting") of Large Company Growth Portfolio (the "Fund"), a series of Scudder
Variable Life Investment Fund (the "Acquired Trust"), will be held at the
offices of Scudder Kemper Investments, Inc., 13th Floor, Two International
Place, Boston, MA 02110-4103, on March 14, 2001, at 3:00 p.m., Eastern time, for
the following purposes:
Proposal 1: To elect Trustees of the Acquired Trust.
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 Kemper Growth
Portfolio, a series of Kemper Variable Series, (ii) each
shareholder of the Fund would receive shares of beneficial
interest of Kemper Growth Portfolio in an amount equal in
value to their shares of the Fund, and (iii) the Fund
would then be terminated.
Proposal 3: To ratify the selection of PricewaterhouseCoopers LLP as
the independent accountants 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
January 26, 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 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 Acquired Trust's (for a
trust-wide vote) or the Fund's (for a Fund-wide vote) 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/ John Millette
John Millette
Secretary
[Date], 2001
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) OR VOTING
INSTRUCTION FORM(S) AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) OR VOTING INSTRUCTION
FORM(S) 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>
<CAPTION>
<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
ACCOUNTANTS................................................. __
ADDITIONAL INFORMATION................................................... __
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
[DATE], 2001
Relating to the acquisition of the assets of
LARGE COMPANY GROWTH PORTFOLIO,
a separate series of
SCUDDER VARIABLE LIFE INVESTMENT FUND (the "Acquired Trust")
Two International Place
Boston, Massachusetts 02110-4103
(800) [ ]
--------------------------
by and in exchange for shares of beneficial interest of
KEMPER GROWTH PORTFOLIO,
a separate series of
KEMPER VARIABLE SERIES (the "Acquiring Trust")
222 South Riverside Plaza
Chicago, Illinois 60606
(800) [ ]
--------------------------
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of Large
Company Growth Portfolio (the "Fund") in connection with the solicitation of
proxies by the Board of Trustees of the Acquired Trust (except as otherwise
noted, "Trustees" refers to the Trustees of the Acquired Trust and "Board"
refers to the Board of Trustees of the Acquired Trust) for use at the Special
Meeting of Shareholders of the Fund to be held on March 14, 2001, at the offices
of Scudder Kemper Investments, Inc. ("Scudder Kemper" or the "Investment
Manager"), 13th Floor, Two International Place, Boston, MA 02110-4103, at 3:00
p.m. (Eastern time), or at such later time made necessary by all adjournments or
postponements thereof (the "Meeting").
The Fund is a funding vehicle for variable life insurance policies ("VLI
contracts") and variable annuity contracts ("VA contracts") offered by the
separate accounts, or sub-accounts thereof, of certain life insurance companies
("Participating Insurance Companies"). Individual VLI and VA contract owners
are not the "shareholders" of the Fund. Rather, the Participating Insurance
Companies and their separate accounts are the shareholders. To the extent
required to be consistent with interpretations of voting requirements by the
staff of the Securities and Exchange Commission (the "SEC" or the "Commission"),
each Participating Insurance Company will offer to contract owners the
opportunity to instruct it as to how it should vote shares held by it and the
separate accounts on the items to be considered at the Meeting. This Proxy
Statement/Prospectus is, therefore, furnished to contract owners entitled to
give voting instructions with regard to the Fund. This Proxy
Statement/Prospectus, the Notice of Special Meeting and the proxy cards and
voting instruction forms are first being mailed to shareholders and contract
owners on or about January 29, 2001 or as soon as practicable thereafter.
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.
<PAGE>
This Proxy Statement/Prospectus contains three proposals (each, a
"Proposal" and collectively, the "Proposals"). Proposal 1 describes the election
of Trustees and Proposal 3 proposes the ratification of the selection of the
Fund's accountants.
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 Kemper Growth Portfolio, a fund with
similar investment characteristics and managed by the same investment manager as
the Fund, in exchange for shares of beneficial interest of Kemper Growth
Portfolio and the assumption by Kemper Growth Portfolio of all of the
liabilities of the Fund, as described more fully below (the "Reorganization").
Shares of Kemper Growth Portfolio thereby 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
Kemper Growth Portfolio and will receive shares of Kemper Growth Portfolio 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 May
1, 2001.
Proposal 2 arises out of a restructuring program proposed by Scudder
Kemper, the investment manager of both the Fund and Kemper Growth Portfolio,
described in more detail below. The restructuring program is designed to
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 Scudder Funds shareholders.
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 Kemper Growth Portfolio (which are collectively referred to as the
"Funds" and each referred to as a "Fund"), although all actions are actually
taken by the Acquired Trust or by the Acquiring Trust (together with the
Acquired Trust, the "Trusts"), on behalf of the applicable Fund.
This Proxy Statement/Prospectus sets forth concisely the information
about Kemper Growth Portfolio 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
Kemper Growth Portfolio, see Kemper Growth Portfolio's prospectus dated May 1,
2000, 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 May 1, 2000, 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 Kemper Growth Portfolio's
statement of additional information dated May 1, 2000, as supplemented from time
to time, which may be obtained upon request and without charge by calling or
writing Kemper Growth Portfolio at the telephone number or address listed above.
A Statement of Additional Information, dated [ ], containing additional
information about the Reorganization has been filed with the SEC and is
incorporated by reference into this Proxy
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Statement/Prospectus. A copy of this Statement of Additional Information is
available upon request and without charge by calling or writing Kemper Growth
Portfolio at the telephone number or address listed above. Shareholder inquiries
regarding Kemper Growth Portfolio 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.
Kemper Growth Portfolio and the Fund are diversified series of shares
of beneficial interest of the Acquiring Trust and the Acquired Trust,
respectively, which are open-end management investment companies organized as
Massachusetts business trusts.
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 nine 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 Board of Trustees of Kemper Growth Portfolio will oversee
the operations of the combined fund (see "Synopsis - Other Differences Between
the Funds" under Proposal 2). The proposed slate of nominees reflects an effort
to consolidate two separate boards of trustees. The proposed consolidation is
expected to provide administrative efficiencies and potential expense savings to
both the Fund and Scudder Kemper. These individuals were nominated after a
careful and deliberate selection process by the present Board of Trustees. All
of the nominees listed below currently serve as trustees or directors for nearly
all of the Scudder Funds and none are currently Trustees of the Fund.
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 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 paragraphs and
table present information about the nominees and the Trustees not standing for
re-election. Each nominee's or Trustee's age 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 paragraphs and table 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., Two International Place, Boston, MA 02110-4103.
Nominees for Election as Trustees:
Henry P. Becton, Jr. (57)
Henry P. Becton, Jr. is president of the WGBH Educational Foundation, producer
and distributor of public broadcasting programming and educational and
interactive software. He graduated from Yale University in 1965, where he was
elected to Phi Beta Kappa. He received his J.D. degree cum laude from Harvard
Law School in 1968. Mr. Becton is a member of the PBS Board of Directors, a
Trustee of American Public Television, the New England Aquarium, the Boston
Museum of Science, Concord
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Academy, and the Massachusetts Corporation for Educational Telecommunications,
an Overseer of the Boston Museum of Fine Arts, and a member of the Board of
Governors of the Banff International Television Festival Foundation. He is also
a Director of Becton Dickinson and Company and A.H. Belo Company, a Trustee of
the Committee for Economic Development, and a member of the Board of Visitors of
the Dimock Community Health Center, the Dean's Council of Harvard University's
Graduate School of Education, and the Massachusetts Bar. Mr. Becton has served
as a trustee or director of various mutual funds advised by Scudder Kemper since
1990 and currently serves as a trustee or director for 44 funds advised by
Scudder Kemper.
Linda C. Coughlin (48)*
Linda C. Coughlin, a Managing Director of Scudder Kemper, is head of Scudder
Kemper's U.S. Retail Mutual Funds Business. Ms. Coughlin joined Scudder Kemper
in 1986 and was a member of the firm's Board of Directors. She currently
oversees the marketing, service and operations of Scudder Kemper retail
businesses in the United States, which include the Scudder, Kemper, AARP, and
the direct and intermediary channels. She also serves as Chairperson of the
AARP Investment Program from Scudder and as a Trustee of the Program's mutual
funds. Ms. Coughlin is also a member of the Mutual Funds Management Group.
Previously, she served as a regional Marketing Director in the retail banking
division of Citibank and at the American Express Company as Director of Consumer
Marketing for the mutual fund group. Ms. Coughlin received a B.A. degree in
economics summa cum laude from Fordham University. Ms. Coughlin has served on
the boards of various funds advised by Scudder Kemper since 1996 and currently
serves as a trustee or director for 91 funds advised by Scudder Kemper.
Dawn-Marie Driscoll (54)
Dawn-Marie Driscoll is an Executive Fellow and Advisory Board member of the
Center for Business Ethics at Bentley College, one of the nation's leading
institutes devoted to the study and practice of business ethics. Ms. Driscoll
is also president of Driscoll Associates, a consulting firm. She is a member of
the Board of Governors of the Investment Company Institute and serves as
Chairman of the Directors Services Committee. Ms. Driscoll was recently named
1999 "Fund Trustee of the Year" by Fund Directions, a publication of
Institutional Investor, Inc. She has been a director, trustee and overseer of
many civic and business institutions, including The Massachusetts Bay United Way
and Regis College. Ms. Driscoll was formerly a law partner at Palmer & Dodge in
Boston and served for over a decade as Vice President of Corporate Affairs and
General Counsel of Filene's, the Boston-based department store chain. Ms.
Driscoll received a B.A. from Regis College, a J.D. from Suffolk University Law
School, a D.H.L. (honorary) from Suffolk University and a D.C.S. (honorary) from
Bentley College Graduate School of Business. Ms. Driscoll has served as a
trustee or director of various mutual funds advised by Scudder Kemper since 1987
and currently serves as a trustee or director for 44 funds advised by Scudder
Kemper.
Edgar R. Fiedler (71)
Edgar R. Fiedler is Senior Fellow and Economic Counsellor at The Conference
Board. He served as the Board's Vice President, Economic Research from 1975 to
1986 and as Vice President and Economic Counsellor from 1986 to 1996. Mr.
Fiedler's business experience includes positions at Eastman Kodak in Rochester
(1956-59), Doubleday and Company in New York City (1959-60), and Bankers Trust
Company in New York City (1960-69). He also served as Assistant Secretary of
the Treasury for Economic Policy from 1971 to 1975. Mr. Fiedler graduated from
the University of Wisconsin in 1951. He received his M.B.A. from the University
of Michigan and his doctorate from New York University. During the 1980's, Mr.
Fiedler was an Adjunct Professor of Economics at the Columbia University
Graduate School of Business. From 1990 to 1991, he was the Stephen Edward
Scarff Distinguished
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Professor at Lawrence University in Wisconsin. Mr. Fiedler is a Director of The
Stanley Works, Harris Insight Funds, Brazil Fund, and PEG Capital Management,
Inc. He has served as a board member of various mutual funds advised by Scudder
Kemper since 1984 and currently serves as a trustee or director for 50 funds
advised by Scudder Kemper.
