345 Park Avenue (at 51st Street)
New York, New York 10154
(800) 349-4281
The Brazil Fund, Inc.
June 6, 1995
To the Stockholders:
The Annual Meeting of Stockholders of The Brazil Fund, Inc. (the "Fund") is
to be held at 11:00 a.m., eastern time, on Tuesday, July 25, 1995 at the offices
of Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154. Stockholders who are unable to attend this meeting are
strongly encouraged to vote by proxy, which is customary in corporate meetings
of this kind. A Proxy Statement regarding the meeting, a proxy card for your
vote at the meeting and an envelope--postage prepaid--in which to return your
proxy are enclosed.
At the Annual Meeting the stockholders will elect two Directors, consider
the ratification of the selection of Price Waterhouse LLP as the Fund's
independent accountants, consider the approval of a new Investment Advisory,
Management and Administration Agreement between the Fund and its investment
manager, Scudder, Stevens & Clark, Inc. and consider the approval of a new
Research and Advisory Agreement between Scudder, Stevens & Clark, Inc. and the
Fund's Brazilian research adviser, Banco Icatu S.A. In addition, the
stockholders present will hear a report on the Fund. There will be an
opportunity to discuss matters of interest to you as a stockholder.
Your Fund's Directors recommend that you vote in favor of each of the
foregoing matters.
Respectfully,
/s/Nicholas Bratt /s/Juris Padegs
Nicholas Bratt Juris Padegs
President Chairman of the Board
STOCKHOLDERS ARE URGED TO SIGN THE PROXY CARD AND MAIL IT IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS
IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
<PAGE>
THE BRAZIL FUND, INC.
Notice of Annual Meeting of Stockholders
To the Stockholders of
The Brazil Fund, Inc.:
Please take notice that the Annual Meeting of Stockholders of The Brazil Fund,
Inc. (the "Fund"), has been called to be held at the offices of Scudder, Stevens
& Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York, New York
10154, on Tuesday, July 25, 1995 at 11:00 a.m., eastern time, for the following
purposes:
(1)To elect two Directors of the Fund to hold office for a term of
three years or until their respective successors shall have been duly
elected and qualified.
(2)To ratify or reject the action taken by the Board of Directors in
selecting Price Waterhouse LLP as independent accountants for the fiscal
year ending December 31, 1995.
(3)To approve or disapprove a new Investment Advisory, Management and
Administration Agreement between the Fund and Scudder, Stevens & Clark,
Inc.
(4)To approve or disapprove a new Research and Advisory Agreement
between Scudder, Stevens & Clark, Inc. and Banco Icatu S.A.
The appointed proxies will vote on any other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of the shares of common stock of the Fund at the close of
business on May 30, 1995 are entitled to vote at the meeting and any
adjournments thereof.
By order of the Board of Directors,
Thomas F. McDonough, Secretary
June 6, 1995
IMPORTANT--We urge you to sign and date the enclosed proxy card and return it in
the enclosed addressed envelope which requires no postage and is intended for
your convenience. Your prompt return of the enclosed proxy card may save the
Fund the necessity and expense of further solicitations to ensure a quorum at
the Annual Meeting. If you can attend the meeting and wish to vote your shares
in person at that time, you will be able to do so.
2
<PAGE>
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Brazil Fund, Inc. (the "Fund") for use
at the Annual Meeting of Stockholders, to be held at the offices of Scudder,
Stevens & Clark, Inc. ("Scudder"), 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154, on Tuesday, July 25, 1995 at 11:00 a.m., eastern time,
and at any adjournments thereof (collectively, the "Meeting").
This Proxy Statement, the Notice of Annual Meeting and the proxy card are
first being mailed to stockholders on or about June 6, 1995, or as soon as
practicable thereafter. Any stockholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary at the principal executive office of the
Fund, 345 Park Avenue, New York, New York 10154) 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, for each
proposal referred to in the Proxy Statement.
The presence at any stockholders' meeting, in person or by proxy, of
stockholders entitled to cast a majority of the votes entitled to be cast shall
be necessary and sufficient to constitute a quorum for the transaction of
business. 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, stockholders are urged to forward their voting instructions
promptly.
Abstentions and broker non-votes will not be counted in favor of, but will
have no other effect on, the vote for proposals (1) and (2) which require the
approval of a majority of shares voting at the Meeting. Abstentions and broker
non-votes will have the effect of a "no" vote for proposals (3) and (4), which
require the approval of a specified percentage of the outstanding shares of the
Fund or of such shares present at the Meeting.
Holders of record of the common stock of the Fund at the close of business
on May 30, 1995 (the "Record Date"), will be entitled to one vote per share on
all business of the Meeting and any adjournments. There were 12,146,285 shares
of common stock outstanding on the Record Date.
The Fund provides periodic reports to all stockholders which highlight
relevant information, including investment results and a review of portfolio
changes. You may receive an additional copy of the annual report for the fiscal
year ended December 31, 1994, without charge, by calling 800-349-4281 or writing
the Fund at 345 Park Avenue, New York, New York 10154.
(1) ELECTION OF DIRECTORS
Persons named on the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies for the election of the two nominees
listed below as Directors of the Fund (Class of 1998) to serve for a term of
3
<PAGE>
three years, or until their successors are duly elected and qualified. All
nominees have consented to stand for election and to serve if elected. If any
such nominee should be unable to serve, an event not now anticipated, the
proxies will be voted for such person, if any, as shall be designated by the
Board of Directors to replace any such nominee.
Information Concerning Nominees
The following table sets forth certain information concerning each of the
two nominees as a Director of the Fund. Each of the nominees is now a Director
of the Fund. Unless otherwise noted, each of the nominees has engaged in the
principal occupation listed in the following table for more than five years, but
not necessarily in the same capacity.
Class of 1998
- -------------
Nominees to serve until 1998 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
Present Office with the Fund, if any; Shares
Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned on of
Name (Age) in Publicly Held Companies Director April 30, 1995(1) Class
---------- -------------------------- -------- ----------------- -----
<S> <C> <C> <C> <C>
Juris Padegs (63)*+ Chairman of the Board; Managing 1987 1,422 less than
Director of Scudder, Stevens & 1/4 of 1%
Clark, Inc. Mr. Padegs serves on
the boards of an additional 27
funds managed by Scudder.
Ronaldo A. da Frota Director and Chief Executive 1987 2,220 less than
Nogueira (56) Officer, IMF Editora Ltda. 1/4 of 1%
(financial publisher). Mr. Nogueira
serves on the boards of an addi-
tional three funds managed by
Scudder.
4
<PAGE>
Information Concerning Continuing Directors
The Board of Directors is divided into three classes, each Director serving
for a term of three years. The terms of the Classes of 1996 and 1997 do not
expire this year. The following table sets forth certain information regarding
the Directors in such classes.
Class of 1996
- -------------
Directors serving until 1996 Annual Meeting of Stockholders:
Present Office with the Fund, if any; Shares
Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned on of
Name (Age) in Publicly Held Companies Director April 30, 1995(1) Class
---------- -------------------------- -------- ----------------- -----
Nicholas Bratt (47)* President; Managing Director of 1987 1,752 less than
Scudder, Stevens & Clark, Inc. Mr. 1/4 of 1%
Bratt serves on the boards of an
additional 13 funds managed by
Scudder.
Edgar R. Fiedler (66) Vice President and Economic 1987 5,623 less than
Counsellor, The Conference Board, 1/4 of 1%
Inc.; Director, The Stanley Works
(manufacturer of tools and
hardware) and Zurich American
Insurance Company (insurance
company). Mr. Fiedler serves on
the boards of an additional five
funds managed by Scudder.
Roberto Teixeira da President, Brasilpar Consultoria 1993 -- --
Costa (60) Financeira e Servicos Ltda.
