<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE BRAZIL FUND, INC.
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Articles of Incorporation)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identity the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
PRELIMINARY COPY
AUGUST 22, 1997
THE BRAZIL FUND, INC.
IMPORTANT NEWS
FOR THE BRAZIL FUND, INC. STOCKHOLDERS
While we encourage you to read the full text of the enclosed proxy
statement, here's a brief overview of some changes affecting your Fund which
require a stockholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Scudder, Stevens & Clark, Inc. ("Scudder"), your Fund's investment manager,
has agreed to form an alliance with Zurich Insurance Company ("Zurich").
Zurich is a leading international insurance and financial services
organization. As a result of the proposed alliance, there will be a change
in ownership of Scudder. In order for Scudder to continue to serve as
investment manager of your Fund, it is necessary for the Fund's stockholders
to approve a new investment management, advisory and administration
agreement. The following pages give you additional information on Zurich,
the proposed new investment management, advisory and administration
agreement and certain other matters. The most important matters to be voted
upon by you are approval of the new investment management, advisory and
administration agreement and the election of Directors. THE BOARD MEMBERS OF
YOUR FUND, INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE FUND OR SCUDDER,
RECOMMEND THAT YOU VOTE FOR THESE PROPOSALS.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT,
ADVISORY AND ADMINISTRATION AGREEMENT?
A. The Investment Company Act of 1940, which regulates investment companies
such as the Fund, requires a vote whenever there is a change in control of a
fund's investment manager. Zurich's alliance with Scudder will result in
such a change of control and requires stockholder approval of a new
investment management, advisory and administration agreement with the Fund.
<PAGE> 3
Q. HOW WILL THE SCUDDER-ZURICH ALLIANCE AFFECT ME AS A FUND STOCKHOLDER?
A. Your Fund and your Fund's investment objective will not change. You will
still own the same shares in the same Fund. As described in more detail in
the proxy statement, the investment management, advisory and administration
agreement that is currently in effect will be replaced, effective as of
October 28, 1997, by a new agreement to reduce the investment management
fees currently paid by the Fund under such agreement. The terms of the new
investment management, advisory and administration agreement are the same in
all material respects as the current investment management, advisory and
administration agreement that will be in effect immediately prior to the
consummation of the alliance. Similarly, the other service arrangements
between you and Scudder will not be affected. You should continue to receive
the same level of services that you have come to expect from Scudder over
the years. If stockholders do not approve the new investment management,
advisory and administration agreement, the current investment management,
advisory and administration agreement will terminate upon the closing of the
transaction and the Board of Directors will take such action as it deems to
be in the best interests of your Fund and its stockholders.
Q. WHY HAS SCUDDER DECIDED TO ENTER INTO THIS ALLIANCE?
A. Scudder believes that the Scudder-Zurich alliance will enable Scudder to
enhance its capabilities as a global asset manager. Scudder further believes
that the alliance will enable it to enhance its ability to deliver the level
of services currently provided to you and your Fund and to fulfill its
obligations under the new investment management, advisory and administration
agreement consistent with current practices.
Q. WILL THE INVESTMENT MANAGEMENT FEES BE THE SAME?
A. The investment management fees paid by your Fund will remain the same as
those in effect in the investment management, advisory and administration
agreement that will replace the current agreement to give effect to the
reduction in investment management fees, effective as of October 28, 1997.
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A. You are also being asked to vote for the ratification of the Board's
selection of the Fund's accountants.
<PAGE> 4
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund, including those
who are not affiliated with the Fund or Scudder, recommend that you vote in
favor of all of the proposals on the enclosed proxy card.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Shareholder Communications Corporation, your Fund's information
agent, at 1-800-733-8481.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED WITH
THIS TRANSACTION?
A. No, Scudder will bear these costs. However, the Fund will bear the ordinary
costs incurred by the Fund in conducting an annual meeting.
ABOUT THE PROXY CARD
If you have more than one account in the Fund in your name at the same
address, you will receive separate proxy cards for each account, but only one
proxy statement for the Fund. Please vote all issues on each proxy card that you
receive.
THANK YOU FOR MAILING YOUR PROXY CARD PROMPTLY.
<PAGE> 5
345 Park Avenue
New York, New York 10154
THE BRAZIL FUND, INC.
August 22, 1997
Dear Stockholder:
Scudder, Stevens & Clark, Inc. ("Scudder") entered into an agreement with
Zurich Insurance Company ("Zurich") pursuant to which Scudder and Zurich have
agreed to form an alliance. Under the terms of the agreement, Zurich will
acquire a majority interest in Scudder, and Zurich Kemper Investments, Inc., a
Zurich subsidiary, will become part of Scudder. Scudder's name will be changed
to Scudder Kemper Investments, Inc. As a result of this transaction, it is
necessary for the stockholders of each of the funds for which Scudder acts as
investment manager, including your Fund, to approve a new investment management
agreement.
The following important facts about the transaction are outlined below:
- The transaction has no effect on the number of shares you own or the value
of those shares.
- The advisory fees and expenses paid by your Fund will not increase as a
result of this transaction.
- The investment objective of your Fund will remain the same.
- The non-interested Directors of your Fund have carefully reviewed the
proposed transaction, and have concluded that the transaction should cause
no reduction in the quality of services provided to your Fund and should
enhance Scudder's ability to provide such services.