Keith R. Fox (46)
Keith R. Fox is the managing partner of the Exeter Group of Funds, a series of
private equity funds with offices in New York and Boston, which he founded in
1986. The Exeter Group invests in a wide range of private equity situations,
including venture capital, expansion financings, recapitalizations and
management buyouts. Prior to forming Exeter, Mr. Fox was a director and vice
president of BT Capital Corporation, a subsidiary of Bankers Trust New York
Corporation organized as a small business investment company and based in New
York City. Mr. Fox graduated from Oxford University in 1976, and in 1981
received an M.B.A. degree from the Harvard Business School. Mr. Fox is also a
qualified accountant. He is a board member and former Chairman of the National
Association of Small Business Investment Companies, and a director of Golden
State Vintners, K-Communications, Progressive Holding Corporation and Facts On
File, as well as a former director of over twenty companies. Mr. Fox has served
as a trustee or director of various mutual funds advised by Scudder Kemper since
1996 and currently serves as a trustee or director for 44 funds advised by
Scudder Kemper.
Joan Edelman Spero (56)
Joan E. Spero is the president of the Doris Duke Charitable Foundation, a
position to which she was named in January 1997. From 1993 to 1997, Ms. Spero
served as Undersecretary of State for Economic, Business and Agricultural
Affairs under President Clinton. From 1981 to 1993, she was an executive at the
American Express Company, where her last position was executive vice president
for Corporate Affairs and Communications. Ms. Spero served as U.N. Ambassador
to the United Nations Economic and Social Council under President Carter from
1980 to 1981. She was an assistant professor at Columbia University from 1973
to 1979. She graduated Phi Beta Kappa from the University of Wisconsin and
holds a master's degree in international affairs and a doctorate in political
science from Columbia University. Ms. Spero is a member of the Council on
Foreign Relations and the Council of American Ambassadors. She also serves as a
trustee of the Wisconsin Alumni Research Foundation, The Brookings Institution
and Columbia University and is a Director of First Data Corporation. Ms. Spero
has served as a trustee or director of various mutual funds advised by Scudder
Kemper since 1998 and currently serves as a trustee or director for 44 funds
advised by Scudder Kemper.
Jean Gleason Stromberg (57)
Ms. Stromberg acts as a consultant on regulatory matters. From 1996 to 1997,
Ms. Stromberg represented the U.S. General Accounting Office before Congress and
elsewhere on issues involving banking, securities, securities markets, and
government-sponsored enterprises. Prior to that, Ms. Stromberg was a corporate
and securities law partner at the Washington, D.C. law office of Fulbright and
Jaworski, a national law firm. She served as Associate Director of the SEC's
Division of Investment Management from 1977 to 1979 and prior to that was
Special Counsel for the Division of Corporation Finance from 1972 to 1977. Ms.
Stromberg graduated Phi Beta Kappa from Wellesley College and received her law
degree from Harvard Law School. From 1988 to 1991 and 1993 to 1996, she was a
Trustee of the American Bar Retirement Association, the funding vehicle for
American Bar Association-sponsored retirement plans. Ms. Stromberg serves on
the Wellesley College Business Leadership Council and the Council for Mutual
Fund Director Education at Northwestern University Law School and was a panelist
at the SEC's Investment Company Director's Roundtable. Ms. Stromberg has served
as a board
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member of various mutual funds advised by Scudder Kemper since 1997 and
currently serves as a trustee or director for 44 funds advised by Scudder
Kemper.
Jean C. Tempel (57)
Jean C. Tempel is a Managing Director for First Light Capital LLC, a venture
capital fund. Ms. Tempel concentrates on investment opportunities in the Boston
area. She spent 25 years in technology/operations executive management at
various New England banks, building custody operations and real time
financial/securities processing systems, most recently as Chief Operations
Officer at The Boston Company. From 1991 until 1993 she was president/COO of
Safeguard Scientifics, a Pennsylvania technology venture company. In that role
she was a founding investor, director and vice chairman of Cambridge Technology
Partners. She is a director of XLVision, Inc., Marathon Technologies, Inc.,
Aberdeen Group and Sonesta Hotels International, and is a Trustee of
Northeastern University, Connecticut College, and The Commonwealth Institute.
She received a B.A. from Connecticut College, an M.S. from Rensselaer
Polytechnic Institute of New York, and attended Harvard Business School's
Advanced Management Program. Ms. Tempel has served as a trustee or director of
various mutual funds advised by Scudder Kemper since 1994 and currently serves
as a trustee or director for 44 funds advised by Scudder Kemper.
Steven Zaleznick (46)*
Steven Zaleznick is President and CEO of AARP Services, Inc., a wholly-owned and
independently-operated subsidiary of AARP which manages a range of products and
services offered to AARP members, provides marketing services to AARP and its
member service providers and establishes an electronic commerce presence for
AARP members. Mr. Zaleznick previously served as AARP's general counsel for nine
years. He was responsible for the legal affairs of AARP, which included tax and
legal matters affecting non-profit organizations, contract negotiations,
publication review and public policy litigation. In 1979, he joined AARP as a
legislation representative responsible for issues involving taxes, pensions, age
discrimination, and other national issues affecting older Americans. Mr.
Zaleznick is President of the Board of Cradle of Hope Adoption Center in
Washington, D.C. He is a former treasurer and currently a board member of the
National Senior Citizens Law Center. Mr. Zaleznick received his B.A. in
economics from Brown University. He received his J.D. degree from Georgetown
University Law Center and is a member of the District of Columbia Bar
Association. Mr. Zaleznick currently serves as a trustee or director for 44
funds advised by Scudder Kemper.
Trustees Not Standing for Re-Election:
<TABLE>
<CAPTION>
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Present Office with the Acquired Trust;
Principal Occupation or Employment
Name (Age) and Directorships
---------- -----------------
---------------------------------------------------------------------------------------------
<S> <C>
Dr. Kenneth Black, Jr. (75) Trustee; Regents' Professor Emeritus, Georgia State
University. Dr. Black does not serve on the board
of any other trusts or corporations advised by
Scudder Kemper.
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Dr. Rosita P. Chang (46) Trustee; Professor of Finance, University of
Hawaii. Dr. Chang serves on the board of one
additional trust whose funds are advised by Scudder
Kemper.
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</TABLE>
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<TABLE>
<CAPTION>
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Present Office with the Acquired Trust;
Principal Occupation or Employment
Name (Age) and Directorships
---------- -----------------
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Peter B. Freeman (68) Trustee; Corporate Director and Trustee. Mr.
Freeman does not serve on the board of any other
trusts or corporations whose funds are advised by
Scudder Kemper.
---------------------------------------------------------------------------------------------
Dr. J. D. Hammond (67) Trustee; Dean Emeritus, Smeal College of Business
Administration, Pennsylvania State University. Dr.
Hammond serves on the board of one additional trust
whose funds are advised by Scudder Kemper.
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Kathryn L. Quirk (48)* Trustee, Vice President and Assistant Secretary;
Managing Director of Scudder Kemper. Ms. Quirk
serves on the boards of an additional 6 trusts or
corporations whose funds are advised by Scudder
Kemper.
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</TABLE>
* Nominee or Trustee considered by the Acquired Trust and its counsel to be
an "interested person" (as defined in the Investment Company Act of 1940,
as amended (the "1940 Act")) of the Acquired Trust, the Investment Manager
or AARP because of his or her employment by the Investment Manager or AARP,
and, in some cases, holding offices with the Acquired Trust.
Responsibilities of the Board of Trustees -- Board and Committee Meetings
A fund's board is responsible for the general oversight of fund business.
The board that is proposed for shareholder voting at this Meeting is comprised
of two individuals who are considered "interested" Trustees, and seven
individuals who have no affiliation with Scudder Kemper and who are called
"independent" 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. On the proposed Board of Trustees, if approved by
shareholders, nearly 78% will be Independent Trustees. The Independent Trustees
have been nominated solely by the current Independent Trustees of the Acquired
Trust, a practice also favored by the SEC. The Independent Trustees have primary
responsibility for assuring that the Fund is managed in the best interests of
its shareholders.
The Trustees meet several 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.
In 2000, the Trustees conducted 10 meetings to discuss Fund issues (including
committee and subcommittee meetings and special meetings of the Independent
Trustees). 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 several
policies and practices which help ensure their effectiveness and independence in
reviewing fees and representing shareholders. 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. The Trustees are also assisted in this regard by the Fund's independent
auditors and other independent experts
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retained from time to time for this purpose. The Independent Trustees regularly
meet privately with their counsel and other advisors. In addition, the
Independent Trustees from time to time have appointed task forces and
subcommittees from their members to focus on particular matters such as
investment, accounting and shareholder servicing issues.
The Board of Trustees has an Audit Committee and a Committee on Independent
Trustees, the responsibilities of which are described below. In addition, the
Board has a Valuation Committee and an Executive Committee.
Audit Committee
The Audit Committee reviews with management and the independent public
accountants for each portfolio of the Acquired Trust, among other things, the
scope of the audit and the internal controls of each series and its agents,
reviews and approves in advance the type of services to be rendered by
independent accountants, recommends the selection of independent accountants for
each portfolio of the Acquired Trust to the Board, reviews the independence of
such firm and, in general, considers and reports to the Board on matters
regarding the accounting and financial reporting practices for each portfolio of
the Acquired Trust.
As suggested by the Advisory Group Report, the Acquired Trust's Audit
Committee is comprised of only Independent Trustees (all of whom serve on the
committee), meets privately with the independent accountants of each series of
the Acquired Trust, will receive annual representations from the accountants as
to their independence, and has a written charter that delineates the committee's
duties and powers.
Committee on Independent Trustees
The Board of Trustees of the Acquired Trust has a Committee on Independent
Trustees, comprised of all of the Independent Trustees, charged with the duty of
making all nominations of Independent Trustees, establishing Trustees'
compensation policies, retirement policies and fund ownership policies,
reviewing Trustees' affiliations and relationships annually, and periodically
assessing and reviewing evaluations of the Board of Trustees' effectiveness.
Attendance
As noted above, the Trustees of the Acquired Trust conducted over 10
meetings in calendar year 2000 to deal with fund matters, including various
committee and subcommittee meetings and special meetings of the Independent
Trustees. The full Board of Trustees of the Acquired Trust met 5 times, the non-
interested Trustees met 2 times, the Audit Committee met 1 time and the
Committee on Independent Trustees met 2 times during calendar year 2000. Each
then current Trustee attended 100% of the total meetings of the full Board of
Trustees held during calendar year 2000, except Ms. Quirk who attended 75% of
the meetings. In addition, each Independent Trustee attended 100% of the total
meetings of the Audit Committee and the Committee on Independent Trustees held
during that period.
Ownership of Fund Shares
The Trustees, including the Independent Trustees, and the nominees view
ownership of shares of the funds on whose boards they serve as an important
issue. Consistent with this belief, as of [date], the Trustees and nominees'
total aggregate holdings in shares of all funds advised by Scudder Kemper ranged
between $0 and $50,000 for [number] Trustees and nominees, $50,000 and $100,000
for [number] Trustees and nominees, and exceeded $100,000 for [number] Trustees
and nominees. Because the Fund is only available as an investment option through
VA and VLI contracts, none of the Trustees or
-8-
<PAGE>
nominees may own any shares of the Fund directly. However, in many cases, the
Trustees and nominees do own shares of other funds advised by Scudder Kemper
with objectives and policies substantially similar to those of the Fund and
other series of the Acquired Trust. In addition, the nominees have included
share ownership as a part of their corporate governance guidelines with respect
to other funds advised by Scudder Kemper on whose boards they serve.