(financial consulting and asset
management); Chairman, CEAL (Latin
American Businessmen Council), and
Director of seven Brazilian listed
and unlisted companies.
5
<PAGE>
Class of 1997
- -------------
Directors serving until 1997 Annual Meeting of Stockholders:
Present Office with the Fund, if any; Shares
Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned on of
Name (Age) in Publicly Held Companies Director April 30, 1995(1) Class
---------- -------------------------- -------- ----------------- -----
Dr. Wilson Nolen (68) Consultant; Director, Ecohealth, 1987 11,734 less than
Inc. (biotechnology company). Dr. 1/4 of 1%
Nolen serves on the boards of an
additional 14 funds managed by
Scudder.
Edmond D. Villani President and Managing Director of 1994 4,000 less than
(48)*+ Scudder, Stevens & Clark, Inc. Mr. 1/4 of 1%
Villani serves on the boards of an
additional 15 funds managed by
Scudder.
All Directors and Officers as a group 27,181(2) less than
1/4 of 1%
- ---------------------------------------
* Directors considered by the Fund and its counsel to be "interested persons" (which as used in this proxy
statement is as defined in the Investment Company Act of 1940, as amended) of the Fund or of the Fund's
investment manager, Scudder, Stevens & Clark, Inc. Messrs. Bratt, Padegs and Villani are deemed to be
interested persons because of their affiliation with the Fund's investment manager, Scudder, Stevens &
Clark, Inc., or because they are Officers of the Fund or both.
+ Messrs. Padegs and Villani are members of the Executive Committee of the Fund.
(1) The information as to beneficial ownership is based on statements furnished to the Fund by the Directors.
Unless otherwise noted, beneficial ownership is based on sole voting and investment power.
(2) The total for the group includes 27,020 shares held with sole investment and voting power and 161 shares
held with shared investment and voting power.
</TABLE>
Section 30(f) of the Investment Company Act of 1940, as amended (the "1940
Act"), as applied to a fund, requires the fund's officers, directors, investment
manager, affiliates of the investment manager, and persons who beneficially own
more than ten percent of a registered class of the fund's outstanding securities
6
<PAGE>
("Reporting Persons"), to file reports of ownership of the fund's securities and
changes in such ownership with the Securities and Exchange Commission (the
"SEC") and the New York Stock Exchange. Such persons are required by SEC
regulations to furnish the fund with copies of all such filings.
Based solely upon its review of the copies of such forms received by it,
and written representations from certain Reporting Persons that no year-end
reports were required for those persons, the Fund believes that during the
fiscal year ended December 31, 1994, all filing requirements applicable to its
Reporting Persons were complied with except that Form 3 on behalf of Margaret D.
Hadzima, Richard A. Holt, Marco Aurelio Virzi, Ney Villas Boas Marinho and
several new subsidiaries of Banco Icatu were filed late.
To the best of the Fund's knowledge, as of April 30, 1995 no person owned
beneficially more than 5% of the Fund's outstanding stock.
Honorary Director
Lino Otto Bohn serves as Honorary Director of the Fund. Honorary Directors
are invited to attend all Board meetings and to participate in Board
discussions, but are not entitled to vote on any matter presented to the Board.
Mr. Bohn had served as Director of the Fund since 1988. Mr. Bohn retired as
Director in 1993 in accordance with the Board of Directors' retirement policy.
Committees of the Board--Board Meetings
The Board of Directors of the Fund met four times during the fiscal year
ended December 31, 1994. Each Director attended at least 75% of the total number
of meetings of the Board of Directors and of all committees of the Board on
which they served as regular members, except Mr. Bratt who attended 63% of the
meetings of the Board of Directors and related committees on which he serves.
The Board of Directors, in addition to an Executive Committee, has an Audit
Committee, a Valuation Committee and a Special Nominating Committee. The
Executive and Valuation Committees consist of regular members, allowing
alternates.
Audit Committee
The Board has an Audit Committee consisting of those Directors who are not
interested persons of the Fund or of Scudder ("Noninterested Directors") as
defined in the 1940 Act, which met once during the Fund's last fiscal year. The
Audit Committee reviews with management and the independent accountants for the
Fund, among other things, the scope of the audit and the controls of the Fund
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 the Fund to the Board and in general considers and reports to
the Board on matters regarding the Fund's accounting and bookkeeping practices.
Nominating Committee
The Board has a Special Nominating Committee consisting of the
Noninterested Directors. The Committee is charged with the duty of making all
nominations for Noninterested Directors. Stockholders' recommendations as to
nominees received by management are referred to the Committee for its
consideration and action. The Committee met on March 2, 1995 to consider and
nominate the nominees set forth above.
7
<PAGE>
Executive Officers
In addition to Messrs. Bratt and Padegs, Directors who are also Officers of
the Fund, the following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
Present Office with the Fund; Year First Became
Name (Age) Principal Occupation or Employment(1) an Officer(2)
---------- ------------------------------------- -------------
<S> <C> <C>
Edmund B. Games, Jr. (57) Vice President; Principal of Scudder, 1987
Stevens & Clark, Inc.
Jerard K. Hartman (62) Vice President; Managing Director of 1987
Scudder, Stevens & Clark, Inc.
David S. Lee (61) Vice President; Managing Director of 1987
Scudder, Stevens & Clark, Inc.
William F. Truscott (34) Vice President; Principal of Scudder, 1993
Stevens & Clark, Inc.; Vice President,
Latin American Structured Finance,
Capital Markets Group, Chemical Bank
(1983-1992).
Pamela A. McGrath (41) Vice President and Assistant 1990
Treasurer; Principal of Scudder,
Stevens & Clark, Inc.
Kathryn L. Quirk (42) Vice President and Assistant 1987
Secretary; Managing Director of
Scudder, Stevens & Clark, Inc.
Edward J. O'Connell (50) Treasurer; Principal of Scudder, 1987
Stevens & Clark, Inc.
Thomas F. McDonough (48) Secretary; Principal of Scudder, 1987
Stevens & Clark, Inc.
Coleen Downs Dinneen (34) Assistant Secretary; Vice President 1992
of Scudder, Stevens & Clark, Inc.
<FN>
(1) Unless otherwise stated, all Executive Officers have been associated with
Scudder for more than five years, although not necessarily in the same
capacity.
(2) The President, Treasurer and Secretary each hold office until his or her
successor has been duly elected and qualified, and all other officers hold
office at the pleasure of the Directors.
</FN>
</TABLE>
Transactions with and Remuneration of Directors and Officers
The aggregate direct remuneration by the Fund of Directors not affiliated
with Scudder was $84,504, including expenses, for the fiscal year ended December
31, 1994. Each such unaffiliated Director currently receives fees, paid by the
Fund, of $750 per Directors' meeting attended and an annual Director's fee of
$6,000, except for Mr. Nogueira and Mr. Da Costa who as Resident Brazilian
Directors receive an annual fee of $12,000. Each Director also receives $250 per
committee meeting attended (other than audit committee meetings for which such
Director receives a fee of $750). Scudder supervises the Fund's investments,
pays the compensation and certain expenses of its personnel who serve as
Directors and Officers of the Fund, and receives a management fee for its
services. Several of the Fund's Officers and Directors are also officers,
directors, employees or stockholders of Scudder and participate in the fees paid
to that firm (see "Investment Manager," page 14), although the Fund makes no
direct payments to them other than for reimbursement of travel expenses in
connection with the attendance of Board of Directors and committee meetings.
8
<PAGE>
The following Compensation Table, provides in tabular form, the following data:
Column (1) All Directors who receive compensation from the Fund.
Column (2) Aggregate compensation received by a Director from the Fund.
Columns (3) and (4) Pension or retirement benefits accrued or proposed to be
paid by the Fund. The Fund does not pay such benefits to its Directors.