Stockholders are also being asked to approve certain other matters that have
been set forth in the Fund's Notice of Meeting. THE BOARD MEMBERS OF YOUR FUND
BELIEVE THAT EACH OF THE PROPOSALS SET FORTH IN THE NOTICE OF MEETING FOR YOUR
FUND IS IMPORTANT AND RECOMMEND THAT YOU READ THE ENCLOSED MATERIALS CAREFULLY
AND THEN VOTE FOR ALL PROPOSALS.
Since all of the funds for which Scudder acts as investment manager are
required to conduct stockholder meetings, if you own shares of more than one
fund, you will receive more than one proxy card. Please sign and return each
proxy card you receive.
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your executed proxy card(s) after a reasonable amount of time you may receive a
telephone call from our proxy solicitor, Shareholder Communications Corporation,
reminding you to vote your shares.
Thank you for your cooperation and continued support.
Respectfully,
Nicholas Bratt Juris Padegs
President Chairman of the Board
STOCKHOLDERS ARE URGED TO SIGN THE PROXY CARD AND RETURN IT IN THE POSTAGE PAID
ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
<PAGE> 6
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") will be held at the offices of Scudder, Stevens & Clark, Inc.,
25th Floor, 345 Park Avenue (at 51st Street), New York, New York 10154, on
October 28, 1997, at 8:30 a.m., Eastern time, for the following purposes:
(1) To approve or disapprove a new investment management, advisory
and administration agreement between the Fund and its investment
manager;
(2) To elect Directors; and
(3) To ratify or reject the selection of Price Waterhouse LLP as the
independent accountants for the Fund for the Fund's current
fiscal year.
The appointed proxies will vote on any other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of shares of common stock of the Fund at the close of business
on August 15, 1997 are entitled to vote at the meeting and at any adjournments
thereof.
In the event that the necessary quorum to transact business or the vote required
to approve or reject any proposal is not obtained at the Meeting, the Persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law, to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of the holders of a majority
of the Fund's shares present in person or by proxy at the Meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor and will vote against any such adjournment those
proxies to be voted against that proposal.
By Order of the Board of Directors,
Thomas F. McDonough,
Secretary
August 22, 1997
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
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.
<PAGE> 7
THE BRAZIL FUND, INC.
345 PARK AVENUE, NEW YORK, NEW YORK 10154
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") 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 October 28, 1997, at 8:30 a.m.,
Eastern time, and at any and all adjournments thereof (the "Meeting"). (In the
descriptions of the various proposals below, the word "fund" is sometimes used
to mean investment companies or series thereof in general and not the Fund whose
proxy statement this is.)
This Proxy Statement, the Notice of Annual Meeting and the proxy card are
first being mailed to stockholders on or about August 22, 1997 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, c/o Scudder, Stevens & Clark, Inc., 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, in favor of each proposal referred to in the Proxy
Statement.
The presence at any stockholders' meeting, in person or by proxy, of the
holders of a majority of the shares entitled to be cast shall be necessary and
sufficient to constitute a quorum for the transaction of business. In the event
that the necessary quorum to transact business or the vote required to approve
or reject any proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law, to permit further solicitation of proxies with respect to any
proposal which did not receive the vote necessary for its passage or to obtain a
quorum. With respect to those proposals for which there is represented a
sufficient number of votes in favor, actions taken at the Meeting will be
effective irrespective of any adjournments with respect to any other proposals.
Any such adjournment will require the affirmative vote of the holders of a
majority of the Fund's shares present in person or by proxy at the Meeting. The
persons names as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor and will vote against any such
adjournment those proxies to be voted against that proposal. For purposes of
determining the presence of a quorum for transacting business at the Meeting,
abstentions and broker "non-votes" will be treated as shares that are present
but which have not been voted. Broker non-votes are proxies received by the Fund
from brokers or
<PAGE> 8
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.
Proposal 1 requires the affirmative vote of a "majority of the outstanding
voting securities" of the Fund. The term "majority of the outstanding voting
securities," as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), and as used in this proxy statement, means: the affirmative vote of
the lesser of (1) 67% of the voting securities of the Fund present at the
Meeting if more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (2) more than 50% of the outstanding shares of the Fund.
Proposals 2 and 3 each require the approval of a majority of shares voted at the
Meeting.
Abstentions will have the effect of a "no" vote on all proposals. Broker
non-votes will have the effect of a "no" vote for Proposal 1 if such vote is
determined on the basis of obtaining the affirmative vote of more than 50% of
the outstanding shares of the Fund. Broker non-votes will not constitute "yes"
or "no" votes and will be disregarded in determining the voting securities
"present" if such vote is determined on the basis of the affirmative vote of 67%
of the voting securities of the Fund present at the Meeting with respect to
Proposal 1 and a majority of the voting securities of the Fund present at the
Meeting with respect to Proposals 2 and 3.
Holders of record of the shares of the common stock of the Fund at the
close of business on August 15, 1997 (the "Record Date"), will be entitled to
one vote per share on all business of the Meeting. The number of shares
outstanding as of June 30, 1997 was 16,256,783.
The Fund provides periodic reports to all of its stockholders which
highlight relevant information including investment results and a review of
portfolio changes. You may receive an additional copy of the most recent annual
report for the Fund, and a copy of any more recent semi-annual report, without
charge, by calling 1-800-349-4281 or writing the Fund, c/o Scudder, Stevens &
Clark, Inc., 345 Park Avenue, New York, New York 10154.