Officers
The following persons are officers of the Acquired Trust:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Present Office with the Acquired
Trust;
Principal Occupation or Year First Became
Name (Age) Employment/1/ an Officer/2/
---------- ------------- -------------
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Linda C. Coughlin (48) President; Managing Director of 2000
Scudder Kemper
------------------------------------------------------------------------------------------------------
Kathryn L. Quirk (48) Trustee, Vice President and 1985
Assistant Secretary; Managing
Director of Scudder Kemper
------------------------------------------------------------------------------------------------------
Robert S. Cessine (50) Vice President; Managing Director of 1999
Scudder Kemper
------------------------------------------------------------------------------------------------------
Irene T. Cheng (46) Vice President; Managing Director of 1997
Scudder Kemper
------------------------------------------------------------------------------------------------------
Peter Chin (58) Vice President; Managing Director of 1999
Scudder Kemper
------------------------------------------------------------------------------------------------------
William F. Gadsden (45) Vice President; Managing Director of 1996
Scudder Kemper
------------------------------------------------------------------------------------------------------
Gary A. Langbaum (53) Vice President; Managing Director of 1999
Scudder Kemper
------------------------------------------------------------------------------------------------------
Valerie F. Malter (42) Vice President; Managing Director of 1996
Scudder Kemper
------------------------------------------------------------------------------------------------------
Kathleen Millard (40) Vice President; Managing Director of 1999
Scudder Kemper
------------------------------------------------------------------------------------------------------
Gerald J. Moran (61) Vice President; Managing Director of 1996
Scudder Kemper
------------------------------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. (55) Vice President; Managing Director of 1998
Scudder Kemper
------------------------------------------------------------------------------------------------------
John R. Hebble (42) Treasurer; Senior Vice President of 1998
Scudder Kemper
------------------------------------------------------------------------------------------------------
John Millette (38) Vice President and Secretary; Vice 1999
President of Scudder Kemper
------------------------------------------------------------------------------------------------------
</TABLE>
_________________________
/1/ Unless otherwise stated, all of the officers have been associated with
their respective companies for more than five years, although not
necessarily in the same capacity.
/2/ The President, Treasurer and Secretary each holds office until his or her
successor has been duly elected and qualified, and all other officers hold
offices in accordance with the By-laws of the Trust.
-9-
<PAGE>
----------------------------------------------------------------------------
Brenda Lyons (37) Assistant Treasurer; Senior Vice 2000
President of Scudder Kemper
----------------------------------------------------------------------------
Caroline Pearson (38) Assistant Secretary; Senior Vice 1997
President of Scudder Kemper
----------------------------------------------------------------------------
Compensation of Trustees and Officers
The Acquired Trust pays each Independent Trustee an annual Trustee's fee
plus specified amounts for Board and committee meetings attended and reimburses
expenses related to the business of the Acquired Trust. Each Independent
Trustee receives an annual Trustee's fee of $2,000, a fee of $200 for attending
each Board meeting, Audit Committee meeting or other meeting held for the
purpose of considering arrangements between the Acquired Trust and Scudder
Kemper, or any of its affiliates. Each Independent Trustee also receives $100
for all other committee meetings attended. The newly-constituted Board may
determine to change its compensation structure.
The Independent Trustees are not entitled to benefits under any pension or
retirement plan. A one-time benefit will be provided to those Independent
Trustees who have volunteered to leave the Board prior to their normal
retirement date in order to facilitate the nomination of a consolidated board.
Inasmuch as Scudder Kemper will also benefit from the administrative
efficiencies of a consolidated board, Scudder Kemper has agreed to reimburse the
Funds for the entire cost of this benefit.
Scudder Kemper supervises the Acquired Trust's investments, pays the
compensation and certain expenses of its personnel who serve as Trustees and
officers of the Acquired Trust and receives a management fee for its services.
Several of the Acquired Trust's officers and Trustees are also officers,
directors, employees or stockholders of Scudder Kemper and participate in the
fees paid to that firm, although the Acquired Trust does not make any direct
payments to them other than for reimbursement of travel expenses in connection
with their attendance at Board and committee meetings.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Trustees who receive compensation from the Acquired Trust.
Column (2) Aggregate compensation received by each Trustee of the Acquired
Trust during calendar year 2000.
Column (3) Total compensation received by each Trustee from funds managed
by Scudder Kemper (collectively, the "Fund Complex") during calendar year 2000.
Compensation Table
------------------------------------------------------------------------------
Aggregate Total Compensation
Compensation from from Fund Complex
the Acquired Trust Paid to Trustee
Trustees (number of series) (number of series)
-------- ------------------ ------------------
------------------------------------------------------------------------------
Dr. Kenneth Black, Jr. $37,172 (9 funds) $ ([ ] funds)
------------------------------------------------------------------------------
Dr. Rosita P. Chang $37,172 (9 funds) $ ([ ] funds)
------------------------------------------------------------------------------
Peter B. Freeman $31,108 (9 funds) $ ([ ] funds)
------------------------------------------------------------------------------
Dr. J. D. Hammond $37,172 (9 funds) $ ([ ] funds)
------------------------------------------------------------------------------
The Board of Trustees unanimously recommends
-10-
<PAGE>
that shareholders of the Fund vote FOR each nominee.
PROPOSAL 2: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. SYNOPSIS
Introduction
The Board of Trustees of the Acquired Trust, including all of the
Independent Trustees, approved the Plan at a meeting held on November 9, 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 Kemper Growth Portfolio in exchange for shares of
beneficial interest of Kemper Growth Portfolio; (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 Kemper Growth Portfolio,
and will hold, immediately after the Reorganization, shares of Kemper Growth
Portfolio, having an aggregate net asset value equal to the aggregate net asset
value of such shareholder's shares of the Fund on the Valuation Date.
Background of the Reorganization
The Reorganization is part of a broader Scudder Kemper 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. In addition, Scudder Kemper
anticipates changing its name to "Zurich Scudder Investments, Inc." Scudder
Kemper believes that the combination of the Scudder Funds with the Kemper Funds
will permit it to streamline its administrative infrastructure and focus its
distribution efforts. 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 Fund.
The fund consolidations are expected to have a positive impact on
Scudder Kemper, as well. These consolidations are likely to result in reduced
costs (and the potential for increased profitability) for Scudder Kemper in
advising or servicing funds.
Reasons for the Proposed Reorganization; Board Approval
The Independent Trustees have conducted a thorough review of all
aspects of the proposed Reorganization. See "The Proposed Transaction - Board
Approval of the Proposed Transaction" below.
-11-
<PAGE>
The Trustees believe that the Reorganization will provide shareholders of
the Fund with the following benefits:
. LOWER FUND EXPENSES. If the Reorganization is approved, the Fund's
shareholders are expected to benefit from lower total Fund operating
expenses. Please refer to "Comparison of Expenses" below.
. SIMILAR INVESTMENT OBJECTIVES AND POLICIES. Although some differences do
exist, Scudder Kemper has advised the Trustees that the Funds have very
compatible investment objectives and policies. Both Funds have the same
portfolio management team, and invest primarily in common stocks of U.S.
companies with market capitalizations of $1.0 billion or greater. Please
refer to "Investment Objectives, Policies and Restrictions of the Funds"
below.
. INVESTMENT IN A LARGER FUND. Scudder Kemper has advised the Trustees that
the Fund's shareholders will benefit from an investment in a larger fund
which may have the ability to effect portfolio transactions on more
favorable terms and provide Scudder Kemper with greater investment
flexibility and the ability to select a larger number of portfolio
securities for the combined fund, with the attendant ability to spread
investment risks among a larger number of portfolio securities.
. TAX-FREE REORGANIZATION. It is a condition of the Reorganization that the
Fund receive an opinion of tax counsel that the transaction would be a TAX-
FREE transaction.
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 Board of Trustees unanimously recommends 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 Board of Trustees.
Investment Objectives, Policies and Restrictions of the Funds
This section will help you compare the investment objectives and policies
of the Fund with those of Kemper Growth Portfolio. Please be aware that this is
only a summary. More complete information may be found in the Fund's and Kemper
Growth Portfolio's prospectuses.
The investment objectives, policies and restrictions of Kemper Growth
Portfolio and the Fund (and, consequently, the risks of investing in either of
the Funds) are similar. Some differences do exist. The investment objective of
Kemper Growth Portfolio is to seek maximum appreciation of capital. The
investment objective of the Fund is to seek long-term growth of capital through
equity securities of seasoned, financially strong U.S. growth companies. There
can be no assurance that either Fund will achieve its investment objective.
Scudder Kemper is the investment manager of both Funds. Both the Fund and
Kemper Growth Portfolio are managed by the same portfolio manager.
-12-
<PAGE>
The Fund seeks its objective by normally investing at least 65% of its
total assets in common stocks and other equities of large U.S. companies.
Kemper Growth Portfolio also normally invests at least 65% of its total assets
in common stocks of large U.S. companies. Companies in which both Funds invest
generally have market capitalizations in excess of $1 billion. Both Funds may
invest in foreign securities, with Kemper Growth Portfolio having the ability to
invest up to 25% of its total assets in foreign securities. While each Fund is
permitted to use various types of derivatives (contracts whose value is based
on, for example, indices, currencies or securities), the managers don't intend
to use them as principal investments, and might not use them at all.
In choosing stocks for the Fund, the portfolio manager uses a combination
of three analytical disciplines: (i) Bottom-up Research: the manager looks for
individual companies with a history of above-average growth, strong competitive
positioning, attractive prices relative to potential growth, sound financial
strength and effective management, among other factors; (ii) Growth Orientation:
the manager generally looks for companies with above-average growth of revenue
or earnings relative to the overall market; and (iii) Top-down Analysis: the
manager considers the economic outlooks for various sectors and industries. The
manager for the Fund may favor securities from different industries at different
times, while still maintaining a variety in terms of the industries represented.
In choosing stocks for Kemper Growth Portfolio, the manager looks for
individual companies that have strong product lines, effective management and
leadership positions within core markets. The manager also analyzes each
company's valuation, stock price movements and other factors. Based on the
foregoing analysis, Kemper Growth Portfolio's manager classifies stock as
follows: (i) Stable Growth (typically 70% of the portfolio): companies with
strong business lines and potentially sustainable earnings growth at a rapid
rate; (ii) Accelerating Growth (typically up to 25% of the portfolio): companies
with a history of strong earnings growth and the potential for continued growth;
(iii) Special Situations (typically up to 15% of the portfolio): companies that
appear likely to become Stable Growth or Accelerating Growth companies through a
new product launch, restructuring, change in management or other catalyst. The
manager intends to keep Kemper Growth Portfolio's securities diversified across
industries and companies, and generally keep its sector weightings similar to
those of the Russell 1000 Growth Index.
The Fund will normally sell a stock when its earnings growth appears less
promising, when the company no longer qualifies as a large company, when the
manager believes that other investments offer better opportunities or in the
course of adjusting its exposure to a given industry. Kemper Growth Portfolio
normally will sell a stock when the manager believes its earnings potential or
its fundamental qualities have deteriorated or when other investments offer
better opportunities.
The Funds' fundamental and non-fundamental investment restrictions are
identical, except that, as a matter of non-fundamental policy, Kemper Growth
Portfolio does not intend to invest more than 15% of its net assets in illiquid
securities. As a matter of internal operating policy, the Fund is subject to the
same restriction. Also, as a matter of non-fundamental policy, Kemper Growth
Portfolio does not intend to lend portfolio securities in an amount greater than
one third of its total assets, while the Fund does not intend to lend portfolio
securities in an amount greater than 5% of its total assets. Fundamental
investment restrictions may not be changed without the approval of Fund
shareholders. Investors should refer to the Funds' statements of additional
information for a fuller description of the Funds' investment policies and
restrictions.