Column (5) Total compensation received by a Director from the Fund plus
compensation received from all funds managed by Scudder for which a Director
serves. The total number of funds from which a Director receives such
compensation is also provided in column (5). Generally, compensation received by
a Director for serving on the Board of a closed-end fund is greater than the
compensation received by a Director for serving on the Board of an open-end
fund.
<TABLE>
<CAPTION>
Compensation Table
for the year ended December 31, 1994
---------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
Pension or
Aggregate Retirement Estimated Total Compensation
Compensation Benefits Accrued Annual From the Fund and
Name of Person, from As Part of Fund Benefits Upon Fund Complex Paid
Position the Fund Expenses Retirement to Directors
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Roberto Teixeira da Costa, $13,868 N/A N/A $13,868
Director (1 fund)
Edgar R. Fiedler, $11,373 N/A N/A $30,003*
Director (6 funds)
Ronaldo A. da Frota Nogueira, $16,497 N/A N/A $54,997
Director (4 funds)
Dr. Wilson Nolen, $11,373 N/A N/A $132,023
Director (15 funds)
* As of December 31, 1994, Mr. Fiedler had a total of $183,603 accrued in a
deferred compensation program for serving on the Board of Scudder
Institutional Fund, Inc., which has four active portfolios and $182,472
accrued in a deferred compensation program for serving on the Board of
Scudder Fund, Inc., which has five active portfolios.
</TABLE>
Required Vote
Election of each of the listed nominees for Director requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. Your Fund's Directors recommend that stockholders vote in favor of each
of the nominees.
(2) RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
At a meeting held May 17, 1995, the Board of Directors of the Fund,
including a majority of the Noninterested Directors, selected Price Waterhouse
LLP to act as independent accountants for the Fund for the fiscal year ending
December 31, 1995. Price Waterhouse LLP are independent accountants and have
advised the Fund that they have no direct financial interest or material
indirect financial interest in the Fund. One or more representatives of Price
Waterhouse LLP are expected to be present at the Meeting and will have an
9
<PAGE>
opportunity to make a statement if they so desire. Such representatives are
expected to be available to respond to appropriate questions posed by
stockholders and management.
The Fund's financial statements for the fiscal year ended December 31, 1994
were audited by Price Waterhouse LLP. In connection with its audit services,
Price Waterhouse LLP reviewed the financial statements included in the Fund's
semiannual and annual reports and its filings with the SEC.
Required Vote
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. Your Fund's Directors recommend that stockholders ratify the selection of
Price Waterhouse LLP as independent accountants.
(3) APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY, MANAGEMENT AND ADMINISTRATION AGREEMENT
Scudder, Stevens & Clark, Inc., 345 Park Avenue, New York, New York acts as
investment adviser to and manager for the Fund pursuant to an Investment
Advisory, Management and Administration Agreement dated October 20, 1993 (the
"present Agreement").
The Directors recommend that the stockholders approve a proposed Investment
Advisory, Management and Administration Agreement (the "proposed Agreement") in
place of the present Agreement. At a meeting held on May 17, 1995, the
Directors, including a majority of the Noninterested Directors, approved the
terms of the proposed Agreement and its adoption subject to approval by
stockholders. Set forth below is a description of the principal difference
between the present Agreement and the proposed Agreement, as well as a
description of those provisions which are the same under both Agreements. The
proposed Agreement is attached hereto as Exhibit A.
Decrease in Rate of Compensation Under the Proposed Agreement
The principal difference between the present Agreement and the proposed
Agreement is the decrease in the fee payable to Scudder from (a) 1.30% per annum
of the value of the Fund's average weekly net assets up to $150 million; 1.25%
per annum of the value of the Fund's average weekly net assets from $150 million
up to and including $300 million; and 1.20% per annum of the value of the Fund's
average weekly net assets in excess of $300 million, to (b) 1.175% per annum of
the value of the Fund's average weekly net assets. Under both Agreements payment
is made monthly to Scudder within the ten days next following the day as of
which such payment is so computed. As described below on page 17, the fee paid
by Scudder to the Brazilian Research Adviser was reduced by 50% effective
November 1, 1994 and this saving was passed on to the Fund through an equivalent
reduction in the fee paid by the Fund to Scudder. The decreased fee provided in
the proposed Agreement formalizes this reduction in the fee payable by the Fund,
but does not change the net fee retained by Scudder.
The present fee and the proposed fee are higher than those paid by many
funds which invest primarily in U.S. securities primarily because of the Fund's
objective of investing in Brazilian securities, the additional time and expenses
required of Scudder in pursuing such objective and the need to enable Scudder to
compensate the Brazilian Research Adviser for its services. However, each fee is
not necessarily higher than the fees charged to funds with investment objectives
similar to that of the Fund.
10
<PAGE>
The following table compares actual fees and expenses incurred under the
present Agreement with the fees that would have been payable under the proposed
Agreement during the last fiscal year of the Fund (unaudited).
Fees Payable
Advisory Fees Under the
Actually Proposed
Year Ended Incurred (a) Agreement (b) $ Change (c) % Change
- ---------- ------------ ------------- ------------ --------
1994 $4,371,086 $4,117,212 $(253,874) (5.81%)
(a) Computed pursuant to the present fee schedule as described above. This
amount reflects a reduction in the management fee of $55,048, which the
Adviser agreed to pass through to the Fund as a result of the Brazilian
Research Adviser waiving approximately half of their fees as of November 1,
1994.
(b) Computed pursuant to the proposed fee schedule as described above.
(c) Equals the difference between fees payable under the proposed Agreement and
advisory fees actually incurred.
The ratio of operating expenses to average net assets for the year ended
December 31, 1994 was 1.71% and if the proposed Agreement had been in effect
such ratio would have been 1.63%. As of April 30, 1995, the net assets of the
Fund were approximately $306 million.
The Board of Directors has determined that the compensation to be paid to
Scudder under the proposed Agreement is fair and reasonable. In approving the
proposed Agreement and the Research and Advisory Agreement described below, and
recommending its approval by stockholders, the Directors of the Fund, including
the Noninterested Directors, considering the best interests of stockholders of
the Fund, took into account all such factors they deemed relevant. Such factors
include the nature, quality and extent of the services furnished by Scudder to
the Fund; the necessity of Scudder maintaining and enhancing its ability to
retain and attract capable personnel to serve the Fund; the experience of
Scudder in international investing; possible economies of scale; the investment
record of Scudder in managing the Fund; Scudder's profitability with respect to
the Fund and the other investment companies managed by Scudder; comparative data
as to investment performance, advisory fees and other fees, including
administrative fees, and expense ratios, particularly fee and expense ratios of
funds with foreign investments, including single country funds, advised by
Scudder and other investment advisers; the risks assumed by Scudder; the
advantages and possible disadvantages to the Fund of having an adviser which
also serves other investment companies as well as other accounts; possible
benefits to Scudder from serving as adviser to the Fund; current and developing
conditions in the financial services industry, including the entry into the
industry of large and well capitalized companies which are spending and appear
to be prepared to continue to spend substantial sums to engage personnel and to
provide services to competing investment companies; the financial resources of
Scudder and the continuance of appropriate incentives to assure that Scudder
will continue to furnish high quality services to the Fund; similar factors
regarding the Brazilian Research Adviser to the extent applicable; the Brazilian
Research Adviser's position as a leading firm in Brazil in developing investment
research capabilities; information submitted by the Brazilian Research Adviser
as to revenues and expenses; and various other factors.