PROPOSAL 1: APPROVAL OR OF NEW
INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder acts as the investment adviser to and manager and administrator for
the Fund pursuant to an Investment Advisory, Management and Administration
Agreement dated October 30, 1996. The investment management, advisory and
administration agreement that is currently in effect will be replaced, effective
as of October 28, 1997, by an agreement that reduces the investment management
fees that the Fund pays to Scudder pursuant to such agreement. Such fees will
2
<PAGE> 9
be reduced by the addition of another breakpoint in the fee schedule so that the
investment management fee will, for amounts in the Fund over $500 million, be
reduced from 1.00% per annum to 0.90%. The current investment management,
advisory and administration agreement, as amended to give effect to the
reduction of fees payable by the Fund to Scudder, shall be referred to as the
"Current Investment Management Agreement." (Scudder is sometimes referred to in
this proxy statement as the "Investment Manager.")
On June 26, 1997, Scudder entered into a Transaction Agreement (the
"Transaction Agreement") with Zurich Insurance Company ("Zurich") pursuant to
which Scudder and Zurich have agreed to form an alliance. Under the terms of the
Transaction Agreement, Zurich will acquire a majority interest in Scudder, and
Zurich Kemper Investments, Inc. ("ZKI"), a Zurich subsidiary, will become part
of Scudder. Scudder's name will be changed to Scudder Kemper Investments, Inc.
("Scudder Kemper"). The foregoing are referred to as the "Transactions." ZKI, a
Chicago-based investment adviser and the adviser to the Kemper funds, has
approximately $80 billion under management. The headquarters of Scudder Kemper
will be in New York. Edmond D. Villani, Scudder's Chief Executive Officer, will
continue as Chief Executive Officer of Scudder Kemper and will become a member
of Zurich's Corporate Executive Board.
Consummation of the Transactions would constitute an "assignment," as that
term is defined in the 1940 Act, of the Fund's Current Investment Management
Agreement with Scudder. As required by the 1940 Act, the Current Investment
Management Agreement provides for its automatic termination in the event of its
assignment. In anticipation of the Transactions, a new investment management,
advisory and administration agreement (the "New Investment Management
Agreement," together with the Current Investment Management Agreement, the
"Investment Management Agreement") between the Fund and Scudder Kemper is being
proposed for approval by stockholders of the Fund. A copy of the form of the New
Investment Management Agreement is attached hereto as Exhibit A. THE NEW
INVESTMENT MANAGEMENT AGREEMENT FOR THE FUND IS IN ALL MATERIAL RESPECTS ON THE
SAME TERMS AS THE CURRENT INVESTMENT MANAGEMENT AGREEMENT. Conforming changes
are being recommended to the New Investment Management Agreement in order to
promote consistency among all of the funds advised by Scudder and to permit ease
of administration. The material terms of the Current Investment Management
Agreement are described under "Description of the Current Investment Management
Agreement" below.
BOARD OF DIRECTORS RECOMMENDATION
On July 29, 1997, the Board of the Fund, including Directors who are not
parties to such agreement or "interested persons" (as defined under the 1940
Act) ("Non-interested Directors") of any such party, voted to approve the New
Investment Management Agreement and to recommend its approval to stockholders.
3
<PAGE> 10
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Directors Evaluation" below.
The Board of the Fund recommends that stockholders vote in favor of the
approval of the New Investment Management Agreement.
BOARD OF DIRECTORS EVALUATION
On July 16, 1997, representatives of Scudder advised the Non-interested
Directors of the Fund, by means of a telephone conference call, that Scudder had
entered into the Transaction Agreement. At that time, Scudder representatives
described the general terms of the proposed Transactions and the perceived
benefits for the Scudder organization and for its investment advisory clients.
Scudder subsequently furnished the Non-interested Directors additional
information regarding the proposed Transactions, including information regarding
the terms of the proposed Transactions, and information regarding the Zurich and
ZKI organizations. In a series of subsequent telephone conference calls and
in-person meetings, the Non-interested Directors discussed this information
among themselves and with representatives of Scudder and Zurich. They were
assisted in their review of this information by their independent legal counsel.
In the course of these discussions, Scudder advised the Non-interested
Directors that it did not expect that the proposed Transactions would have a
material effect on the operations of the Fund or its stockholders. Scudder has
advised the Non-interested Directors that the Transaction Agreement, by its
terms, does not contemplate any changes in the structure or operations of the
Fund. Scudder representatives have informed the Directors that Scudder intends
to maintain the separate existence of the funds that Scudder and ZKI manage in
their respective distribution channels. Scudder has also advised the Non-
interested Directors that, although it expects that various portions of the ZKI
organization would be combined with Scudder's operations, the senior executives
of Scudder overseeing those operations will remain largely unchanged. It is
possible, however, that changes in certain personnel currently involved in
providing services to the Fund may result from future efforts to combine the
strengths and efficiencies of both firms. In their discussions with the
Directors, Scudder representatives also emphasized the strengths of the Zurich
organization and its commitment to provide the new Scudder Kemper organization
with the resources necessary to continue to provide high quality services to the
Fund and the other investment advisory clients of the new Scudder Kemper
organization.