-13-
<PAGE>
Portfolio Turnover
The portfolio turnover rate for Kemper Growth Portfolio, 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 December 31, 1999 was 87%. The portfolio turnover rate for the Fund for
the period May 3, 1999 (commencement of operations) to December 31, 1999 was
119% (annualized). 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.
Performance
The following table shows how the returns of the Fund and Kemper Growth
Portfolio over different periods average out. For context, the table also
includes two broad-based market indexes (which, unlike the Funds, do not have
any fees or expenses). The performances of both Funds and the indexes 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]
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 the applicable Fund's Trustees.
The same individual serves as the portfolio manager for each Fund. Scudder
Kemper is a Delaware corporation located at Two International Place, Boston,
Massachusetts 02110-4103.
The Investment Manager receives a fee for its services pursuant to its
investment management agreement with Kemper Growth Portfolio. For these
services, Kemper Growth Portfolio pays the Investment Manager a fee at an annual
rate of 0.60% of its average daily net assets payable monthly. As of December
31, 1999, Kemper Growth Portfolio had total net assets of $737,691,000. For the
fiscal year ended December 31, 1999, Kemper Growth Portfolio paid the Investment
Manager a fee of 0.60% of its average daily net assets.
-14-
<PAGE>
The Investment Manager receives a fee for its services pursuant to its
investment management agreement with the Fund. For these services, the Fund
pays the Investment Manager a fee at an annual rate of 0.625% of its average
daily net assets payable monthly. However, the Investment Manager has agreed,
by contract, to waive all or a portion of the Fund's expenses in order to limit
the total operating expenses of the Fund's shares to 1.25% of average daily net
assets until April 30, 2001. As of December 31, 1999, the Fund had total net
assets of $6,025,263. For the period May 3, 1999 (commencement of operations)
to December 31, 1999, the Fund did not pay a fee to the Investment Manager
because the Fund's other operating expenses exceeded 1.25% of average daily net
assets.
The fee schedule for the combined fund after the Reorganization will be
identical to the current fee schedule for Kemper Growth Portfolio.
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 Kemper Growth Portfolio, and compare these with the expenses of the
Fund. As indicated below, it is expected that the total expense ratio of Kemper
Growth Portfolio following the Reorganization will be substantially lower than
the current expense ratio of the Fund. 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
Annual Fund Operating Expenses (Unaudited)
<TABLE>
<CAPTION>
Kemper
Growth Pro Forma
Fund Portfolio (Combined)(1)
---- --------- -------------
<S> <C> <C> <C>
Annual Fund Operating Expenses
------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.63% 0.60% 0.60%
Distribution and/or Service (12b-1) Fees None None None
Other Expenses 1.57% 0.05% 0.05%
Total Annual Fund Operating Expense 2.20% 0.65% 0.65%
Expense Waiver 0.95% n/a n/a
Net Annual Fund Operating Expense 1.25%(3) 0.65% 0.65%
Expense Example of Total Operating
----------------------------------
Expenses at the
---------------
End of the Period(2)
-----------------
One Year $127 $ 66 $ 66
</TABLE>
-15-
<PAGE>
Three Years $ 597 $ 208 $ 208
Five Years $1,093 $ 362 $ 362
Ten Years $2,460 $ 810 $ 810
_________________
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.
(2) 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 redemption at the end of each
period.
(3) By contract, total operating expenses of the Fund are capped at 1.25%,
through April 30, 2001. There is no guarantee that this expense waiver
will continue beyond April 30, 2001.
Financial Highlights
For management's discussion of Kemper Growth Portfolio's performance for
the fiscal year ended December 31, 1999, please refer to Exhibit B attached
hereto.
The financial highlights table for Kemper Growth Portfolio, which is
intended to help you understand Kemper Growth Portfolio's financial performance
for at least the past five years, is attached hereto as Exhibit C.
Distribution and Services Fees
Pursuant to an underwriting and distribution services agreement with Kemper
Growth Portfolio, Kemper Distributors, Inc. ("KDI"), 222 South Riverside Plaza,
Chicago, Illinois 60606, an affiliate of the Investment Manager, will serve as
principal underwriter and distributor for the shares of the combined fund and
will act as agent of the combined fund in the continuous offering of its shares.
As agent, KDI will offer shares of the combined fund on a continuous basis to
the separate accounts of Participating Insurance Companies in all states in
which the combined fund or the Acquiring Trust may from time to time be
registered or where permitted by applicable law. After the Reorganization, KDI
will continue to accept orders for shares of the combined fund at net asset
value without a sales commission and on a no-load basis.
Purchases and Redemptions
The purchase and redemption procedures and privileges of the combined fund
will be identical to those of both Kemper Growth Portfolio and the Fund.
The separate accounts of the Participating Insurance Companies place
orders to purchase and redeem shares of the Funds based on, among other things,
the amount of premium payments to be invested and surrender and transfer
requests to be effected on that day pursuant to VLI and VA contracts. The
shares of each Fund are purchased and redeemed at the net asset value of the
applicable Fund's shares determined that same day or, in the case of an order
not resulting automatically from contract transactions, next determined after an
order in proper form is received. An order is considered to be in proper form
if it is communicated by telephone or wire by an authorized employee of a
Participating Insurance Company.
No fee is charged to shareholders when they purchase or redeem shares of
either the Fund or Kemper Growth Portfolio, nor will a fee be charged to
shareholders when they purchase or redeem shares of the combined fund. Please
see the Funds' prospectuses for additional information.
-16-
<PAGE>
Dividends and Other Distributions
Kemper Growth Portfolio normally declares and distributes dividends of net
investment income annually. Kemper Growth Portfolio distributes any net realized
short-term and long-term capital gains at least annually. The Fund intends to
declare and distribute investment company taxable income and any net realized
capital gains in April each year. Each Fund may make an additional distribution
if necessary. Dividends and distributions of each Fund are invested in
additional shares of that Fund at net asset value and credited to the
shareholder's account on the payment date unless an election is made on behalf
of a separate account to receive dividends and capital gains distributions in
cash.
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.
Both the Acquired Trust and the Acquiring Trust are Massachusetts business
trusts. Although the organizational documents of the Fund and of Kemper Growth
Portfolio are similar, some differences do exist. The more significant
differences are listed below.
. Kemper Growth Portfolio shareholders may remove a trustee by a vote of
50% of the outstanding shares of that Fund; a vote of two-thirds of
the outstanding shares of the Fund is required to remove a trustee of
the Fund.
. A special meeting of Kemper Growth Portfolio may be called upon
written application of shareholders of the Fund holding at least 25%
of the outstanding shares of that Fund (10% if the purpose of the
meeting is to consider the removal of a trustee); a special meeting
for all purposes may be called upon written request of shareholders
holding 10% or more of the outstanding shares of the Fund.
Board Members and Officers.
The Trustees of the Fund are different from the Trustees of Kemper Growth
Portfolio. The shareholders of Kemper Growth Portfolio are currently voting on
a new Board of Trustees, which, if approved by the shareholders, will consist of
John W. Ballantine, Lewis A. Burnham, Linda C. Coughlin, Donald L. Dunaway,
James R. Edgar, William F. Glavin, Robert B. Hoffman, Shirley D. Peterson, Fred
B. Renwick, William P. Sommers and John G. Weithers. In addition, the officers
of the Fund and Kemper Growth Portfolio are different. (See each Fund's
Statement of Additional Information for further information.)
Transfer Agent.
Scudder Service Corporation, a subsidiary of Scudder Kemper, is the
transfer agent for the shares of the Fund. State Street Bank and Trust Company
is the transfer agent for the shares of Kemper Growth Portfolio.
Auditors.
-17-
<PAGE>
The Fund's auditors are PricewaterhouseCoopers LLP. Kemper Growth
Portfolio's auditors are Ernst & Young 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 types of principal risks presented by Kemper Growth Portfolio are similar to
those presented by the Fund. The main risks applicable to each Fund stem from
market risk, industry risk, management risk (i.e., securities selection by the
Investment Manager) and, particularly in the case of Kemper Growth Portfolio,
risk associated with exposure to foreign markets. 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 "Investment Objectives, Policies and Restrictions
of the Funds" above, and the prospectuses and statements of additional
information for the Funds.
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 Kemper Growth Portfolio in exchange for that
number of full and fractional shares having an aggregate net asset value equal
to the aggregate net asset value of the shares of the Fund as of the close of
business on the Valuation Date. Kemper Growth Portfolio will assume all of the
liabilities of the Fund. The Fund will distribute the 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 shares having an aggregate net asset
value equal to the aggregate net asset value of such shareholder's shares held
in the Fund as of the close of business on the Valuation Date. Such shares will
be held in an account with Kemper Growth Portfolio identical in all material
respects to the account currently maintained by the Fund for such shareholder.
In the interest of economy and convenience,
-18-
<PAGE>
shares issued to the Fund's shareholders in the Reorganization will be in
uncertificated form. If 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 shares of Kemper Growth Portfolio 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 by the transfer agent after the Closing will be
treated as requests received for the redemption or purchase of Kemper Growth
Portfolio shares received by the shareholder in connection with the
Reorganization.
The obligations of each Trust on behalf of the respective Funds under the
Plan are subject to various conditions, as stated therein. 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 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 Kemper Growth Portfolio 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.
Scudder Kemper will pay the expenses associated with the Reorganization.
Board Approval of the Proposed Transaction
Scudder Kemper first presented the Reorganization to the Independent
Trustees of the Fund as part of a broader initiative by Scudder Kemper to
consolidate its mutual fund lineup and to offer all of the open-end mutual funds
it advises under the "Scudder" brand name (see "Synopsis - Background of the
Reorganization" above). This initiative includes several major components,
including:
(i) A change in branding to offer virtually all funds advised by Scudder
Kemper under the Scudder name;
(ii) The combination of funds with similar investment objectives and
policies, including in particular the Reorganization;
(iii) The election of the board currently responsible for overseeing most
of the Scudder no-load funds as the board of each series of the
Acquired Trust; and
(iv) The liquidation of certain small funds which have not achieved
market acceptance and which are unlikely to reach an efficient
operating size.
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 trustees or directors. They were assisted in this review by their
independent legal counsel and by independent consultants with special
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<PAGE>
expertise in financial and mutual fund industry matters. The Independent
Trustees met in person or by telephone on numerous occasions to review and
discuss these proposals, both among themselves and with representatives of
Scudder Kemper. In the course of their review, the Independent Trustees
requested and received substantial additional information and suggested numerous
changes to Scudder Kemper's proposals, many of which were accepted.
Following the conclusion of this process, the Independent Trustees of the
Fund, the independent trustees/directors of other funds involved and Scudder
Kemper reached general agreement on the elements of a restructuring plan as it
affects shareholders of various funds and, where required, agreed to submit
elements of the plan for approval to shareholders of those funds.
On November 9, 2000, the Board of the Fund, including the Independent
Trustees of the Fund, approved the terms of the Reorganization and certain
related proposals. The Independent Trustees have also unanimously agreed to
recommend that the Reorganization be approved by the Fund's shareholders.
