345 Park Avenue (at 51st Street)
New York, New York 10154
(800) 349-4281
September 13, 1996
To the Stockholders:
The Annual Meeting of Stockholders of The Brazil Fund, Inc. (the "Fund") is
to be held at 9:00 a.m., eastern time, on Tuesday, October 29, 1996 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 three Directors, consider
the ratification of the selection of Price Waterhouse LLP as the Fund's
independent accountants and consider the approval of a new Investment Advisory,
Management and Administration Agreement between the Fund and its investment
manager, Scudder, Stevens & Clark, Inc. 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, October 29, 1996 at 9:00 a.m., eastern time, for the
following purposes:
(1)To elect three 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, 1996.
(3)To approve or disapprove a new Investment Advisory, Management
and Administration Agreement between the Fund and Scudder, Stevens & Clark,
Inc.
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 September 6, 1996 are entitled to vote at the meeting and any
adjournments thereof.
By order of the Board of Directors,
Thomas F. McDonough,
Secretary
September 13, 1996
- --------------------------------------------------------------------------------
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, October 29, 1996 at 9:00 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 September 13, 1996, 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 proposal (3), which requires
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 September 6, 1996 (the "Record Date"), will be entitled to one vote per share
on all business of the Meeting and any adjournments. There were 16,229,986
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, 1995, 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 three
nominees listed below as Directors of the Fund to serve for a term of 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.
3
<PAGE>
Information Concerning Nominees
The following table sets forth certain information concerning each of the
three 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 I
-------
Nominees to serve until 1999 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
Present Office with the Fund, if Shares
any; Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned on of
Name (Age) in Publicly Held Companies Director July 31, 1996(1) Class
- --------- -------------------------- -------- ---------------- -----
<S> <C> <C> <C> <C>
Nicholas Bratt President; Managing 1987 2,474 less than 1/4 of 1%
(48)* Director of Scudder,
Stevens & Clark, Inc.
Mr. Bratt serves on
the boards of an
additional 15 funds
managed by Scudder.
Edgar R. Fiedler Vice President and 1987 7,858 less than 1/4 of 1%
(67) Economic Counselor,
The Conference Board,
Inc.; Director: The
Stanley Works
(manufacturer of
tools and hardware)
Zurich American
Insurance Company
(insurance company),
Harris Insight Funds
and Emerging Mexico
Fund. Mr. Fiedler
serves on the boards
of an additional 15
funds managed by
Scudder.
Roberto Teixeria President, Brasilpar 1993 -- --
da Costa (61) Ltda. (financial
consulting and asset
management);
Chairman, CEAL (Latin
American Businessmen
Council), and
Director of eight
Brazilian listed and
unlisted companies.
</TABLE>
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 Class II and III do not expire this
year. The following table sets forth certain information regarding the
Directors in such classes.
Class II
- --------
Directors serving until 1997 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
Present Office with the Fund, if Shares
any; Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned on of
Name (Age) in Publicly Held Companies Director July 31, 1996(1) Class
- --------- -------------------------- -------- ---------------- -----
<S> <C> <C> <C> <C>
Dr. Wilson Nolen Consultant; Trustee, 1987 16,539 less than 1/4 of 1%
(69) Cultural Institutions
Retirement Fund,
Inc.; Director,
Ecohealth, Inc.
(biotechnology
company) (until
1996); and Director,
Chattem, Inc. (drug
and chemical company)
(until 1993). Dr.
Nolen serves on the
boards of an
additional 18 funds
managed by Scudder.
Edmond D. Villani President, Chief 1994 5,428 less than 1/4 of 1%
(49)*+ Executive Officer and
Managing Director of
Scudder, Stevens &
Clark, Inc. Mr.
Villani serves on the
boards of an
additional four funds
managed by Scudder.
</TABLE>
5
<PAGE>
Class III
- ---------
Directors serving until 1998 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
Present Office with the Fund, if Shares
any; Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned on of
Name (Age) in Publicly Held Companies Director July 31, 1996(1) Class
- --------- -------------------------- -------- ---------------- -----
<S> <C> <C> <C> <C>
Juris Padegs Chairman of the 1987 2,042 less than 1/4 of 1%
(64)*+ Board; Managing
Director of Scudder,
Stevens & Clark, Inc.
Mr. Padegs serves on
the boards of an
additional 30 funds
managed by Scudder.
Ronaldo A. da Director and Chief 1987 3,319 less than 1/4 of 1%
Frota Nogueira Executive Officer,
(57) IMF Editora Ltda.
(financial publisher).
Mr. Nogueira serves on
the boards of an
additional three
funds managed by
Scudder.