The Board was advised that Scudder intends to rely on Section 15(f) of the
1940 Act, which provides a non-exclusive safe harbor for an investment adviser
to an investment company or any of the investment adviser's affiliated persons
(as defined under the 1940 Act) to receive any amount or benefit in connection
with a change in control of the investment adviser so long as two conditions are
4
<PAGE> 11
met. First, for a period of three years after the transaction, at least 75% of
the board members of the investment company must not be "interested persons" of
the investment company's investment adviser or its predecessor adviser. On or
prior to the consummation of the Transactions, the Board, assuming the election
of the nominees that you are being asked to elect in "Proposal 2: Election of
Directors," would be in compliance with this provision of Section 15(f). (See
"Proposal 2: Election of Directors.") Second, an "unfair burden" must not be
imposed upon the investment company as a result of such transaction or any
express or implied terms, conditions or understandings applicable thereto. The
term "unfair burden" is defined in Section 15(f) to include any arrangement
during the two-year period after the transaction whereby the investment adviser,
or any interested person of any such adviser, receives or is entitled to receive
any compensation, directly or indirectly, from the investment company or its
stockholders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter for such
investment company). No such compensation agreements are contemplated in
connection with the Transactions. Aside from the ordinary expenses incurred by
the Fund in conducting an annual meeting, Scudder has undertaken to pay the
costs of preparing and distributing proxy materials to, and of holding the
meeting of, the Fund's stockholders as well as other fees and expenses in
connection with the Transactions, including the fees and expenses of legal
counsel and consultants to the Fund and the Non-interested Directors.
During the course of their deliberations, the Non-interested Directors
considered a variety of factors, including 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 investment record of Scudder in managing the Fund; the increased
complexity of the domestic and international securities markets; Scudder's
profitability from advising the Fund; possible economies of scale; comparative
data as to investment performance, advisory fees and other fees, including
administrative fees, and expense ratios; the risks assumed by Scudder; the
advantages and possible disadvantages to the Fund of having an adviser of the
Fund which also serves other investment companies as well as other accounts;
possible benefits to Scudder from serving as manager to the Fund and from
affiliates of Scudder serving the Fund in various other capacities; 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; and 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.
In addition to the foregoing factors, the Non-interested Directors gave
careful consideration to the likely impact of the Transactions on the Scudder
5
<PAGE> 12
organization. In this regard, the Non-interested Directors considered, among
other things, the structure of the Transactions which affords Scudder executives
substantial autonomy over Scudder's operations and provides substantial equity
participation and incentives for many Scudder employees; Scudder's and Zurich's
commitment to Scudder's paying compensation adequate to attract and retain top
quality personnel; Zurich's strategy for the development of its asset management
business through Scudder; information regarding the financial resources and
business reputation of Zurich; and the complementary nature of various aspects
of the business of Scudder and ZKI and the intention to maintain separate
Scudder and ZKI brands in the mutual fund business. Based on the foregoing, the
Non-interested Directors concluded that the Transactions should cause no
reduction in the quality of services provided to the Fund and believe that the
Transactions should enhance Scudder's ability to provide such services. The
Non-interested Directors considered the foregoing factors with respect to the
Fund.
On July 29, 1997, the Directors of the Fund, including the Non-interested
Directors of the Fund, approved the New Investment Management Agreement.
INFORMATION CONCERNING THE TRANSACTIONS AND ZURICH
Under the Transaction Agreement, Zurich will pay $866.7 million in cash to
acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will then transfer a
9.6% fully diluted equity interest in Scudder Kemper to a compensation pool for
the benefit of Scudder and ZKI employees, as well as cash and warrants on Zurich
shares for award to Scudder employees, in each case subject to five-year vesting
schedules. After giving effect to the Transactions, current Scudder stockholders
will have a 29.6% fully diluted equity interest in Scudder Kemper and Zurich
will have a 69.5% fully diluted interest in Scudder Kemper. Scudder's name will
be changed to Scudder Kemper Investments, Inc.
The purchase price for Scudder or for ZKI in the Transactions is subject to
adjustment based on the impact to revenues of non-consenting clients, and will
be reduced if the annualized investment management fee revenues (excluding the
effect of market changes, but taking into account new assets under management)
from clients at the time of closing, as a percentage of such revenues as of June
30, 1997 (the "Revenue Run Rate Percentage"), is less than 90%.
At the closing, Zurich and the other stockholders of Scudder Kemper will
enter into a Second Amended and Restated Security Holders Agreement (the "New
SHA"). Under the New SHA, Scudder stockholders will be entitled to designate
three of the seven members of the Scudder Kemper board and two of the four
members of an Executive Committee, which will be the primary management-level
committee of Scudder Kemper. Zurich will be entitled to designate the other four
members of the Scudder Kemper board and other two members of the Executive
Committee.
6
<PAGE> 13
The names, addresses and principal occupations of the initial Scudder-
designated directors of Scudder Kemper are as follows: Lynn S. Birdsong, 345
Park Avenue, New York, New York, Managing Director of Scudder; Cornelia M.
Small, 345 Park Avenue, New York, New York, Managing Director of Scudder; and
Edmond D. Villani, 345 Park Avenue, New York, New York, President, Chief
Executive Officer and Managing Director of Scudder.
The names, addresses and principal occupations of the initial Zurich-
designated directors of Scudder Kemper are as follows: Lawrence W. Cheng,
Mythenquai 2, Zurich, Switzerland, Chief Investment Officer for Investments and
Institutional Asset Management and the corporate functions of Securities and
Real Estate for Zurich; Steven M. Gluckstern, Mythenquai 2, Zurich, Switzerland,
responsible for Reinsurance, Structured Finance, Capital Market Products and
Strategic Investments, and a member of the Corporate Executive Board of Zurich;
Rolf Hueppi, Mythenquai 2, Zurich, Switzerland, Chairman of the Board and Chief
Executive Officer of Zurich; and Markus Rohrbasser, Mythenquai 2, Zurich,
Switzerland, Chief Financial Officer and member of the Corporate Executive Board
of Zurich.