In determining to recommend that the shareholders of the Fund approve the
Reorganization, the Board considered, among other factors: (a) the fees and
expense ratios of the Funds, including comparisons between the expenses of the
Fund and the estimated operating expenses of Kemper Growth Portfolio, and
between the estimated operating expenses of Kemper Growth Portfolio 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 Fund's and Kemper Growth
Portfolio's investment objective, policies, restrictions and portfolios; (d) the
service features available to shareholders of the Fund and Kemper Growth
Portfolio; (e) the costs to be borne by the Fund, Kemper Growth Portfolio and
Scudder Kemper as a result of the Reorganization; (f) prospects for Kemper
Growth Portfolio to attract additional assets; (g) the tax consequences of the
Reorganization on the Fund, Kemper Growth Portfolio and their respective
shareholders; (h) the investment performance of the Fund and Kemper Growth
Portfolio; and (i) information provided by Scudder Kemper regarding the
anticipated reaction of the Acquired Trust's insurance partners to the proposed
Reorganization and other related changes.
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. The Trustees concluded that these economies
were appropriately reflected in the fee and expense arrangements of Kemper
Growth Portfolio. The Trustees also considered the impact of the Reorganization
on the total expenses to be borne by shareholders of the Fund. As noted above
under "Comparison of Expenses," the pro forma expense ratio for the combined
fund following the Reorganization is substantially lower than the current
expense ratio for the Fund. The Board also considered that the Reorganization
would permit the shareholders of the Fund to pursue similar investment goals in
a larger fund.
Based on all of 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
Kemper Growth Portfolio is a series of the Acquiring Trust, a Massachusetts
business trust established under a Declaration of Trust dated January 22, 1987,
as amended. The Acquiring Trust's authorized capital consists of an unlimited
number of shares of beneficial interest, all having no par value per share. The
Trustees of the Acquiring Trust are authorized to divide the Acquiring Trust's
shares into
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<PAGE>
separate series. Kemper Growth Portfolio is one of twenty-six series of the
Acquiring Trust that the Board has created to date. The Trustees of the
Acquiring Trust are also authorized to further divide the shares of the series
of the Acquiring Trust into classes. Currently, the Acquiring Trust does not
offer a multiple-class structure.
Each share of Kemper Growth Portfolio represents an interest in Kemper
Growth Portfolio that is equal to and proportionate with each other share of
Kemper Growth Portfolio. Kemper Growth Portfolio 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, there
are no material differences between the rights of shareholders of the Fund and
the rights of shareholders of Kemper Growth Portfolio, except as described above
under "Other Differences Between the Funds - Charter Documents."
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 Kemper Growth Portfolio of all or
substantially all of the assets of the Fund in exchange solely for shares of
beneficial interest of Kemper Growth Portfolio and the assumption by Kemper
Growth Portfolio 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 Kemper
Growth Portfolio 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 Kemper Growth Portfolio in exchange solely for shares of beneficial
interest of Kemper Growth Portfolio and the assumption by Kemper Growth
Portfolio of all of the liabilities of the Fund or upon the distribution of such
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 Kemper Growth
Portfolio 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 Kemper Growth Portfolio will include the period during which such
assets were held by the Fund; (v) no gain or loss will be recognized by Kemper
Growth Portfolio upon the receipt of the assets of the Fund in exchange for
shares of beneficial interest of Kemper Growth Portfolio and the assumption by
Kemper Growth Portfolio 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
shares of beneficial interest of Kemper Growth Portfolio solely in exchange for
their shares of the Fund as part of the transaction; (vii) the basis of the
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 the
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, Kemper Growth Portfolio 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
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<PAGE>
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 10019-6099. Certain legal matters concerning the
issuance of shares of Kemper Growth Portfolio will be passed on by Dechert, Ten
Post Office Square, South, Boston, Massachusetts 02109.
Capitalization
The following table shows on an unaudited basis the capitalization of
Kemper Growth Portfolio 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>
=============================================================================================================================
Kemper
Growth
Portfolio Fund Pro Forma Adjustments Pro Forma (Combined)
--------- ---- --------------------- --------------------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets....................................... $708,996,088 $13,608,186 $722,604,274
Shares Outstanding............................... 195,462,517 1,711,561 2,037,251 199,211,329
Net Asset Value Per Share........................ $ 3.63 $ 7.95 $ 3.63
=============================================================================================================================
</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 Kemper Growth Portfolio 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 Kemper Growth
Portfolio that actually will be received on or after such date.
The Board of Trustees unanimously recommends that shareholders of the
Fund vote FOR this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT
ACCOUNTANTS
The Board of Trustees, including all of the Independent Trustees, has
selected PricewaterhouseCoopers LLP to act as independent accountants 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,
Ernst & Young LLP will serve as the independent auditors for the combined fund.
One or more representatives of PricewaterhouseCoopers 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 FOR this Proposal 3.
-22-
<PAGE>
ADDITIONAL INFORMATION
Information about the Funds
Additional information about the Trusts, 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, Massachusetts
02110-4103, or by calling 1-800-[ ].
The Trusts 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 Trust, 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 Trusts and the Funds.
General
Proxy Solicitation. Proxy solicitation costs will be paid by Scudder
Kemper. See "The Proposed Transaction - Board Approval of the Proposed
Transaction." In addition to solicitation by mail, certain officers and
representatives of the Acquired Trust, 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.
As discussed above, shares of the Fund are offered only to Participating
Insurance Companies to fund benefits under their VA contracts and VLI contracts
(each a "Contract"). Accordingly, as of the close of business on January 26,
2001, shares of the Fund were held by separate accounts, or sub-accounts
thereof, of various Participating Insurance Companies. These shares are owned by
the Participating Insurance Companies as depositors for their respective
Contracts issued to individual contract holders or to a group (e.g., a defined
benefit plan) in which individuals participate (collectively, "Participants").
Under the terms of the Contracts, Participants have the right to instruct the
Participating Insurance Companies on how to vote the shares related to their
interests through their Contracts (i.e., pass-through voting). A Participating
Insurance Company must vote the shares of the Fund held in its name as directed.
If a Participating Insurance Company does not receive voting instructions for
all of the shares of the Fund held under the Contracts, it may vote all of the
shares in the relevant separate accounts with respect to each Proposal on which
it is entitled to vote, for, against or abstaining, in the same proportion as
the shares of the Fund for which it has received instructions (i.e., echo
voting). The group Participants of some group Contracts may have the right to
direct the vote, with respect to each Proposal on which they are entitled to
vote, for all shares of the Fund held under the Contract, for, against or
abstaining, in the same proportions as shares for which instructions have been
given under the same Contract. This Proxy Statement/Prospectus is used to
solicit instructions from Participants for voting shares of the Fund as well as
for soliciting proxies from the Participating Insurance Companies, the actual
shareholders of
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<PAGE>
the Fund. All persons entitled to direct the voting of shares, whether or not
they are shareholders, will be described as voting for purposes of this Proxy
Statement/Prospectus.
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. Only a shareholder may execute or revoke a proxy. A Participant
who has given voting instructions may revoke them through the applicable
Participating Insurance Company. A Participant may also revoke the accompanying
voting instruction at any time prior to its use by filing with the Trust a
written revocation or duly executed voting instruction bearing a later date. In
addition, any Participant who attends the Meeting in person may vote by ballot
at the Meeting, thereby canceling any voting instruction previously given. The
persons named in the accompanying voting instruction will vote as directed, but
in the absence of voting directions in any voting instruction that is signed and
returned, they may vote the interest represented thereby FOR each Proposal and
may vote in accordance with their best judgment with respect to other matters
not now known to the Board that may be presented to the Meeting.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of at least one-third of the shares of the Acquired Trust (for a trust-
wide vote) or the Fund (for a fund-wide vote) 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 Acquired Trust's (for a trust-wide vote) or
the Fund's (for a fund-wide vote) 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 each nominee under Proposal 1 requires the affirmative vote
of a plurality of the shares of the Acquired Trust 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 shares of the Fund at the close of business on January
26, 2001 will be entitled to one vote per share on all business of the Meeting.
As of [ ], [ ], there were [ ] shares of the Fund outstanding.
[As of December 31, 2000, the officers and Trustees of the Acquiring Trust
as a group owned beneficially less than 1% of the outstanding shares of Kemper
Growth Portfolio. Appendix 1 hereto sets forth the beneficial owners of 5% or
more of each Fund's shares, as well as the beneficial owners of more
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<PAGE>
than 5% of the shares of each other series of the Acquired Trust. To the best of
each Trust's knowledge, as of December 31, 2000, no person owned beneficially 5%
or more of the outstanding shares of the applicable Fund or the shares of any
other series of the Acquired Trust, except as stated on Appendix 1.]
In addition to solicitation by mail, certain officers and representatives
of the Acquired Trust, officers and employees of Scudder Kemper or its
affiliates 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. Shareholder Communications Corporation
("SCC") also 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, if their votes have not yet been received, may receive
a telephone call from a representative of SCC requesting that they submit the
proxy card(s) originally sent with the Proxy Statement/Prospectus. 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 Acquired Trust, c/o Scudder Kemper Investments, Inc., Two
International Place, Boston, Massachusetts 02110-4103, 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 Acquired Trust and/or
the Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) OR VOTING
INSTRUCTION FORM(S) PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board,
/s/ John Millette
John Millette
Secretary
-25-
<PAGE>
INDEX OF EXHIBITS AND APPENDICES
EXHIBIT A: AGREEMENT AND PLAN OF REORGANIZATION........................__
EXHIBIT B: MANAGEMENT'S DISCUSSION OF KEMPER GROWTH PORTFOLIO'S
PERFORMANCE.............................................................__
EXHIBIT C: FINANCIAL HIGHLIGHTS TABLE FOR KEMPER GROWTH PORTFOLIO......__
APPENDIX 1: BENEFICIAL OWNERS OF FUND SHARES...........................__
-26-
<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 Kemper Variable Series (the
"Acquiring Trust"), a Massachusetts business trust, on behalf of Kemper Growth
Portfolio (the "Acquiring Fund"), a separate series of the Acquiring Trust,
Scudder Variable Life Investment Fund (the "Acquired Trust" and, together with
the Acquiring Trust, each a "Trust" and collectively the "Trusts"), a
Massachusetts business trust, on behalf of Large Company Growth Portfolio (the
"Acquired Fund" and, together with the Acquiring Fund, each a "Fund" and
collectively the "Funds"), a separate 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 Trust is 222 South Riverside Plaza, Chicago, Illinois
60606 and the principal place of business of the Acquired Trust is Two
International Place, Boston, Massachusetts 02110-4103.
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
voting shares of beneficial interest (no 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 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 Acquiring Fund Shares determined by dividing the value of
the Acquired Fund's assets net of any liabilities 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, 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 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").
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
<PAGE>
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 (the "Acquired Fund Shareholders"), determined as of the Valuation Time
(as defined in section 2.1), on a pro rata basis, the Acquiring Fund Shares
received by the Acquired Fund pursuant to section 1.1 and will completely
liquidate. Such distribution and liquidation will be accomplished 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 the Acquiring
Fund Shares to be so credited to the Acquired Fund Shareholders shall be equal
to the aggregate net asset value of the Acquired Fund shares 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 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.
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
2
<PAGE>
other distributions on that date, using the valuation procedures set forth in
the Acquiring Trust's Declaration of Trust, 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 an Acquiring Fund Share shall be the net
asset value per share computed as of the Valuation Time using the valuation
procedures referred to in section 2.1.