11
<PAGE>
Description of the Proposed Agreement
Under both Agreements Scudder regularly makes investment decisions for the
Fund, prepares and makes available to the Fund research and statistical data in
connection therewith and supervises the acquisition and disposition of
securities by the Fund, including the selection of broker/dealers to carry out
the transactions, all in accordance with the Fund's investment objective and
policies and in accordance with guidelines and directions from the Fund's Board
of Directors. Scudder also maintains or causes to be maintained for the Fund all
books, records and reports and other information (not otherwise provided by
third parties) required under the 1940 Act. In addition to the provision of
portfolio management services and the payment of the Fund's office rent, Scudder
renders significant administrative services (not otherwise provided by third
parties), including, but not limited to, preparing reports to and meeting
materials for the Fund's Board of Directors and reports and notices to
stockholders, preparing and making filings with the SEC and other regulatory and
self-regulatory organizations, including preliminary and definitive proxy
materials and amendments to the Fund's Registration Statement, providing
assistance in certain accounting and tax matters and investor and public
relations, monitoring the valuation of portfolio securities, calculation of net
asset value and calculation and payment of distributions to stockholders,
overseeing arrangements with the Fund's custodian, including the maintenance of
books and records of the Fund and assisting the Fund as it may reasonably
request in the conduct of the Fund's business, subject to the direction and
control of the Fund's Board of Directors.
Under both the present and proposed Agreements, the Fund is responsible for
all of its other expenses, including organization and certain offering expenses
of the Fund; legal expenses; auditing and accounting expenses; telephone, telex,
facsimile, postage and other communication expenses; taxes and governmental
fees; stock exchange listing fees; fees, dues and expenses incurred by the Fund
in connection with membership in investment company trade organizations; fees
and expenses of the Fund's custodians, subcustodians, transfer agents and
registrars; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; expenses of
preparing share certificates and other expenses in connection with the issuance,
offering, distribution, sale or underwriting of securities issued by the Fund,
if any; expenses relating to investor and public relations; expenses of
registering or qualifying securities of the Fund for sale, if any; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; brokerage commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; expenses of preparing and
distributing reports, notices and dividends to stockholders; certain expenses of
the Fund's dividend reinvestment and cash purchase plan; costs of stationery;
any litigation expenses; and costs of stockholders' and other meetings.
Under both Agreements Scudder pays the reasonable salaries, fees and
expenses of such of the Fund's Officers and employees and any fees and expenses
of such of the Fund's Directors as are Directors, Officers or employees of
Scudder provided that the Fund and not the Investment Manager shall bear travel
expenses of Directors and Officers of the Fund who are Directors, Officers or
employees of Scudder to the extent that such expenses relate to attendance at
meetings of the Board of Directors of the Fund or any committees thereof. During
the year ended December 31, 1994, no compensation, direct or otherwise (other
12
<PAGE>
than through fees paid to the Investment Manager) was paid or became payable by
the Fund to any of its Officers or Directors who were affiliated with Scudder.
Each Agreement provides that Scudder shall not be liable for any act or
omission, error of judgment or mistake of law, or for any loss suffered by the
Fund in connection with matters to which such Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Scudder in the performance of its duties or from reckless disregard by Scudder
of its obligations and duties under such Agreement.
Under both Agreements Scudder agrees not to make a short sale of any
capital stock of the Fund, or purchase any share of the capital stock of the
Fund otherwise than for investment. Additionally, neither Agreement prohibits
Scudder from providing investment advisory services to, or entering into
investment advisory agreements with other clients.
If approved by the stockholders, the proposed Agreement will become
effective on the day following such approval, the present Agreement will
terminate and the proposed Agreement will remain in force for two years from
that date. The proposed Agreement would continue in effect thereafter by its
terms from year to year only so long as its continuance is specifically approved
at least annually by the vote of a majority of the Noninterested Directors cast
in person at a meeting called for the purpose of voting on such approval, and
either by the vote of a majority of all of the Directors or a majority of the
Fund's outstanding voting securities, as defined below. The proposed Agreement
may be terminated on 60 days' written notice, without penalty, by the Directors,
by the vote of the holders of a majority of the Fund's outstanding voting
securities, or by Scudder, and automatically terminates in the event of its
assignment. The present Agreement requires annual approval of its continuance
and contains the same termination provisions as the proposed Agreement.
The present Agreement by its terms continues in effect until October 20,
1995. The present Agreement was approved by the Directors on July 27, 1993, and
the continuance of the present Agreement was last approved by a vote of
stockholders on July 26, 1994.
In reviewing the terms of the proposed Agreement and the Research and
Advisory Agreement described below and in discussions with Scudder and the
Brazilian Research Adviser, the Noninterested Directors received legal advice
and were represented at the Fund's expense by independent counsel, Ropes & Gray.
Counsel for the Fund is Debevoise & Plimpton.
Required Vote
Approval of the proposed Agreement requires the affirmative vote of a
majority of the Fund's outstanding voting securities, which, as used in this
proposal means (1) the holders of more than 50% of the outstanding shares of the
Fund or (2) the holders of 67% or more of the shares present, if more than 50%
of the shares are present at the Meeting in person or by proxy, whichever is
less. If an affirmative vote of stockholders is not obtained, the present
Agreement for the Fund will continue in effect for the time being pending
consideration by the Directors of such further action as they may deem to be in
the best interests of the stockholders of the Fund. Your Fund's Directors
recommend that stockholders vote to approve the proposed Agreement.
13
<PAGE>
Investment Manager
Scudder is a Delaware corporation. Daniel Pierce* is the Chairman of the
Board of Scudder. Edmond D. Villani# is the President of Scudder. Stephen R.
Beckwith#, Lynn S. Birdsong#, Nicholas Bratt#, Linda C. Coughlin#, Margaret D.
Hadzima*, Jerard K. Hartman#, Richard A. Holt@, Dudley H. Ladd*, Douglas M.
Loudon#, John T. Packard+, Juris Padegs# and Cornelia M. Small# are the other
members of the Board of Directors of Scudder. The principal occupation of each
of the above named individuals is serving as a Managing Director of Scudder.
- ---------------------------
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
+ 101 California Street, San Francisco, California
@ Two Prudential Plaza, 180 North Stetson, Suite 5400, Chicago, Illinois
All of the outstanding voting and nonvoting securities of Scudder are held
of record by Stephen R. Beckwith, Juris Padegs, Daniel Pierce and Edmond D.
Villani in their capacity as the representatives (the "Representatives") of the
beneficial owners of such securities, pursuant to a Security Holders' Agreement
among Scudder, the beneficial owners of securities of Scudder and the
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocation will be at net book value in cash
transactions. All Managing Directors of Scudder own voting and nonvoting stock;
all Principals own nonvoting stock.
Messrs. Bratt, Padegs and Villani, who are Officers and/or Directors of the
Fund, are Managing Directors of Scudder. In addition, the following directors or
officers of Scudder are Officers of the Fund in the following capacities: Jerard
K. Hartman, William F. Truscott, Edmund B. Games and David S. Lee, Vice
Presidents; Kathryn L. Quirk, Vice President and Assistant Secretary; Pamela A.
McGrath, Vice President and Assistant Treasurer; Edward J. O'Connell, Treasurer;
and Thomas F. McDonough, Secretary; Coleen Downs Dinneen, Assistant Secretary.
Messrs. Hartman and Lee and Ms. Quirk are Managing Directors of Scudder and
Messrs. Games, O'Connell and McDonough and Ms. McGrath are Principals of
Scudder. Ms. Dinneen is a Vice President of Scudder.
Scudder or an affiliate manages in excess of $90 billion in assets for
individuals, mutual funds and other organizations. The following are open- or
closed-end mutual funds with investment objectives similar to the Fund, for whom
Scudder provides investment management:
<TABLE>
<CAPTION>
Total Net Assets
as of Management Compensation
April 30, 1995 on an Annual Basis Based on the
Name (000 omitted) Value of Average Daily Net Assets
---- ------------- ---------------------------------
<S> <C> <C>
Scudder Greater Europe Growth Fund+ $ 28,100 1.00%.
Scudder International Fund $ 2,310,100 0.90 of 1%; 0.85 of 1% on net assets in
excess of $500 million; 0.80 of 1% on net
assets in excess of $1 billion; 0.75 of 1% on
net assets in excess of $2 billion.