The initial Scudder-designated Executive Committee members will be Messrs.
Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.
The New SHA requires the approval of a majority of the Scudder-designated
directors for certain decisions, including changing the name of Scudder Kemper,
effecting a public offering before April 15, 2005, causing Scudder Kemper to
engage substantially in non-investment management and related business, making
material acquisitions or divestitures, making material changes in Scudder
Kemper's capital structure, dissolving or liquidating Scudder Kemper, or
entering into certain affiliated transactions with Zurich. The New SHA also
provides for various put and call rights with respect to Scudder Kemper stock
held by current Scudder employees, limitations on Zurich's ability to purchase
other asset management companies outside of Scudder Kemper, rights of Zurich to
repurchase Scudder Kemper stock upon termination of employment of Scudder Kemper
personnel, and registration rights for stock held by continuing Scudder
stockholders.
The Transactions are subject to a number of conditions, including approval
by Scudder stockholders; the Revenue Run Rate Percentages of Scudder and ZKI
being at least 75%; Scudder and ZKI having obtained director and stockholder
approvals from U.S.-registered funds representing 90% of assets of such funds
under management as of June 30, 1997; the absence of any restraining order or
injunction preventing the Transactions, or any litigation challenging the
Transactions that is reasonably likely to result in an injunction or
invalidation of the Transactions; and the continued accuracy of the
representations and warranties contained in the Transaction Agreement. The
Transactions are expected to close during the fourth quarter of 1997.
7
<PAGE> 14
The information set forth above concerning the Transactions has been
provided to the Fund by Scudder, and the information set forth below concerning
Zurich has been provided to the Fund by Zurich.
Founded in 1872, Zurich is a multinational, public corporation organized
under the laws of Switzerland. Its home office is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services,
and have branch offices and subsidiaries in more than 40 countries throughout
the world. The Zurich Insurance Group is particularly strong in the insurance of
international companies and organizations. Over the past few years, Zurich's
global presence, particularly in the United States, has been strengthened by
means of selective acquisitions.
DESCRIPTION OF THE CURRENT INVESTMENT MANAGEMENT AGREEMENT
Under the Current Investment Management Agreement, Scudder provides the
Fund with continuing investment management services. The Investment Manager
makes investment decisions, prepares and makes available research and
statistical data and supervises the acquisition and disposition of securities by
the Fund, 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. The Investment Manager assists 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. The Investment Manager is required to maintain or
cause to be maintained for the Fund all books and records required to be
maintained under the 1940 Act, and to furnish or cause to be furnished all
required reports or other information under Brazilian securities laws, to the
extent such books and records are not maintained by the Fund's custodian or
other agents of the Fund. The Investment Manager also supplies the Fund with
office space in New York and furnishes clerical services in the United States
related to research, statistical and investment work. The Investment Manager
renders 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
Fund stockholders, preparing and making filings with the Securities and Exchange
Commission 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 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. The Investment Manager agrees to pay reasonable salaries, fees and
expenses of the Fund's officers and employees and any fees and expenses of the
Fund's directors who are directors, officers or employees of the Investment
Manager, except that the Fund bears travel expenses (or an appro-
8
<PAGE> 15
priate portion of those expenses) of directors and officers of the Fund who are
directors, officers or employees of the Investment Manager to the extent that
such expenses relate to attendance at meetings of the Board of Directors or any
committees of or advisors to the Board. During the Fund's most recent fiscal
year, 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 the Investment Manager.
Under the Current Investment Management Agreement the Fund pays or causes
to be paid all of its other expenses, including, among others, the following:
organization and certain offering expenses (including out-of-pocket expenses,
but not including overhead or employee costs of the Investment Manager or of any
one or more organizations retained by the Fund or by the Investment Manager as a
Brazilian administrator or adviser of the Fund) legal expenses; auditing and
accounting expenses; telephone, facsimile, postage and other communications
expenses; taxes and governmental fees; stock exchange listing fees; fees, dues
and expenses incurred 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 related 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; expenses of the
dividend reinvestment and cash purchase plan (except for brokerage expenses paid
by participants in such plan); costs of stationery; any litigation expenses; and
costs of shareholders' and other meetings.
In return for the services provided by the Investment Manager as investment
manager, and the expenses it assumes under the Current Investment Management
Agreement (which takes into account the reduction in investment management fees
payable to the Investment Manager through the addition of a breakpoint such that
fees on amounts in excess of $500 will be reduced from 1.00% per annum to 0.90%,
effective as of October 28, 1997), the Fund will pay the Investment Manager 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 and including $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, 1.00% per annum of the value of the Fund's
average weekly net assets from $300 million to $500 million, and 0.90% per annum
of the value of the Fund's average weekly net assets in excess of $500 million.
This fee is higher than advisory fees paid by most other investment companies,
primarily because of the Fund's objective of investing in Brazilian securities
and the additional time and expense required of
9
<PAGE> 16
the Investment Manager in pursuing such objective. Under the Current Investment
Management Agreement, the Investment Manager may retain the services of others,
including a Brazilian adviser, but at no additional cost to the Fund, in
connection with its services to the Fund. During the fiscal year ended December
31, 1996, the fees paid to the Investment Manager, pursuant to the investment
management, advisory and administration agreement in effect prior to the
reduction of investment management fees, amounted to $4,679,023. For the period
January 1, 1996 to October 29, 1996, the Investment Manager agreed not to charge
the Fund an amount equal to 0.01% of average weekly net assets in excess of $300
million. The portion of the fee not charged to the Fund for such period amounted
to $82,941.