2.3. The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Assets shall be determined by
dividing the value of the Assets with respect to Class A shares of the Acquired
Fund determined in accordance with section 2.1 by the net asset value of an
Acquiring Fund Share 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 May 1, 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. State Street Bank and Trust Company ("State Street"), 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
State Street, 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 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. Scudder Service Corporation, 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 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
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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 shares of the Acquiring Fund or the Class A shares of
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 Fund is a separate
series of the Acquired Trust 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
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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 period May 3, 1999 (commencement of operations)
to December 31, 1999, 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 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;
(g) Since December 31, 1999, 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;
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<PAGE>
(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 Scudder Service Corporation, 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 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
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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 Trust, on behalf of the Acquiring Fund, represents
and warrants to the Acquired Fund as follows:
(a) The Acquiring 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 Acquiring 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 the approval of shareholders of the
Acquired Fund, to carry out the Agreement. The Acquiring Fund is a separate
series of the Acquiring Trust duly designated in accordance with the applicable
provisions of the Acquiring Trust's Declaration of Trust. The Acquiring Trust
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 Trust 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 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 Acquiring 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 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 Trust is not, and the execution, delivery and
performance of this Agreement by the Acquiring Trust will not result (i) in
violation of Massachusetts law or of the Acquiring Trust's Declaration of Trust,
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 December 31, 1999, have been
audited by Ernst & Young LLP, independent auditors, and are in
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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 December 31, 1999, 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;
(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 (recognizing that, under Massachusetts law, Acquiring Fund
Shareholders, under certain circumstances, could be held personally liable
for the obligations of the Acquiring Fund). 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 (recognizing that, under Massachusetts law, Acquiring Fund
Shareholders, under certain circumstances, could be held personally liable
for the obligations of the Acquiring Fund);
(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 Trust (including
the determinations required by Rule 17a-8(a) under the 1940 Act) and this
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Agreement will constitute a valid and binding obligation of the Acquiring
Trust, 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
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.
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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 March 14, 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.
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.
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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 Trusts, 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 Trusts, 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 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 Trust, 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 Trust has been duly formed and is an existing
business trust; (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 Trust, on behalf of the
Acquiring Fund, and constitutes a valid and legally binding obligation of the
Acquiring Trust, 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'
11
<PAGE>
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 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 Acquiring Trust is not subject to any litigation or other
proceedings that might have a materially adverse effect on the operations
of the Acquiring Trust, (ii) the Acquiring 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 Acquiring 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 Trust 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.
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 Trust,
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
12
<PAGE>
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, 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
Trust 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
13
<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 Trust 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 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.
14
<PAGE>
10. FEES AND EXPENSES
10.1. Each of the Acquiring Trust, 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. Scudder Kemper will pay the expenses associated with the
Reorganization. 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 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, Two International
15
<PAGE>
Place, Boston, MA 02110-4103, with a copy to Dechert, Ten Post Office Square
South, Boston, MA 02109-4603, Attention: Joseph R. Fleming, Esq., or to the
Acquiring 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 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 each Trust mean and refer to the
Board members of each 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 each Trust
conducts its business. It is expressly agreed that the obligations of each Trust
hereunder shall not be binding upon any of the Board members, shareholders,
nominees, officers, agents, or employees of the Trusts or the Funds personally,
but bind only the respective property of the Funds, as provided in each Trust's
Declaration of Trust. Moreover, no series of either Trust other than the Funds
shall be responsible for the obligations of the Trusts hereunder, and all
persons shall look only to the assets of the Funds to satisfy the obligations of
the Trusts hereunder. The execution and the delivery of this Agreement have been
authorized by each Trust's Board members, on behalf of the applicable Fund, and
this Agreement has been signed by authorized officers of each 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 any liability on any of them personally, but shall
bind only the respective property of the Funds, as provided in each 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 Trusts 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.
16
<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: SCUDDER VARIABLE LIFE INVESTMENT FUND
on behalf of Large Company Growth Portfolio
_________________________
Secretary
________________________________
By:_____________________________
Its:____________________________
Attest: KEMPER VARIABLE SERIES
on behalf of Kemper Growth Portfolio
_________________________
Secretary
________________________________
By:_____________________________
Its:____________________________
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
___________________________________
By:________________________________
Its:_______________________________
17
<PAGE>
EXHIBIT B
Management's Discussion of Kemper Growth Portfolio's Performances
Management Summary And Performance Update
--------------------------------------------------------------------------------
December 31, 1999
Kemper Growth Portfolio
Despite periods of volatility and weakness in several sectors, the Kemper Growth
Portfolio outpaced the benchmark Russell 1000 Growth Index and posted strong
returns in 1999.
In general, during the second half of the year, we were rewarded for our
unflagging commitment to style consistency and quality. Earlier in the year,
large-cap growth stocks fell out of favor and the market punished quality
stocks. But the portfolio stayed its course and our patience was rewarded. Late
in the year, when the market returned to our style, we found ourselves
well-situated to take advantage of a number of attractive opportunities.
Specifically, we found performance in a number of technology stocks, including
Microsoft and Sun Microsystems, as well as in sectors such as consumer
discretionary and health. Recently, we initiated positions in both eBay, which
we believe has an excellent business model and a positive earnings outlook, and
Honeywell International, which recently completed a complementary merger with
AlliedSignal.
Conversely, the portfolio was hindered by sluggishness among large-cap health
and financials, although, by sticking to our disciplined investment
1
<PAGE>
strategy, we were still able to find select, underpriced buying opportunities in
those areas. We expect that many of the moves we've made of late may reward the
portfolio as we move into 2000.
Valerie F. Malter
George P. Fraise
Co-Lead Portfolio Managers
--------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Growth Portfolio from
12/9/1983 to 12/31/1999
--------------------------------------------------------------------------------
The Russell 1000 Growth Index is an unmanaged index composed of common stock of
larger U.S. companies with greater than average growth orientation and
represents the universe of stocks from which "earnings/growth" money managers
typically select. The Standard & Poor's 500 Index is an unmanaged index
generally representative of the U.S. stock market.
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Kemper Growth Russell 1000 Standard &
Portfolio Growth Index Poor's 500 Index
1983.75 10000 10000 10000
2
<PAGE>
1984 10260 10000 10000
1984.25 10475 9195 9760
1984.5 10568 9088 9509
1984.75 11172 9788 10430
1985 11372 9905 10625
1985.25 12254 10899 11601
1985.5 13012 11599 12453
1985.75 12389 11040 11943
1986 14224 13158 13998
1986.25 16330 15208 15972
1986.5 17317 16455 16912
1986.75 15229 14444 15733
1987 15518 15177 16611
1987.25 19068 18832 20159
1987.5 19532 19553 21171
1987.75 20684 20873 22569
1988 15777 15981 17485
1988.25 16534 16477 18479
1988.5 17175 17363 19710
1988.75 16064 17289 19778
1989 15841 17782 20386
1989.25 16759 19018 21830
3
<PAGE>
1989.5 18319 20933 23757
1989.75 20732 23538 26299
1990 20256 24171 26842
1990.25 19858 23276 26036
1990.5 22090 25541 27677
1990.75 18739 21727 23872
1991 20377 24108 26011
1991.25 24391 28432 29787
1991.5 24136 28159 29719
1991.75 26891 30126 31309
1992 32497 34029 33934
1992.25 31405 32347 33081
1992.5 29089 31994 33710
1992.75 30248 33403 34775
1993 33657 35733 36531
1993.25 33695 35435 38127
1993.5 35577 34884 38308
1993.75 39302 35400 39296
1994 38581 36769 40209
1994.25 37937 35150 38686
1994.5 34896 34795 38848
4
<PAGE>
1994.75 37007 37468 40744
1995 37030 37749 40738
1995.25 40133 41341 44705
1995.5 43337 45409 48970
1995.75 47196 49533 52863
1996 49240 51789 56046
1996.25 51824 54569 59052
1996.5 54412 58040 61699
1996.75 58396 60129 63607
1997 59889 63758 68912
1997.25 56831 64097 70757
1997.5 66224 76220 83119
1997.75 73724 81948 89344
1998 72669 83191 91913
1998.25 84417 95797 104735
1998.5 83906 100136 108194
1998.75 65471 91037 97423
1999 83644 115388 118185
1999.25 90114 122722 124068
1999.5 92144 127446 132824
1999.75 88953 122771 124528
12/31/99 114695 153630 143057
5
<PAGE>
--------------------------------------------------------------------------------
Average Annual Total Returns 1
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Life of
For the periods ended December 31, 1999 1-year 5-year 10-year portfolio
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Kemper Growth Portfolio 37.12% 25.38% 18.94% 16.40% (Since 12/9/1983)
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Average annual total return and total return measure net investment income
and capital gain or loss from portfolio investments over the periods
specified, assuming reinvestment of all dividends. Average annual total
return reflects annualized change while total return reflects aggregate
change. Performance is net of the portfolio's management fee and other
operating expenses but does not include any deduction at the separate
account or contract level for any insurance or surrender charges that may
be incurred under a contract. Please see the prospectus for more details.
Past performance is not a guarantee of future results. Returns and
principal values will fluctuate so that accumulation units,
6
<PAGE>
when redeemed, may be worth more or less than original cost.
7
<PAGE>
EXHIBIT C
Financial Highlights Table for Kemper Growth Portfolio
This table is designed to help you understand Kemper Growth Portfolio's
financial performance for the periods reflected below. The figures in the first
part of the table are for a single share. The total return figures show what a
shareholder in Kemper Growth Portfolio would have earned (or lost), assuming all
dividends and distributions were reinvested. The information for the 1995
through 1999 fiscal years has been audited by Ernst & Young LLP whose report,
along with Kemper Growth Portfolio's financial statements, is included in Kemper
Growth Portfolio's annual report.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 2000(a) 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.054 2.957 3.001 3.371 3.262 2.665
Income (loss) from investment operations:
Net investment income (loss) (.003)(b) (.001)(b) .007 .012 .030 .034
Net realized and unrealized gain (loss) on investment transactions .190 1.098 .459 .448 .589 .793
----------------------------------------------------------
Total from investment operations .187 1.097 .466 .460 .619 .827
Less distributions from:
Net investment income - - (.010) (.020) (.040) (.010)
Net realized gains on investment transactions (.360) - (.500) (.810) (.470) (.220)
----------------------------------------------------------
Total distributions (.360) - (.510) (.830) (.510) (.230)
Net asset value, end of period $ 3.881 4.054 2.957 3.001 3.371 3.262
----------------------------------------------------------
Total Return (%) 4.30** 37.12 15.10 21.34 21.63 32.97
Ratios of Average Net Assets and Supplemental Data
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 756,581 737,691 628,551 563,016 487,483 414,533
Ratio of expenses before expense reductions(%) .65* .66* .66 .65 .64 .64
Ratio of expenses after expense reductions (%) .65* .66 .66 .65 .64 .64
Ratio of net investment income (loss)(%) (.14)* (.04) .28 .42 .94 1.15
Portfolio turnover rate (%) 58* 87 109 170 175 88
</TABLE>
(a) For the six months ended June 30, 2000 (Unaudited).
(b) Based on monthly average shares outstanding during the period.
* Annualized
** Not annualized
<PAGE>
APPENDIX 1
Beneficial Owners of Fund Shares
<PAGE>
This proxy statement/prospectus is accompanied by the prospectus for Kemper
Growth Portfolio dated May 1, 2000, which was previously filed with the
Securities and Exchange Commission (the "Commission") via EDGAR on May 5, 2000
(File No. 811-05002) and is incorporated by reference herein.