14
<PAGE>
Total Net Assets
as of Management Compensation
April 30, 1995 on an Annual Basis Based on the
Name (000 omitted) Value of Average Daily Net Assets
---- ------------- ---------------------------------
Scudder Latin America Fund $ 547,200 1.25%.
Scudder Pacific Opportunities Fund $ 397,400 1.10%.
The Japan Fund, Inc. $ 511,300 0.85 of 1% of the first $100 million of
average daily net assets; 0.75 of 1% on
assets in excess of $100 million up to and
including $300 million; 0.70 of 1% on assets
in excess of $300 million up to and including
$600 million; 0.65 of 1% on assets in excess
of $600 million. Scudder pays The Nikko
International Capital Management Co., Ltd.
for investment and research services: 0.15 of
1% up to $700 million of average daily net
assets; 0.14 of 1% on assets in excess of
$700 million, payable monthly during fiscal
year 1994; 0.10 of 1% on average daily net
assets, payable during fiscal year 1995.
Total Net Assets
as of Management Compensation
April 30, 1995 on an Annual Basis Based on the
Name (000 omitted) Value of Average Weekly Net Assets
---- ------------- ----------------------------------
The Argentina Fund, Inc.* $ 98,000 1.30%; Scudder pays Sociedad General de
Negocios y Valores S.A. for investment and
research services 0.36 of 1%.
The First Iberian Fund, Inc.* $ 60,800 1.00%.
Scudder New Asia Fund, Inc.* $ 132,600 1.25%; 1.15% on net assets in excess of $75
million; 1.10% on net assets in excess of
$200 million.
Scudder New Europe Fund, Inc.* $ 193,400 1.25%; 1.15% on net assets in excess of $75
million; 1.10% on net assets in excess of
$200 million.
15
<PAGE>
Total Net Assets
as of Management Compensation
April 30, 1995 on an Annual Basis Based on the
Name (000 omitted) Value of Average Monthly Net Assets
---- ------------- -----------------------------------
The Korea Fund, Inc.* $ 608,100 1.15%; 1.10% on net assets in excess of $50
million; 1% on net assets in excess of $100
million; 0.95 of 1% on net assets in excess
of $350 million; 0.90 of 1% on net assets in
excess of $750 million. Scudder pays Daewoo
Capital Management Co., Ltd. for investment
and research services 0.2875 of 1%; 0.275 of
1% on net assets in excess of $50 million;
0.25 of 1% on net assets in excess of $100
million; 0.2375 of 1% on net assets in excess
of $350 million; 0.2250 of 1% on net assets
in excess of $750 million.
<FN>
+ Scudder has agreed to maintain the total annualized expenses of the fund at not more than 1.50% of
average daily net assets until February 29, 1996.
* These funds are not subject to state imposed expense limitations.
</FN>
</TABLE>
Directors, officers and employees of Scudder from time to time may have
transactions with various banks, including the Fund's custodian bank. It is
Scudder's opinion that the terms and conditions of those transactions that have
occurred were not influenced by existing or potential custodial or other Fund
relationships.
Brokerage Commissions on Portfolio Transactions
To the maximum extent feasible Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc. (the "Distributor") (a
corporation registered as a broker/dealer and a wholly-owned subsidiary of
Scudder), which in turn places orders on behalf of the Fund with issuers,
underwriters or other brokers and dealers. The Distributor receives no
commissions, fees or other remuneration from the Fund for this service.
Allocation of portfolio transactions is supervised by Scudder.
(4) APPROVAL OR DISAPPROVAL OF
A NEW RESEARCH AND ADVISORY AGREEMENT
The Brazilian Research Adviser, Banco Icatu S.A., an investment adviser
registered under the United States Investment Advisers Act of 1940, has entered
into a Research and Advisory Agreement (the "present Research Agreement") with
Scudder. The present Research Agreement, dated October 20, 1993, will continue
in effect until October 20, 1995. The present Research Agreement was approved by
the Directors on July 27, 1993 and the continuance of the present Research
Agreement was last approved by a vote of stockholders on July 26, 1994. At a
meeting held on May 17, 1995, the Directors, including a majority of the
Noninterested Directors, approved the terms of a new Research and Advisory
Agreement (the "proposed Research Agreement") and its adoption subject to
approval by stockholders. The Directors recommend that the stockholders approve
the proposed Research Agreement in place of the present Research Agreement. Set
forth below is a description of the principal difference between the present
Research Agreement and the proposed Research Agreement, as well as a description
16
<PAGE>
of those provisions which are the same under both Research Agreements. The
proposed Research Agreement is attached hereto as Exhibit B.
The principal difference between the present Research Agreement and the
proposed Research Agreement is the decrease in the fee schedule payable to the
Brazilian Research Adviser. In addition, the proposed Research Agreement would
remain in effect, subject to earlier termination, for two years from the day
following its approval. The annual fee payable to the Brazilian Research Adviser
under the present Research Agreement and the proposed Research Agreement,
respectively, would change from: (a) 0.25% per annum of the value of the average
weekly net assets of the Fund up to and including US$150 million, 0.15% per
annum of the value of the average weekly net assets of the Fund over US$150
million and up to and including US$300 million, and 0.05% per annum of the value
of the average weekly net assets of the Fund in excess of US$300 million, to (b)
0.125% per annum of the value of the average weekly net assets of the Fund up to
and including US$150 million, 0.075% per annum of the value of the average
weekly net assets of the Fund over US$150 million and up to and including US$300
million, and 0.025% per annum of the value of the average weekly net assets of
the Fund in excess of US$300 million. The Fund's net assets on December 31, 1994
were US$376.5 million.
The annual fee under the present Research Agreement is payable monthly in
Cruzeiros; under the proposed Research Agreement the fee is payable in Brazilian
Reales. For purposes of computing the monthly fee, the value of the net assets
of the Fund is determined as of the close of business on the last business day
of each month. Effective November 1, 1994, the Brazilian Research Adviser agreed
to waive approximately one half of its fees. For the fiscal year ended December
31, 1994, Scudder paid the Brazilian Research Adviser an aggregate fee of
$617,844, of which $55,048 was waived and reflected as a reduction of the
management fee paid by the Fund. Under the proposed Research Agreement, the fee
paid to the Brazilian Research Adviser is reduced by one half, formalizing the
current waiver arrangement.
Under both the present and proposed Research Agreements, the Brazilian
Research Adviser has agreed to furnish to Scudder such information, investment
recommendations, advice and assistance as Scudder shall from time to time
reasonably request. The Brazilian Research Adviser has agreed to maintain within
its organization a technical department specialized in the analysis of
securities to furnish such services exclusively to Scudder. The Brazilian
Research Adviser has agreed to pay the fees and expenses of any Directors or
officers of the Fund who are Directors, officers or employees of the Brazilian
Research Adviser or any of its affiliates.
Under both Research Agreements, the Brazilian Research Adviser will not be
liable for any act or omission in the course of, connected with or arising out
of any services rendered under the agreement, except by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the agreement.
If approved by stockholders, the proposed Research Agreement will become
effective on the day following such approval, the present Research Agreement
will terminate and the proposed Research Agreement will remain in force for two
years from that date. The proposed Research Agreement would continue in effect
thereafter by its terms from year to year only so long as its continuance is
specifically approved at least annually by the vote of a majority of the
17
<PAGE>
Noninterested Directors cast in person at a meeting called for the purpose of
voting on such approval, and either by the vote of a majority of all the
Directors or a majority of the Fund's outstanding voting securities. The
Research Agreement may be terminated on 60 days' written notice, without
penalty, by the Fund and by the Brazilian Research Adviser, but only after
written notice to the Fund, Scudder and the Brazilian Securities Commission
Regulations (the "Regulations"). The Regulations currently require six months'
notice. The Research Agreement automatically terminates in the event of
termination of the Fund's agreement with Scudder or in the event the Research
Agreement is assigned, as defined under the 1940 Act. The present Research
Agreement requires annual approval of its continuance and contains the same
termination provisions as the proposed Research Agreement. The present Research
Agreement will continue in effect until October 20, 1995 if this proposal is not
approved.