Under the Current Investment Management Agreement, the Investment Manager
is permitted to provide investment advisory services to other clients, including
clients which may invest in securities of Brazilian issuers and, in providing
such services, may use information furnished by advisors and consultants to the
Fund and others. Conversely, information furnished by others to the Investment
Manager in providing services to other clients may be useful to the Investment
Manager in providing services to the Fund.
The Current Investment Management Agreement may be terminated at any time
without payment of penalty by the Board of Directors, by vote of holders of a
majority of the outstanding voting securities of the Fund, or by the Investment
Manager on 60 days' written notice, but only after written notice to the Fund
and to the Brazilian Comissao de Valores Mobiliarios of not less than 60 days
(or such longer period as may be required by regulation). The Current Investment
Management Agreement automatically terminates in the event of its assignment (as
defined under the 1940 Act), provided that an assignment to a corporate
successor of all or substantially all of the Investment 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 Investment Manager's business
shall not be deemed to be an assignment for these purposes.
The Current Investment Management Agreement provides that the Investment
Manager is not liable for any act or omission, error of judgment or mistake of
laws or for any loss suffered by the Fund in connection with matters to which
the Investment Management Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Investment
Manager in the performance of its duties or from reckless disregard by the
Investment Manager of its obligations and duties under the Current Investment
Management Agreement.
Scudder has acted as the Investment Manager for the Fund since the Fund
commenced operations on September 25, 1987. The Current Investment Management
Agreement was last approved by the Board on July 29, 1997, at which meeting the
Board voted to reduce the fee paid to the Investment Manager as described above.
The investment management, advisory and administration agreement dated as of
October 30, 1996 (the agreement in effect prior to the
10
<PAGE> 17
reduction of investment management fees) was last approved by the stockholders
of the Fund on October 29, 1996. The Current Investment Management Agreement
continues in effect until October 28, 1998. The purpose of the last submission
to stockholders was to approve a new fee structure resulting from the
termination of the Research and Advisory Agreement with Banco Icatu S.A.
THE NEW INVESTMENT MANAGEMENT AGREEMENT
The New Investment Management Agreement for the Fund will be dated as of
the date of the consummation of the Transactions, which is expected to occur in
the fourth quarter of 1997, but in no event later than February 28, 1998. The
New Investment Management Agreement will be in effect for an initial term ending
on the date which is one year from the date of consummation of the Transactions,
and may continue thereafter from year to year only if specifically approved at
least annually by the vote of "a majority of the outstanding voting securities"
of the Fund, or by the Board and, in either event, the vote of a majority of the
Non-interested Directors, cast in person at a meeting called for such purpose.
In the event that stockholders of the Fund do not approve the New Investment
Management Agreement, the Current Investment Management Agreement will remain in
effect until the closing of the Transactions, at which time it would terminate.
In such event, the Board of the Fund will take such action as it deems to be in
the best interest of the Fund and its stockholders. In the event the
Transactions are not consummated, Scudder will continue to provide services to
the Fund in accordance with the terms of the Current Investment Management
Agreement for such periods as may be approved at least annually by the Board,
including a majority of the Non-interested Directors.
DIFFERENCES BETWEEN THE CURRENT AND NEW INVESTMENT MANAGEMENT
AGREEMENTS
The New Investment Management Agreement is substantially the same as the
Current Investment Management Agreement in all material respects. The principal
changes that have been made are summarized below. The New Investment Management
Agreement reflects conforming changes that have been made in order to promote
consistency among all the funds advised by Scudder and to permit ease of
administration. For example, it is proposed that the New Investment Management
Agreement contain provisions that provide that Scudder Kemper shall use its best
efforts to seek the best overall terms available in executing transactions for
the Fund and selecting brokers and dealers and shall consider on a continuing
basis all factors it deems relevant, including the consideration of the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to the Fund and/or other accounts
over which Scudder Kemper or an affiliate exercises investment discretion. In
addition, with respect to the allocation of investment and sale opportunities
among the Fund and other accounts or funds managed by Scudder Kemper, the New
Investment Management Agreement provide that Scudder Kemper shall allocate such
opportunities in accor-
11
<PAGE> 18
dance with procedures believed by Scudder Kemper to be equitable to each entity.
It is proposed that the New Investment Management Agreement will also clarify
that such agreement supersedes all prior agreements.
INVESTMENT MANAGER
Scudder is one of the most experienced investment counsel firms in the
United States. It was established in 1919 as a partnership and was restructured
as a Delaware corporation in 1985. The principal source of Scudder's income is
professional fees received from providing continuing investment advice. Scudder
provides investment counsel for many individuals and institutions, including
insurance companies, endowments, industrial corporations and financial and
banking organizations.
Scudder is a Delaware corporation. Daniel Pierce* is the chairman of the
Board of Scudder, Edmond D. Villani# is 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@, John T. Packard+, Kathryn L. Quirk#, Cornelia M.