Large Company Growth Portfolio's prospectus dated May 1, 2000, which was
previously filed with the Commission via EDGAR on April 27, 2000 (File No. 811-
04257), is incorporated by reference herein.
Kemper Growth Portfolio's statement of additional information dated May 1,
2000, which was previously filed with the Commission via EDGAR on May 5, 2000
(File No. 811-05002), is incorporated by reference herein.
<PAGE>
PART B
KEMPER VARIABLE SERIES
---------------------------------------------
Statement of Additional Information
[Date], 2000
---------------------------------------------
<TABLE>
<S> <C>
Acquisition of the Assets of By and in Exchange for shares of
Large Company Growth Portfolio, a series of Kemper Growth Portfolio, a series of
Scudder Variable Life Investment Fund Kemper Variable Series (the "Acquiring Trust")
Two International Place 222 South Riverside Plaza
Boston, MA 02110-4103 Chicago, IL 60606
</TABLE>
This Statement of Additional Information is available to the shareholders
of Large Company Growth Portfolio in connection with a proposed transaction
whereby Kemper Growth Portfolio will acquire all or substantially all of the
assets and all of the liabilities of Large Company Growth Portfolio in exchange
for shares of beneficial interest of Kemper Growth Portfolio (the
"Reorganization").
This Statement of Additional Information of the Acquiring Trust contains
material which may be of interest to investors but which is not included in the
Proxy Statement/Prospectus of the Acquiring Trust relating to the
Reorganization. This Statement of Additional Information consists of this cover
page and the following documents:
1. Kemper Growth Portfolio's statement of additional information dated May 1,
2000, which was previously filed with the Securities and Exchange Commission
(the "Commission") via EDGAR on May 5, 2000 (File No. 811-05002) and is
incorporated by reference herein.
2. Kemper Growth Portfolio's annual report to shareholders for the fiscal year
ended December 31, 1999, which was previously filed with the Commission via
EDGAR on March 3, 2000 (File No. 811-05002) and is incorporated by reference
herein.
3. Kemper Growth Portfolio's semiannual report to shareholders for the period
ended June 30, 2000, which was previously filed with the Commission via EDGAR on
August 22, 2000 (File No. 811-05002) and is incorporated by reference herein.
4. Large Company Growth Portfolio's prospectus dated May 1, 2000, which was
previously filed with the Commission via EDGAR on April 27, 2000 (File No. 811-
04257) and is incorporated by reference herein.
5. Large Company Growth Portfolio's statement of additional information dated
May 1, 2000, which was previously filed with the Commission via EDGAR on April
27, 2000 (File No. 811-04257) and is incorporated by reference herein.
6. Large Company Growth Portfolio's annual report to shareholders for the
fiscal year ended December 31, 1999, which was previously filed with the
Commission via EDGAR on February 22, 2000 (File No. 811-04257) and is
incorporated by reference herein.
<PAGE>
7. Large Company Growth Portfolio's semiannual report to shareholders for the
period year ended June 30, 2000, which was previously filed with the Commission
via EDGAR on August 22, 2000 (File No. 811-04257) and is incorporated by
reference herein.
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated [Date], 2000 relating to the Reorganization may be
obtained by writing Large Company Growth Portfolio at Two International Place,
Boston, Massachusetts 02110-4103 or by calling [ ] at 1-800-[ ].
This Statement of Additional Information should be read in conjunction with the
Proxy Statement/Prospectus.
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification.
-------- ----------------
Article VIII of the Registrant's Agreement and Declaration of
Trust (Exhibit (1)(a)(1) and (2) hereto, which is incorporated
herein by reference) provides in effect that the Registrant will
indemnify its officers and trustees under certain circumstances.
However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of
the Agreement and Declaration of Trust does not protect any
person against any liability to the Registrant or its
shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer, or controlling person of the
Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI
Holding Corp. ("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"),
Scudder, Stevens & Clark, Inc. ("Scudder") and the
representatives of the beneficial owners of the capital stock of
Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich
became the majority stockholder in Scudder with an approximately
70% interest, and ZKI was combined with Scudder ("Transaction").
In connection with the trustees' evaluation of the Transaction,
Zurich agreed to indemnify the Registrant and the trustees who
were not interested persons of ZKI or Scudder (the "Independent
Trustees") for and against any liability and expenses based upon
any action or omission by the Independent Trustees in connection
with their consideration of and action with respect to the
Transaction. In addition, Scudder has agreed to indemnify the
Registrant and the Independent Trustees for and against any
liability and expenses based upon any misstatements or omissions
by Scudder to the Independent Trustees in connection with their
consideration of the Transaction.
Item 16. Exhibits.
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(1) (a)(1) Amended and Restated Agreement and
Declaration of Trust, dated April 24, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 22 to the Registration
Statement on Form N-1A filed on April 28,
1998.)
<PAGE>
(a)(2) Amendment to the Declaration of Trust, dated
March 31, 1999. (Incorporated by reference to
Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A filed on
April 29, 1999.)
(a)(3) Amended and Restated Establishment and
Designation of Series of Shares of Beneficial
Interest dated March 31, 1999. (Incorporated
by reference to Post-Effective Amendment No.
27 to the Registration Statement on Form N-1A
filed on September 1, 1999. )
(a)(4) Amended and Restated Establishment and
Designation of Series of Shares of Beneficial
Interest dated September 29, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 29 to the Registration
Statement on Form N-1A filed on October 29,
1999.)
(a)(5) Redesignation of Series dated May 1, 2000
(Incorporated by reference to Post-Effective
Amendment No. 32 to the Registration
Statement on Form N-1A filed on May 1, 2000.)
(a)(6) Text of Share Certificate. (Incorporated by
reference to Post-Effective Amendment No. 14
to the Registration Statement on Form N-1A
filed on April 27, 1995.)
(2) (b)(1) By-laws. (Incorporated by reference to Post-
Effective Amendment No. 14 to the
Registration Statement on Form N-1A filed on
April 27, 1995.)
(3) Inapplicable.
(4) Form of Agreement and Plan of Reorganization
is filed herein as Exhibit A to Part A.
(5) Inapplicable.
(6) (d)(1) Investment Management Agreement between the
Registrant, on behalf of Kemper Money Market
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(2) Investment Management Agreement between the
Registrant, on behalf of Kemper High Yield
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(3) Investment Management Agreement between the
Registrant, on behalf of Kemper Growth
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
<PAGE>
(d)(4) Investment Management Agreement between the
Registrant, on behalf of Kemper Government
Securities Portfolio, and Scudder Kemper
Investments, Inc., dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 23 to the Registration
Statement on Form N-1A filed on February 12,
1999.)
(d)(5) Investment Management Agreement between the
Registrant, on behalf of Kemper International
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(6) Investment Management Agreement between the
Registrant, on behalf of Kemper Small Cap
Growth Portfolio, and Scudder Kemper
Investments, Inc., dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 23 to the Registration
Statement on Form N-1A filed on February 12,
1999.)
(d)(7) Investment Management Agreement between the
Registrant, on behalf of Kemper Investment
Grade Bond Portfolio, and Scudder Kemper
Investments, Inc., dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 23 to the Registration
Statement on Form N-1A filed on February 12,
1999.)
(d)(8) Investment Management Agreement between the
Registrant, on behalf of Kemper Value+Growth
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(9) Investment Management Agreement between the
Registrant, on behalf of Kemper Horizon 20+
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(10) Investment Management Agreement between the
Registrant, on behalf of Kemper Horizon 10+
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(11) Investment Management Agreement between the
Registrant, on behalf of Kemper Horizon 5
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
<PAGE>
(d)(12) Investment Management Agreement between the
Registrant, on behalf of Kemper Contrarian
Value Portfolio, and Scudder Kemper
Investments, Inc., dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 23 to the Registration
Statement on Form N-1A filed on February 12,
1999.)
(d)(13) Investment Management Agreement between the
Registrant, on behalf of Kemper Small Cap
Value Portfolio, and Scudder Kemper
Investments, Inc., dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 23 to the Registration
Statement on Form N-1A filed on February 12,
1999.)
(d)(14) Investment Management Agreement between the
Registrant, on behalf of Kemper Blue Chip
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(15) Investment Management Agreement between the
Registrant, on behalf of Kemper Global Income
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(16) Investment Management Agreement between the
Registrant, on behalf of KVS Dreman High
Return Equity Portfolio (formerly Kemper-
Dreman High Return Equity Portfolio), and
Scudder Kemper Investments, Inc., dated
September 7, 1998. (Incorporated by reference
to Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A filed on
February 12, 1999.)
(d)(17) Investment Management Agreement between the
Registrant, on behalf of KVS Dreman Financial
Services Portfolio (formerly Kemper Dreman
Financial Services Portfolio), and Scudder
Kemper Investments, Inc., dated September 7,
1998. (Incorporated by reference to Post-
Effective Amendment No. 23 to the
Registration Statement on Form N-1A filed on
February 12, 1999.)
(d)(18) Investment Management Agreement between the
Registrant, on behalf of Kemper Global Blue
Chip Portfolio, and Scudder Kemper
Investments, Inc., dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 23 to the Registration
Statement on Form N-1A filed on February 12,
1999.)
(d)(19) Investment Management Agreement between the
Registrant, on behalf of Kemper International
Growth and Income Portfolio, and Scudder
Kemper Investments, Inc., dated September 7,
1998. (Incorporated by reference to Post-
Effective Amendment No. 23 to the
Registration Statement on Form N-1A filed on
February 12, 1999.)
<PAGE>
(d)(20) Investment Management Agreement between the
Registrant, on behalf of Kemper Total Return
Portfolio, and Scudder Kemper Investments,
Inc., dated September 7, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(21) Investment Management Agreement between the
Registrant, on behalf of Kemper Aggressive
Growth Portfolio, and Scudder Kemper
Investments, Inc., dated May 1, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 24 to the Registration
Statement on Form N-1A filed on April 29,
1999.)
(d)(22) Investment Management Agreement between the
Registrant, on behalf of Kemper Technology
Portfolio, and Scudder Kemper Investments,
Inc., dated May 1, 1999. (Incorporated by
reference to Post-Effective Amendment No. 24
to the Registration Statement on Form N-1A
filed on April 29, 1999.)
(d)(23) Investment Management Agreement between the
Registrant, on behalf of KVS Index 500
Portfolio, and Scudder Kemper Investments,
Inc., dated September 1, 1999. (Incorporated
by reference to Post-Effective Amendment No.
27 to the Registration Statement on Form N-1A
filed on August 31, 1999.)
(d)(24) Investment Management Agreement between the
Registrant, on behalf of the KVS Focused
Large Cap Growth Portfolio, and Scudder
Kemper Investments, Inc. (Incorporated by
reference to Post-Effective Amendment No. 30
to the Registration Statement on Form N-1A
filed on February 25, 2000.)
(d)(25) Investment Management Agreement between the
Registrant, on behalf of the KVS Growth and
Income Portfolio, and Scudder Kemper
Investments, Inc. (Incorporated by reference
to Post-Effective Amendment No. 30 to the
Registration Statement on Form N-1A filed on
February 25, 2000.)