Information from the Brazilian Research Adviser is evaluated by Scudder's
research department and portfolio managers, in light of their own expertise and
information from other sources, in making investment decisions for the Fund.
The Brazilian Research Adviser, organized in December 1986, is a
wholly-owned subsidiary of Icatu Empreendimentos e Participacoes Ltda.
("Icatu"), an investment management company which manages over US$200 million in
assets. Icatu in turn has a parent company, Itaborai Participacoes S/A
("Itaborai"). Icatu and the Brazilian Research Adviser, whose offices are at
Avenida Presidente Wilson 231, 20030, Rio de Janeiro (RJ), Brazil, have a staff
of 131 investment management professionals. The directors of the Brazilian
Research Adviser are Nelson Moreira Assad, Luis Antonio Nabuco de Almeida Braga,
Marcos Pessoa de Queiroz Falcao, Jose Luis Osorlo de Almelda Filho, Jacob Remo
Hartmann, Ney Villas-Boas Marinho, Antonio Carlos Dantas Mattos, Pedro Luiz
Bodin de Moraes, Alarico Silveira Neto, Cesar do Monte Pires and Ricardo Coelho
Taboaco. The directors of Icatu are Luis Patricio Miranda de Avillez, Jose
Antonio Tornaghi Grabowsky, Antonio Carlos Dantas Mattos, Nilton Molina, Alarico
Silveira Neto, Cesar do Monte Pires and Ricardo Coelho Taboaco. The stockholder
of Icatu is Itaborai. The directors of Itaborai are Maria do Carmo Nabuco de
Almeida Braga, Luis Antonio Nabuco de Almeida Braga, Jose Antonio Tornaghi
Grabowsky, Antonio Carlos Dantas Mattos, Luis Patricio Miranda de Avillez,
Nilton Molina, Cesar do Monte Pires, George Eduardo de Moraes, Alarico Silveira
Neto and Mario Jose Gonzaga Petrelli. The stockholders of Itaborai are Sylvia
Maria de Gloria de Mello Franco Nabuco, Maria do Carmo Nabuco de Almeida Braga,
Luis Antonio Nabuco de Almeida Braga, Sylvia Nabuco de Almeida Braga, Lucia
Nabuco de Almeida Braga Rebello and Icatu Factoring Fomento Comercial Ltda.
("Icatu Factoring"). The sole partner of Icatu Factoring is Daniel Valente
Dantas. The directors of Icatu Factoring are Daniel Valente Dantas and Veronica
Valente Dantas Rodenburg.
Required Vote
The approval of the new Research Agreement requires the affirmative vote of
a majority of the Fund's outstanding voting securities, as defined on page 13.
Your Fund's Directors recommend that stockholders approve the proposed Research
Agreement.
18
<PAGE>
Other Matters
The Board of Directors does not know of any matters to be brought before
the Meeting other than those mentioned in this Proxy Statement. The appointed
proxies will vote on any other business that comes before the Meeting or any
adjournment thereof in accordance with their best judgment.
Miscellaneous
Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph by Officers of the Fund or personnel of Scudder. The Fund
has retained Corporate Investor Communications, Inc., 111 Commerce Road,
Carlstadt, New Jersey 07072-2586 to assist in the proxy solicitation. The cost
of their services is estimated at $6,000. The expenses connected with the
solicitation of the proxies and with any further proxies which may be solicited
by the Fund's Officers or Corporate Investor Communications, Inc., in person, by
telephone or by telegraph will be borne by the Fund. The Fund will reimburse
banks, brokers, and other persons holding the Fund's shares registered in their
names or in the names of their nominees, for their expenses incurred in sending
proxy material to and obtaining proxies from the beneficial owners of such
shares.
In the event that sufficient votes in favor of any proposal set forth in
the Notice of this Meeting are not received by July 25, 1995, the persons named
as appointed proxies on the enclosed proxy card may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the shares present in person or by proxy at the session of the meeting to be
adjourned. The persons named as appointed proxies on the enclosed proxy card
will vote in favor of such adjournment those proxies which they are entitled to
vote in favor of the proposal for which further solicitation of proxies is to be
made. They will vote against any such adjournment those proxies required to be
voted against such proposal. The costs of any such additional solicitation and
of any adjourned session will be borne by the Fund.
Stockholder Proposals
Any proposal by a stockholder of the Fund intended to be presented at the
1996 meeting of stockholders of the Fund must be received by Thomas F.
McDonough, Secretary of the Fund, c/o Scudder, Stevens & Clark, Inc. at 345 Park
Avenue, New York, New York 10154, not later than January 31, 1996.
By order of the Board of Directors,
Thomas F. McDonough
Secretary
345 Park Avenue
New York, New York 10154
June 6, 1995
19
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY, MANAGEMENT AND
ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of July __, 1995 between THE
BRAZIL FUND, INC., a Maryland corporation (herein referred to as the "Fund"),
and SCUDDER, STEVENS & CLARK, INC., a Delaware corporation (herein referred to
as the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is agreed by
the parties as follows:
1. The Manager hereby undertakes and agrees, upon the terms
and conditions herein set forth, (i) to make investment decisions for the Fund,
to prepare and make available to the Fund research and statistical data in
connection therewith and to supervise the acquisition and disposition of
securities by the Fund, including the selection of brokers or dealers to carry
out the transactions, all in accordance with the Fund's investment objectives
and policies and in accordance with guidelines and directions from the Fund's
Board of Directors; (ii) to assist the Fund as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Fund's Board of Directors; (iii) to maintain or cause to be maintained for the
Fund all books and records required under the Investment Company Act of 1940, as
amended (the "1940 Act"), and to furnish or cause to be furnished all required
reports or other information under Brazilian securities laws, to the extent that
such books, records and reports and other information are not maintained or
furnished by the Custodian or other agents of the Fund; (iv) to furnish at the
Manager's expense for the use of the Fund such office space and facilities as
the Fund may require for its reasonable needs in the City of New York and to
furnish at the Manager's expense clerical services in the United States related
to research, statistical and investment work; (v) to render to the Fund
administrative services such as preparing reports to and meeting materials for
the Fund's Board of Directors and reports and notices to stockholders, preparing
and making filings with the Securities and Exchange Commission (the "SEC") and
other regulatory and self-regulatory organizations, including preliminary and
definitive proxy materials and post-effective amendments to the Fund's
Registration Statement, providing assistance in certain accounting and tax
matters and investor and public relations, monitoring the valuation of portfolio
securities, calculation of net asset value and calculation and payment of
distributions to stockholders, and overseeing arrangements with the Fund's
custodian, including the maintenance of books and records of the Fund; and (vi)
to pay the reasonable salaries, fees and expenses of such of the Fund's officers
and employees (including the Fund's shares of payroll taxes) and any fees and
expenses of such of the Fund's directors as are directors, officers or employees
of the Manager; provided, however, that the Fund, and not the Manager, shall
bear travel expenses (or an appropriate portion thereof) of directors and
officers of the Fund who are directors, officers or employees of the Manager to
A-1
<PAGE>
the extent that such expenses relate to attendance at meetings of the Board of
Directors of the Fund or any committees thereof or advisers thereto. The Manager
shall bear all expenses arising out of its duties hereunder but shall not be
responsible for any expenses of the Fund other than those specifically allocated
to the Manager in this paragraph 1. In particular, but without limiting the
generality of the foregoing, the Manager shall not be responsible, except to the
extent of the reasonable compensation of such of the Fund's employees as are
directors, officers or employees of the Manager whose services may be involved,
for the following expenses of the Fund: organization and certain offering
expenses of the Fund (including out-of-pocket expenses, but not including
overhead or employee costs of the Manager or of any one or more organizations
retained by the Fund or by the Manager as a Brazilian administrator or adviser
of the Fund (together, the "Brazilian Advisers")); legal expenses; auditing and
accounting expenses; telephone, telex, facsimile, postage and other
communication expenses; taxes and governmental fees; stock exchange listing
fees; fees, dues and expenses incurred by the Fund in connection with membership
in investment company trade organizations; fees and expenses of the Fund's
custodians, subcustodians, transfer agents and registrars; payment for portfolio
pricing or valuation services to pricing agents, accountants, bankers and other
specialists, if any; expenses of preparing share certificates and other expenses
in connection with the issuance, offering, distribution, sale or underwriting of
securities issued by the Fund; expenses of registering or qualifying securities
of the Fund for sale; expenses relating to investor and public relations;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; brokerage commissions or other costs of acquiring
or disposing of any portfolio securities of the Fund; expenses of preparing and
distributing reports, notices and dividends to stockholders; costs of
stationery; costs of stockholders' and other meetings; litigation expenses; or
expenses relating to the Fund's dividend reinvestment and cash purchase plan
(except for brokerage expenses paid by participants in such plan).