Small# and Stephen A. Wohler* are the other members of the Board of Directors of
Scudder (see footnote for symbol key). 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 of the beneficial owners of
such securities (the "Representatives"), pursuant to a Security Holders'
Agreement among Scudder, the beneficial owners of securities of Scudder and such
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocations will be at net book value in cash
transactions. All Managing Directors of Scudder own voting and nonvoting stock
and all Principals of Scudder own nonvoting stock.
Directors, officers and employees of Scudder from time to time may enter
into transactions with various banks, including the Fund's custodian bank. It is
Scudder's opinion that the terms and conditions of those transactions will not
be influenced by existing or potential custodial or other Fund relationships.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder,
computes net asset value for the Fund and provides fund accounting services for
- - - ------------------------------
* 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
12
<PAGE> 19
the Fund. Scudder Service Corporation ("SSC"), also a subsidiary of Scudder, is
the shareholding agent for the Fund. For the fiscal year ended December 31,
1996, the fees paid to SFAC and SSC by the Fund aggregated $231,902 and $15,000,
respectively. SFAC and SSC will continue to provide fund accounting and
shareholding services to the Fund under the current arrangements if the New
Investment Management Agreement is approved.
Exhibit B sets forth the fees and other information regarding other
investment companies advised by Scudder.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
To the maximum extent feasible, Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc., Two International Place,
Boston, Massachusetts 02110 (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.
In selecting brokers and dealers with which to place portfolio transactions for
the Fund, Scudder will not consider sales of shares of funds currently advised
by ZKI, although it may place such transactions with brokers and dealers that
sell shares of funds currently advised by ZKI. The Distributor receives no
commissions, fees or other remuneration from the Fund for this service.
Allocation of portfolio transactions is supervised by Scudder.
Banco de Boston S.A., Rua Libero Badaro, 501-parte, Sao Paulo, SP, Brazil
(the "Administrator"), acts as administrator to the Fund pursuant to an
Administration Agreement. During the fiscal year ended December 31, 1996, the
Administrator was paid $50,733.
REQUIRED VOTE
Approval of this Proposal requires the affirmative vote of a "majority of
the outstanding voting securities" of the Fund. The Directors recommend that the
stockholders vote in favor of this Proposal 1.
PROPOSAL 2: ELECTION OF DIRECTORS
Persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies in favor of the election of the four
nominees listed below as Nominees for Director of the Fund to serve for the
stipulated terms, 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.
13
<PAGE> 20
INFORMATION CONCERNING NOMINEES
The following table sets forth certain information concerning each of the
nominees as 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. For election of
Directors at the Meeting, the Board of Directors has approved the nomination of
the individuals listed below.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED AND %
PRESENT OFFICE WITH THE FUND, OF TOTAL
NAME (AGE) PRINCIPAL OCCUPATION OR DIRECTOR OUTSTANDING ON
----------- EMPLOYMENT AND DIRECTORSHIPS SINCE JUNE 30, 1997 (1)
---------------------------------- -------- -----------------
<S> <C> <C> <C>
CLASS II NOMINEES TO SERVE UNTIL 2000 ANNUAL MEETING OF STOCKHOLDERS
WILSON NOLEN (70) Consultant; Trustee, Cultural 1987 17,266
Institutions Retirement Fund,
Inc., New York Botanical Garden,
Skowhegan School of Painting &
Sculpture; Director, Ecohealth,
Inc. (biotechnology company)
(until 1996). Dr. Nolen serves on
the boards of an additional 20
funds managed by Scudder.
KENNETH C. FROEWISS (51) Adjunct Professor of Finance, 1997 --
Stern School of Business, New York
University; Managing Director,
J.P. Morgan (until 1996).
CLASS III NOMINEE TO SERVE UNTIL 1998 ANNUAL MEETING OF STOCKHOLDERS
HAROLD WILLIAMS () President and Chief Executive -- --
Officer, J. Paul Getty Trust;
Director, California Endowment;
Director, Sun-America; and
Director, Times-Mirror.
CLASS I NOMINEE TO SERVE UNTIL 1999 ANNUAL MEETING OF STOCKHOLDERS
WILLIAM H. LUERS (68) President, the Metropolitan Museum -- --
of Art; Director; IDEX Corporation
(liquid handling equipment
manufacturer), Wickes Lumber
Company (building materials),
Transco Energy Company (natural
gas transmission company) (until
1995) and the Discount Corporation
of New York (bond trading) (until
1993). Mr. Luers serves on the
boards of an additional 11 funds
managed by Scudder.
</TABLE>
INFORMATION CONCERNING CONTINUING DIRECTORS
The Board of Directors is divided into three classes with each Directors
serving for a term of three years. The following table sets forth certain
information regarding the Directors. Unless otherwise noted, each Director has
engaged
14
<PAGE> 21
in the principal occupation listed in the following table for more than five
years, but not necessarily in the same capacity.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED AND %
PRESENT OFFICE WITH THE FUND, OF TOTAL
NAME (AGE) PRINCIPAL OCCUPATION OR DIRECTOR OUTSTANDING ON
----------- EMPLOYMENT AND DIRECTORSHIPS SINCE JUNE 30, 1997 (1)
---------------------------------- -------- -----------------
<S> <C> <C> <C>
CLASS III DIRECTORS SERVING UNTIL 1998 ANNUAL MEETING OF STOCKHOLDERS
JURIS PADEGS (65)* Chairman of the Board; Advisory 1987 2,161
Managing Director of Scudder,
Stevens & Clark, Inc. Mr. Padegs
serves on the board of one
additional fund managed by
Scudder.