All Directors and Officers as a group 38,114(2) less than
1/4 of 1%
</TABLE>
- ---------------------------
* 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 37,877 shares held with sole investment
and voting power and 227 shares held with shared investment and voting
power.
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
("Reporting Persons"), to file reports of ownership of the fund's securities and
changes in such ownership with the Securities and Exchange Commission (the
6
<PAGE>
"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, 1995, all filing requirements applicable to its
Reporting Persons were complied with, except that a Form 4 on behalf of Ronaldo
da Frota Nogueira was filed late.
To the best of the Fund's knowledge, as of July 31, 1996 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, 1995. 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 67% 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 Committee on Independent Directors. 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.
Committee on Independent Directors
The Board has a Committee on Independent Directors 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 February 29, 1996 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. (58) Vice President; Managing Director of 1987
Scudder, Stevens & Clark, Inc.
Jerard K. Hartman (63) Vice President; Managing Director of 1987
Scudder, Stevens & Clark, Inc.
David S. Lee (62) Vice President; Managing Director of 1987
Scudder, Stevens & Clark, Inc.
Pamela A. McGrath (42) Treasurer; Managing Director of 1990
Scudder, Stevens & Clark, Inc.
Kathryn L. Quirk (43) Vice President and Assistant 1987
Secretary; Managing Director of
Scudder, Stevens & Clark, Inc.
Edward J. O'Connell (51) Vice President and Assistant 1987
Treasurer; Principal of Scudder,
Stevens & Clark, Inc.
Thomas F. McDonough (49) Secretary; Principal of Scudder, 1987
Stevens & Clark, Inc.
Coleen Downs Dinneen (35) Assistant Secretary; Vice President 1992
of Scudder, Stevens & Clark, Inc.
</TABLE>
(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.
Transactions with and Remuneration of Directors and Officers
The aggregate direct remuneration by the Fund of Directors not affiliated
with Scudder was $84,647, including expenses, for the fiscal year ended December
31, 1995. 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"), 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, 1995
---------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
Pension or Estimated
Aggregate Retirement Annual Total Compensation
Compensation Benefits Accrued Benefits Upon From the Fund and
Name of Person, from As Part of Fund Retirement Fund Complex Paid
Position the Fund Expenses to Directors
=========================================================================================================
<S> <C> <C> <C> <C>
Roberto Teixeira da Costa, $17,250 N/A N/A $17,250
Director (1 fund)
Edgar R. Fiedler, $14,250 N/A N/A $33,570*
Director (6 funds)
Ronaldo A. da Frota Nogueira, $20,000 N/A N/A $57,950
Director (4 funds)
Dr. Wilson Nolen, $13,250 N/A N/A $148,342
Director (16 funds)#
</TABLE>
* As of December 31, 1995, Mr. Fiedler had a total of $206,003 accrued in a
deferred compensation program for serving on the Board of Scudder
Institutional Fund, Inc., which had four active portfolios and $208,215
accrued in a deferred compensation program for serving on the Board of
Scudder Fund, Inc., which has five active portfolios. As of April 3, 1996,
Scudder Institutional Fund, Inc. has five active portfolios.
# This does not include membership on the Board of Scudder Emerging Markets
Growth Fund, which commenced operations on May 8, 1996.
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.
9
<PAGE>
(2) RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
At a meeting held May 28, 1996, 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, 1996. 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
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, 1995
and the semiannual period ended June 30, 1996 were audited by Price Waterhouse
LLP.
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 July 26, 1995 (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 July 29, 1996, 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.
Termination of the Research and Advisory Agreement
On July 25, 1995 a Research and Advisory Agreement (the "Research
Agreement") between the Brazilian Research Adviser, Banco Icatu S.A., an
investment adviser under the United States Investment Advisers Act of 1940, and
Scudder was approved by a vote of the Fund's outstanding voting securities, as
defined on page 14. The Research Agreement was terminated by a vote of the
majority of the Noninterested Directors on July 29, 1996 as permitted by the
agreement. The fee payable to Scudder under the present Agreement reflected the
fact that Scudder was paying Banco Icatu for its services under the Research
Agreement. The fee schedule in the proposed Agreement reduces the investment
management fee payable to Scudder by a portion of the estimated net savings to
Scudder expected to result from the termination of Banco Icatu's research
services.
Change in Rate of Compensation Under the Proposed Agreement
The principal difference between the present Agreement and the proposed
Agreement is the change in the fee payable to Scudder from (a) 1.175% per annum
of the value of the Fund's average weekly net assets, to (b) 1.20% per annum of
10
<PAGE>
the value of the Fund's average weekly net assets up to $150 million; 1.05% per
annum of the value of the Fund's average weekly net assets on the next $150
million, and 1.00% per annum of the value of the Fund's weekly net assets in
excess of $300 million. 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. However, since the present Agreement has been in effect, Scudder has
agreed not to charge the Fund an amount equal to 0.10% of average weekly net
assets in excess of $300 million.