2. In connection with the rendering of the services required
under paragraph 1, the Fund and the Manager have entered into an agreement dated
April 30, 1992 with Banco de Boston S.A. to furnish administrative and economic
advisory services to the Manager pursuant to such agreement, as well as an
agreement dated July __, 1995 with Banco Icatu S.A. to furnish investment
advisory services to the Manager pursuant to such agreement. The Manager may
also contract with or consult with such banks, other securities firms or other
parties in Brazil or elsewhere as it may deem appropriate to obtain information
and advice, including investment recommendations, advice regarding economic
factors and trends, advice as to currency exchange matters, and clerical and
accounting services and other assistance, but any fee, compensation or expenses
to be paid to any such parties shall be paid by the Manager, and no obligation
shall be incurred on the Fund's behalf in any such respect.
3. The Fund agrees to pay to the Manager in United States
dollars, as full compensation for the services to be rendered and expenses to be
borne by the Manager hereunder, a monthly fee, which, on an annual basis, is
equal to 1.175% per annum of the value of the Fund's average weekly net assets.
Each payment of a monthly fee to the Manager shall be made within the ten days
next following the day as of which such payment is so computed.
A-2
<PAGE>
The value of the net assets of the Fund shall be determined
pursuant to the applicable provisions of the Articles of Incorporation and
By-laws of the Fund.
4. The Manager agrees that it will not make a short sale of
any capital stock of the Fund or purchase any share of the capital stock of the
Fund otherwise than for investment.
5. Nothing herein shall be construed as prohibiting the
Manager from providing investment advisory services to, or entering into
investment advisory agreements with, other clients (including other registered
investment companies), including clients which may invest in securities of
Brazilian issuers, or from utilizing (in providing such services) information
furnished to the Manager by any Brazilian Adviser and others as contemplated by
sections 1 and 2 of this Agreement; nor shall anything herein be construed as
constituting the Manager an agent of the Fund.
6. The Manager may rely on information reasonably believed by
it to be accurate and reliable. Neither the Manager nor its officers, directors,
employees or agents shall be subject to any liability for any act or omission,
error of judgment or mistake of law, or for any loss suffered by the Fund, in
the course of, connected with or arising out of any services to be rendered
hereunder, except by reason of willful misfeasance, bad faith, or gross
negligence on the part of the Manager in the performance of its duties or by
reason of reckless disregard on the part of the Manager of its obligations and
duties under this Agreement. Any person, even though also employed by the
Manager, who may be or become an employee of the Fund and paid by the Fund shall
be deemed, when acting within the scope of his employment by the Fund, to be
acting in such employment solely for the Fund and not as an employee or agent of
the Manager.
7. This Agreement shall remain in effect for a period of two
years from the date hereof, and shall continue in effect thereafter, but only so
long as such continuance is specifically approved at least annually by the
affirmative vote of (i) a majority of the members of the Fund's Board of
Directors who are not interested persons of the Fund or of the Manager or of any
entity regularly furnishing investment advisory services with respect to the
Fund pursuant to an agreement with the Fund or the Manager, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) a majority
of the Fund's Board of Directors or the holders of a majority of the outstanding
voting securities of the Fund. This Agreement may nevertheless be terminated at
any time without penalty, on 60 days' written notice, by the Fund's Board of
Directors, by vote of holders of a majority of the outstanding voting securities
of the Fund, or by the Manager, but only after written notice to the Fund and to
the Comissao de Valores Mobiliarios of not less than 60 days (or such longer
period as may be required under the Regulations attached as Annex III to the
National Monetary Council Resolution No. 1,289 of March 20, 1987). This
Agreement shall automatically be terminated in the event of its assignment,
provided that an assignment to a corporate successor to all or substantially all
of the Manager's business or to a wholly-owned subsidiary of such corporate
successor which does not result in a change of actual control or management of
the Manager's business shall not be deemed to be an assignment for the purposes
of this Agreement. Any such notice shall be deemed given when received by the
addressee.
8. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by either party hereto, except as permitted
A-3
<PAGE>
under the 1940 Act. It may be amended by mutual agreement, but only after
authorization of such amendment by the affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Fund, and (ii) a majority
of the members of the Fund's Board of Directors who are not interested persons
of the Fund or of the Manager or of any entity regularly furnishing investment
advisory services with respect to the Fund pursuant to an agreement with the
Fund or the Manager, cast in person at a meeting called for the purpose of
voting on such approval.
9. This Agreement shall be construed in accordance with the
laws of the State of New York, provided, however, that nothing herein shall be
construed as being inconsistent with the 1940 Act. As used herein, the terms
"interested person," "assignment," and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act.
IN WITNESS WHEREOF, the parties have executed this Agreement
by their officers thereunto duly authorized as of the day and year first written
above.
THE BRAZIL FUND, INC.
By: _________________________
Title: President
SCUDDER, STEVENS & CLARK, INC.
By: _________________________
Title: Managing Director
A-4
<PAGE>
EXHIBIT B
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, New York 10154
RESEARCH AND ADVISORY AGREEMENT
July __, 1995
Banco Icatu S.A.
Av. Presidente Wilson
231 2(degree) andar
Rio de Janeiro, Brazil
CEP: 20030 021
Dear Sirs:
Scudder, Stevens & Clark, Inc. (the "Manager") has entered into an
Investment Advisory, Management and Administration Agreement (the "Management
Agreement") dated as of July __, 1995 with The Brazil Fund, Inc., a Maryland
corporation (the "Fund"), pursuant to which the Manager is to act as investment
adviser to and manager of the Fund. A copy of the Management Agreement has been
previously furnished to you.
The Manager wishes to avail itself of your investment advisory services.
Accordingly, the Manager, with the acceptance of the Fund, hereby agrees with
you as follows for the duration of this Agreement:
1. The Manager hereby contracts with you for the maintenance of the
technical department specialized in the analysis of stocks and securities
contemplated by Paragraph 1 of Article 4 of the Regulations attached as Annex
III to the National Monetary Council Resolution No. 1,289 of March 20, 1987 (the
"Regulations"). The Manager hereby directs that in so acting, you shall give all
advice solely to, and take all instructions solely from, the Manager.