(d)(26) Investment Management Agreement between the
Registrant, on behalf of the KVS Growth
Opportunities Portfolio, and Scudder Kemper
Investments, Inc. (Incorporated by reference
to Post-Effective Amendment No. 30 to the
Registration Statement on Form N-1A filed on
February 25, 2000.)
(d)(27) Subadvisory Agreement between Scudder Kemper
Investments, Inc. and Dreman Value
Management, L.L.C., dated September 7, 1998,
for KVS Dreman High Return Equity Portfolio.
(Incorporated by reference to Post-Effective
Amendment No. 23 to the Registration
Statement on Form N-1A filed on February 12,
1999.)
<PAGE>
(d)(28) Subadvisory Agreement between Scudder Kemper
Investments, Inc., on behalf of Investors
Fund Series, and Dreman Value Management,
L.L.C., dated September 7, 1998, for KVS
Dreman Financial Services Portfolio.
(Incorporated by reference to Post-Effective
Amendment No. 23 to the Registration
Statement on Form N-1A filed on February 12,
1999.)
(d)(29) Subadvisory Agreement between Scudder Kemper
Investments, Inc. and Scudder Investments
(U.K.) Limited, dated September 7, 1998, for
Kemper Global Income Portfolio. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(30) Subadvisory Agreement between Scudder Kemper
Investments, Inc. and Scudder Investments
(U.K.) Limited, dated September 7, 1998, for
Kemper International Portfolio. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(d)(31) Subadvisory Agreement between Scudder Kemper
Investments, Inc. and Banker Trust Company,
dated September 1, 1999, for Kemper Index 500
Portfolio. (Incorporated by reference to
Post-Effective Amendment No. 27 to the
Registration Statement on Form N-1A filed on
August 31, 1999.)
(d)(32) Subadvisory Agreement between Scudder Kemper
Investments, Inc. and Eagle Asset Management,
dated October 29, 1999, for KVS Focused Large
Cap Growth Portfolio. (Incorporated by
reference to Post-Effective Amendment No. 30
to the Registration Statement on Form N-1A
filed on February 25, 2000.)
(d)(33) Subadvisory Agreement between Scudder Kemper
Investments, Inc. and Janus Capital
Corporation, dated October 29, 1999, for KVS
Growth and Income Portfolio. (Incorporated by
reference to Post-Effective Amendment No. 30
to the Registration Statement on Form N-1A
filed on February 25, 2000.)
(d)(34) Subadvisory Agreement between Scudder Kemper
Investments, Inc. and Janus Capital
Corporation, dated October 29, 1999, for KVS
Growth Opportunities Portfolio. (Incorporated
by reference to Post-Effective Amendment No.
30 to the Registration Statement on Form N-1A
filed on February 25, 2000.)
(7) (e)(1) Underwriting Agreement between Investors Fund
Series and Kemper Distributors, Inc., dated
August 1, 1998. (Incorporated by reference to
Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A filed on
February 12, 1999.)
<PAGE>
(e)(2) Underwriting Agreement between Investors Fund
Series and Kemper Distributors, Inc., dated
September 7, 1998. (Incorporated by reference
to Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A filed on
February 12, 1999.)
(8) Inapplicable.
(9) (g)(1) Custody Agreement between the Registrant, on
behalf of Kemper Money Market Portfolio,
Kemper Total Return Portfolio, Kemper High
Yield Portfolio, Kemper Growth Portfolio,
Kemper Government Securities Portfolio,
Kemper International Portfolio, Kemper Small
Cap Growth Portfolio, Kemper Investment Grade
Bond Portfolio, Kemper Value+Growth
Portfolio, Kemper Horizon 20+ Portfolio,
Kemper Horizon 10+ Portfolio, Kemper Horizon
5 Portfolio, Kemper Contrarian Portfolio,
Kemper Small Cap Value Portfolio, Kemper Blue
Chip Portfolio and Kemper Global Income
Portfolio, and Investors Fiduciary Trust
Company, dated March 1, 1995. (Incorporated
by reference to Post-Effective Amendment No.
14 to the Registration Statement on Form N-1A
filed on April 27, 1995.)
(g)(2) Foreign Custodian Agreement between Chase
Manhattan Bank and Kemper Investors Fund,
dated January 2, 1990. (Incorporated by
reference to Post-Effective Amendment No. 14
to the Registration Statement on Form N-1A
filed on April 27, 1995.)
(g)(3) Custody Agreement between the Registrant, on
behalf of KVS Dreman High Return Equity
Portfolio and KVS Dreman Financial Services
Portfolio, and State Street Bank and Trust
Company, dated April 24, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999. )
(g)(4) Custody Agreement between the Registrant, on
behalf of Kemper International Growth and
Income Portfolio and Kemper Global Blue Chip
Portfolio, and Brown Brothers Harriman & Co.,
dated May 1, 1998. (Incorporated by reference
to Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A filed on
February 12, 1999.)
(g)(5) Addendum to the Custody Agreement between the
Registrant, on behalf of Kemper Aggressive
Growth Portfolio and Kemper Technology Growth
Portfolio, and State Street Bank and Trust
Company, dated May 1, 1999. (Incorporated by
reference to Post-Effective Amendment No. 24
to the Registration Statement on Form N-1A
filed on April 29, 1999.)
(10) Inapplicable.
(11) Opinion and Consent of Dechert is filed
herewith.
<PAGE>
(12) Opinion and Consent of Willkie, Farr &
Gallagher to be filed by post-effective
amendment.
(13) (h)(1) Agency Agreement between Kemper Investors
Fund and Investors Fiduciary Trust Company,
dated March 24, 1987. (Incorporated by
reference to Post-Effective Amendment No. 14
to the Registration Statement on Form N-1A
filed on April 27, 1995.)
(h)(2) Supplement to Agency Agreement. (Incorporated
by reference to Post-Effective Amendment No.
24 to the Registration Statement on Form N-1A
filed on April 29, 1999.)
(h)(3) Fund Accounting Services Agreements between
the Registrant, on behalf of Kemper Money
Market Portfolio, Kemper Total Return
Portfolio, Kemper High Yield Portfolio,
Kemper Growth Portfolio, Kemper Government
Securities Portfolio, Kemper International
Portfolio, Kemper Small Cap Growth Portfolio,
Kemper Investment Grade Bond Portfolio,
Kemper Value+Growth Portfolio, Kemper Horizon
20+ Portfolio, Kemper Horizon 10+ Portfolio,
Kemper Horizon 5 Portfolio, Kemper Value
Portfolio, Kemper Small Cap Value Portfolio,
Kemper Blue Chip Portfolio and Kemper Global
Income Portfolio, and Scudder Fund Accounting
Corporation, dated December 31, 1997.
(Incorporated by reference to Post-Effective
Amendment No. 21 to the Registration
Statement on Form N-1A filed on March 26,
1998.)
(h)(4) Fund Accounting Services Agreement between
the Registrant, on behalf of KVS Dreman High
Return Equity Portfolio, KVS Dreman Financial
Services Portfolio, Kemper Global Blue Chip
Portfolio and Kemper International Growth and
Income Portfolio, and Scudder Fund Accounting
Corporation, dated May 1, 1998. (Incorporated
by reference to Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A
filed on February 12, 1999.)
(h)(5) Fund Accounting Services Agreement between
the Registrant, on behalf of Kemper
Aggressive Growth Portfolio, and Scudder Fund
Accounting Corporation, dated May 1, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 24 to the Registration
Statement on Form N-1A filed on April 29,
1999.)
(h)(6) Fund Accounting Services Agreement between
the Registrant, on behalf of Kemper
Technology Growth Portfolio, and Scudder Fund
Accounting Corporation, dated May 1, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 24 to the Registration
Statement on Form N-1A filed on April 29,
1999.)
<PAGE>
(h)(7) Fund Accounting Services Agreement between
the Registrant, on behalf of KVS Index 500
Portfolio (formerly, Kemper Index 500
Portfolio), and Scudder Fund Accounting
Corporation, dated September 1, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 27 to the Registration
Statement on Form N-1A filed on August 31,
1999.)
(h)(8) Fund Accounting Services Agreement between
the Registrant, on behalf of KVS Focused
Large Cap Portfolio, and Scudder Fund
Accounting Corporation, dated October 29,
1999. (Incorporated by reference to Post-
Effective Amendment No. 30 to the
Registration Statement on Form N-1A filed on
February 25, 2000.)
(h)(9) Fund Accounting Services Agreement between
the Registrant, on behalf of KVS Growth and
Income Portfolio, and Scudder Fund Accounting
Corporation, dated October 29, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 30 to the Registration
Statement on Form N-1A filed on February 25,
2000.)
(h)(10) Fund Accounting Services Agreement between
the Registrant, on behalf of KVS Growth
Opportunities Portfolio, and Scudder Fund
Accounting Corporation, dated October 29,
1999. (Incorporated by reference to Post-
Effective Amendment No. 30 to the
Registration Statement on Form N-1A filed on
February 25, 2000.)
(h)(11) Amended and Restated Establishment and
Designation of Series, on behalf of Kemper
Aggressive Growth Portfolio and Kemper
Technology Growth Portfolio, dated March 31,
1999. (Incorporated by reference to Post-
Effective Amendment No. 27 to the
Registration Statement on Form N-1A filed on
August 31, 1999.)
(h)(12) Amended and Restated Establishment and
Designation of Series, on behalf of KVS Index
500 Portfolio, dated July 14, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 27 to the Registration
Statement on Form N-1A filed on August 31,
1999.)
(h)(13) Amended and Restated Establishment and
Designation of Series, on behalf of KVS
Growth Opportunities Portfolio, KVS Growth
and Income Portfolio and KVS Focused Large
Cap Growth Portfolio, dated September 29,
1999. (Incorporated by reference to Post-
Effective Amendment No. 29 to the
Registration Statement on Form N-1A filed on
October 29, 1999.)
(14) Consents of Independent Accountants are filed
herewith.
(15) Inapplicable.
(16) Powers of Attorney are filed herewith.
(17) Form of Proxy is filed herewith.
<PAGE>
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 [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, Kemper Variable Series 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 14th day of December, 2000.
KEMPER VARIABLE SERIES
By: /s/Mark S. Casady
-----------------
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Mark S. Casady President December 14, 2000
-----------------
Mark S. Casady
/s/ James E. Akins* Trustee December 14, 2000
------------------
James E. Akins
/s/ James R. Edgar* Trustee December 14, 2000
------------------
James R. Edgar
/s/ Arthur R. Gottschalk* Trustee December 14, 2000
------------------------
Arthur R. Gottschalk
/s/ Frederick T. Kelsey* Trustee December 14, 2000
-----------------------
Frederick T. Kelsey
/s/ Thomas W. Littauer* Trustee December 14, 2000
----------------------
Thomas W. Littauer
/s/ Fred B. Renwick* Trustee December 14, 2000
-------------------
Fred B. Renwick
/s/ John G. Weithers* Trustee December 14, 2000
--------------------
John G. Weithers
/s/ John R. Hebble Treasurer (Principal Financial and December 14, 2000
------------------ Accounting Officer)
John R. Hebble
*By: /s/ Caroline Pearson December 14, 2000
--------------------
Caroline Pearson, 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
KEMPER VARIABLE SERIES
<PAGE>
KEMPER VARIABLE SERIES
EXHIBIT INDEX
Exhibit 11 Opinion and Consent of Dechert
Exhibit 14 Consents of Independent Accountants
Exhibit 16 Powers of Attorney
Exhibit 17 Form of Proxy