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 and the additional time and
expenses required of Scudder in pursuing such objective. However, each fee is
not necessarily higher than the fees charged to funds with investment objectives
similar to that of the Fund.
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).
<TABLE>
<CAPTION>
Advisory Fees Fees Payable Under
Actually the Proposed
Year Ended Incurred (a) Agreement (b) $ Change (c) % Change
---------- ------------ ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
1995 $3,617,043 $3,455,500 $(161,543) (4.47%)
</TABLE>
(a) Computed pursuant to the present fee schedule as described above.
Includes a $299,426 fee paid by Scudder to the Brazilian Research
Adviser.
(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 net operating expenses to average net assets for the year
ended December 31, 1995 was 1.62% and if the proposed Agreement had been in
effect such ratio would have been 1.56%. The Fund's net assets as of December
31, 1995 were approximately US$336 million and as of July 22, 1996, the net
assets of the Fund were approximately $420 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 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
11
<PAGE>
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; the termination of the Research
Agreement and of the fee that had been payable to Banco Icatu by Scudder under
the present Agreement, and various other factors.
Description of the Proposed Agreement
Under both the present and the proposed 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, fund accounting agent, 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
12
<PAGE>
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, 1995, no compensation, direct or otherwise (other
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 July 26, 1997.
The present Agreement was approved by the Directors on May 17, 1995, and was
last approved by a vote of stockholders on July 25, 1995.
In reviewing the terms of the proposed Agreement and in discussions with
Scudder, 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.
13
<PAGE>
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.
Investment Manager
Scudder is a Delaware corporation. Daniel Pierce* is the Chairman of the
Board of Scudder. Edmond D. Villani# is the President and Chief Executive
Officer of Scudder. Stephen R. Beckwith#, Lynn S. Birdsong#, Nicholas Bratt#, E.
Michael Brown*, Mark S. Casady*, Linda C. Coughlin*, Margaret D. Hadzima*,
Jerard K. Hartman#, Richard A. Holt@, Dudley H. Ladd*, John T. Packard+++,
Kathryn L. Quirk#, Cornelia M. Small# and Stephen A. Wohler* 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.
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.
Scudder or an affiliate manages in excess of $100 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:
- ---------------------------
* 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
14
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets as of Management Compensation
July 31, 1996 on an Annual Basis Based on the
Name (000 omitted) Value of Average Daily Net Assets
---- ------------- ----------------------------------
<S> <C> <C>
Scudder Latin America Fund $ 609,200 1.25%.
The Japan Fund, Inc. $ 480,800 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.
Total Net Assets as of Management Compensation
July 31, 1996 on an Annual Basis Based on the
Name (000 omitted) Value of Average Weekly Net Assets
---- ------------- ----------------------------------
The Argentina Fund, Inc.* $ 113,200 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.* $ 73,500 1.00%.
Total Net Assets as of Management Compensation
July 31, 1996 on an Annual Basis Based on the
Name (000 omitted) Value of Average Monthly Net Assets
---- ------------- ----------------------------------
The Korea Fund, Inc.* $ 700,500 1.15% of the Fund's month end net assets up
to and including $50 million; 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% of the Fund's
month end net assets up to and including $50
million; 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.
</TABLE>
* These funds are not subject to state imposed expense limitations.
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.
15
<PAGE>
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 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.
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 October 29, 1996, 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
1997 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, within a reasonable time before the
solicitation of proxies for such stockholders' meeting.
By order of the Board of Directors,
Thomas F. McDonough
Secretary
345 Park Avenue
New York, New York 10154
September 13, 1996
16
<PAGE>
PROXY THE BRAZIL FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders--October 29, 1996
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, October 29, 1996 at 9:00 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 to vote for all nominees
below) /_/ listed 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/_/
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 you rname 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 , 1996
------------------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY, MANAGEMENT AND
ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of October 30, 1996 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 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
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
A - 1
<PAGE>
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, and accounting
agents; 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., as amended from time to time, to
furnish administrative 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 1.20% per annum of the value of the Fund's average weekly net assets up
to $150 million; 1.05% per annum of the value of the Fund's average weekly net
assets from $150 million up to and including $300 million and 1.00% per annum of
the Fund's average weekly net assets in excess of $300 million. 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.
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.
A - 2
<PAGE>
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
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
A - 3
<PAGE>
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