2. You agree to furnish to the Manager such information, investment
recommendations, advice and assistance, as the Manager shall from time to time
reasonably request. In that connection, you agree to continue to maintain within
your organization a technical department specialized in the analysis of stocks
and securities to furnish such services exclusively to the Manager. Attached is
a copy of a memorandum describing the proposed working procedures to be followed
by you in working with the Manager, which may be revised by mutual agreement as
you work with the Manager pursuant to this Agreement. In addition, for the
benefit of the Fund, you agree to pay the fees and expenses of any directors or
officers of the Fund who are directors, officers or employees of you or of any
of your affiliates.
3. The Manager agrees to pay or to cause to be paid to you, as full
compensation for the services to be rendered and expenses to be borne by you
hereunder, a monthly fee in BRLs, which, on an annual basis, is equal to 0.125%
per annum of the value of the Fund's average weekly net assets up to and
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including US$150 million; 0.075% per annum of the value of the Fund's average
weekly net assets over US$150 million and up to and including US$300 million;
and 0.025% per annum of the value of the Fund's average weekly net assets in
excess of US$300 million. Each payment of a monthly fee shall be made to you
within the fifteen days next following the day as of which such payment is so
computed.
The value of the net assets of the Fund shall be determined pursuant to the
applicable provisions of the Certificate of Incorporation and By-Laws of the
Fund.
4. You agree that you will not make a short sale of any capital stock of
the Fund, or purchase any share of the capital stock of the Fund otherwise than
for investment.
5. Your services to the Manager are not to be deemed exclusive and you are
free to render similar services to others, except as otherwise provided in
Section 2 hereof.
6. Nothing herein shall be construed as constituting you an agent of the
Manager or of the Fund.
7. You represent and warrant that you are registered as an investment
adviser under the U.S. Investment Advisers Act of 1940, as amended, and will
comply with such Act and the U.S. Investment Company Act of 1940, as amended,
and the rules thereunder. You agree to maintain such registration in effect
during the term of this Agreement. You further represent and warrant that you
are accredited by the Comissao de Valores Mobiliarios ("CVM") within the meaning
of Paragraph 1 of Article 4 of the Regulations. You agree to use your best
efforts to maintain such accreditation in effect during the term of this
Agreement. You further agree to comply with the Regulations and all other
applicable laws and regulations in performing your obligations hereunder.
8. Neither you nor any affiliate of yours shall receive any compensation in
connection with the placement or execution of any transaction for the purchase
or sale of securities or for the investment of funds on behalf of the Fund,
except that you or your affiliates may receive a commission, fee or other
remuneration for acting as broker in connection with the sale of securities to
or by the Fund, if permitted under the U.S. Investment Company Act of 1940, as
amended.
9. You represent and warrant to the Manager that there is no publicly held
company which is an affiliated person (as defined in the U.S. Investment Company
Act of 1940, as amended), or an affiliated person of an affiliated person, of
yours. You will advise the Manager immediately if any publicly held company is
an affiliated person, or an affiliated person of an affiliated person, of yours.
10. You will advise the Manager as soon as possible if, to the best of your
knowledge, any publicly held company is an affiliated person (within the meaning
of Articles 29(VII) and 32 of the Regulations) of Banco de Boston (the
"Brazilian Administrator") or of a company affiliated with the Brazilian
Administrator.
11. The Manager agrees that you may rely on information reasonably believed
by you to be accurate and reliable, and further agrees that, except to the
extent otherwise provided under applicable Brazilian law, neither you nor your
officers, directors, employees or agents shall be subject to any liability for
any act or omission in the course of, connected with or arising out of any
services to be rendered hereunder, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties or by reason of
reckless disregard of your obligations and duties under this Agreement.
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12. This Agreement shall remain in effect for a period of two years from
the date hereof and shall continue in effect thereafter, but only so long as
such continuance is specifically approved at least annually by the affirmative
vote of (i) a majority of the members of the Fund's Board of Directors who are
not interested persons of the Fund, the Manager, or you, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) a majority
of the Fund's Board of Directors or the holders of a majority of the outstanding
voting securities of the Fund. This Agreement may nevertheless be terminated at
any time, without penalty, by the Fund's Board of Directors or by vote of
holders of a majority of the outstanding voting securities of the Fund, upon 60
days' written notice delivered or sent by registered mail, postage prepaid, to
you, at your address given above or at any other address of which you shall have
notified us in writing, or by you, but only after written notice to the Fund,
the Manager, and the CVM, of not less than 60 days (or such longer period as may
be required under the Regulations). This Agreement shall automatically be
terminated in the event of its assignment or of the termination (due to
assignment or otherwise) of the Management Agreement.
13. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto. It may be amended by mutual
agreement, but only after authorization of such amendment by the affirmative
vote of (i) the holders of a majority of the outstanding voting securities of
the Fund; and (ii) a majority of the members of the Fund's Board of Directors
who are not interested persons of the Fund, the Manager, or you, cast in person
at a meeting called for the purpose of voting on such approval.
14. Any notice hereunder shall be in writing and shall be delivered in
person or by facsimile (followed by mailing such notice, air mail postage paid,
the day on which such facsimile is sent)
Addressed
If to the Fund, to:
The Brazil Fund, Inc.
345 Park Avenue
New York, NY 10154
Attention: President
(Facsimile No. 212-223-3127)
If to the Manager, to:
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, NY 10154
Attention: President
(Facsimile No. 212-319-7813)
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If to you, to:
Banco Icatu S.A.
Av. Presidente Wilson
231 2(degree) andar
Rio de Janeiro, Brazil
CEP: 20030 021
Attention: President
(Facsimile No. 021-240-4133)
or to such other address as to which the recipient shall have informed the other
party.
Notice given as provided above shall be deemed to have been given, if by
personal delivery, on the day of such delivery, and if by facsimile and mail,
the date on which such facsimile and confirmatory letter are sent.
15. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the U.S. Investment Company Act of 1940, as amended, or
the Regulations. As used herein the terms "interested person," "assignment," and
"vote of a majority of the outstanding voting securities" shall have the
meanings set forth in the U.S. Investment Company Act of 1940, as amended.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
SCUDDER, STEVENS & CLARK, INC.
By ___________________________
Managing Director
The foregoing agreement is
hereby accepted as of the
date first above written.
BANCO ICATU S.A.
By ___________________________
Director
By ___________________________
Director
Accepted:
THE BRAZIL FUND, INC.
By _________________________________
President
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<S> <C> <C>
PROXY THE BRAZIL FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders--July 25, 1995
The undersigned hereby appoints Nicholas Bratt, Dr. Wilson Nolen and Juris Padegs and each of them, the proxies of the
undersigned, with the power of substitution to each of them, to vote all shares of The Brazil Fund, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of The Brazil Fund, Inc. to be held at the offices of Scudder, Stevens &
Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York, New York 10154, on Tuesday, July 25, 1995 at 11:00 a.m.,
eastern time, and at any adjournments thereof.
Unless otherwise specified in the squares provided, the undersigned's vote will be cast FOR each numbered item listed below.
1. The election of Directors;
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [] to vote for all nominees listed below []
Nominees: Juris Padegs and Ronaldo A. da Frota Nogueira
(INSTRUCTION To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.)
2. Ratification of the selection of Price Waterhouse LLP as independent
accountants; FOR [] AGAINST [] ABSTAIN []
<PAGE>
3. Approval of a new Investment Advisory, Management and Administration
Agreement between the Fund and Scudder, Stevens & Clark, Inc.; FOR [] AGAINST [] ABSTAIN []
4. Approval of a new Research and Advisory Agreement between Banco Icatu S.A.,
and Scudder Stevens & Clark, Inc.; FOR [] AGAINST [] ABSTAIN []
The Proxies are authorized to vote in their discretion on any other
business which may properly come before the meeting and any adjournments
thereof.
Please sign exactly as your name or names appear. When
signing as attorney, executor, administrator, trustee or
guardian, please give your full title as such.
_________________________________________________________
(Signature of Stockholder)
_________________________________________________________
(Signature of joint owner, if any)
Date_______________________________________________, 1995
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
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