RONALDO A. DA FROTA NOGUEIRA Director and Chief Executive 1987 3,504
(58) Officer, IMF Editora Ltda.
(financial publisher). Mr.
Nogueira serves on the boards of
an additional three funds managed
by Scudder.
CLASS I DIRECTORS SERVING UNTIL 1999 ANNUAL MEETING OF STOCKHOLDERS
EDGAR R. FIEDLER (68)* Senior Fellow and Economic 1987 8,318
counselor, The Conference Board,
Inc.; Director: The Stanley Works
(manufacturer of tools and
hardware), Zurich American
Insurance Company (insurance
company) (until 1997), Harris
Insight Funds and Emerging Mexico
Fund. Mr. Fiedler serves on the
boards of an additional 26 funds
managed by Scudder.
ROBERTO TEIXEIRA DA COSTA President, Brasilpar Ltda. 1993 --
(62) (financial consulting and asset
management); Chairman, CEAL (Latin
American Businessmen Council), and
Director of eight Brazilian listed
and unlisted companies.
All Directors and Officers 34,348(2)
as a Group
</TABLE>
- - - ------------------------------
* Directors considered by the Fund and its counsel to be "interested persons"
(as defined in the 1940 Act) of the Fund or of its investment manager. Mr.
Padegs is deemed to be an interested person because of his affiliation with
the Fund's investment manager, Scudder, and because he is an officer of the
Fund. Mr. Fiedler is now deemed to be an interested person because of his
affiliation with Zurich American Insurance Company, however, prior to the
Transactions, he was not deemed to be an interested person.
(1) The information as to beneficial ownership is based on statements furnished
to the Fund by each Director. Unless otherwise noted, beneficial ownership
is based on sole voting and investment power. Each Director or Nominee's
individual shareholdings constitutes less than 1/4 of 1% of the shares
outstanding. As a group, the Directors, nominees and officers own less than
1/4 of 1% of the shares of the Fund.
(2) The total for the group includes 34,108 shares held with sole investment and
voting power and 240 shares held with shared investment and voting power.
15
<PAGE> 22
Nicholas Bratt, who is currently a Director of the Fund, will resign
effective as of the date of the Meeting. Mr. Bratt will remain President of the
Fund.
To the best of the Fund's knowledge, as of June 30, 1997, no person owned
beneficially more than 5% of the outstanding shares of the Fund.
In 1996, Robert Strougo, alleging that he is a shareholder of the Fund,
brought suit in the United States District Court for the Southern District of
New York, allegedly on behalf of the Fund as well as on behalf of an alleged
class of similarly situated shareholders, against Messrs. Padegs, Bratt,
Fiedler, Teixeira da Costa, Nogueira, Nolen and Villani and against Scudder. The
complaint alleges among other things that the director defendants breached their
fiduciary duties to the Fund in 1995 by approving a rights offering in which the
Fund issued transferable rights to its shareholders, entitling them to acquire
shares at a discount from the then current market price. The complaint seeks,
among other things, declaratory relief and damages against the director
defendants in favor of the Fund. All of the defendants, including the Fund as a
nominal defendant with respect to the plaintiff's purported derivative claims,
moved to dismiss the complaint. The District Court in May 1996 dismissed the
class action claims, dismissed the claims on behalf of the Fund against Mr. da
Costa, but denied the motion to dismiss the claims on behalf of the Fund as to
the other director defendants and Scudder.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
and Section 30(h) of the 1940 Act, as applied to a fund, require the fund's
officers, Directors, investment manager or adviser, affiliates of the investment
manager or adviser, and persons who beneficially own more than 10% 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 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, 1996, all filing requirements applicable to its Reporting
Persons were complied with except that Forms 3 on behalf of the following
subsidiaries of Scudder were filed late: Scudder Fund Accounting Corporation;
Scudder Realty Holdings Corporation; Scudder, Stevens & Clark Asia Limited;
Scudder Canada Investor Services L.T.D.; Scudder Defined Contribution Services,
Inc.; Scudder Capital Stock Corporation; SIS Investment Corporation; SRV
Investment Corporation; Scudder Cayman Ltd.; Scudder, Stevens & Clark Australia
Limited; and Scudder Realty Holdings (II) L.L.C.
16
<PAGE> 23
COMMITTEES OF THE BOARD--BOARD MEETINGS
The Board of the Fund has both an Audit Committee and a Committee on
Independent Directors, the responsibilities of which are described below. The
Board of the Fund met four times during the Fund's most recently completed
fiscal year. Each then current director attended at least 75% of the total
number of meetings of the Board and the committees of which they served as
regular members that were held during that period, except Mr. Bratt who attended
50% of the meetings of the Board of Directors and related committees on which he
serves.
AUDIT COMMITTEE
The Board has an Audit Committee consisting of the Non-interested
Directors. 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. The Audit Committee met once during the fiscal year ended December
31, 1996
COMMITTEE ON INDEPENDENT DIRECTORS
The Board has a Committee on Independent Directors consisting of all the
Non-interested Directors. The Committee is charged with the duty of making all
nominations for Non-interested Directors and consideration of other related
matters. Stockholders' recommendations as to nominees received by management are
referred to the Committee for its consideration and action. The Committee met
once during the fiscal year ended December 31, 1996.
EXECUTIVE OFFICERS
In addition to Mr. Padegs, a Director who is also an officer of the Fund,
the following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
FUND;
PRINCIPAL OCCUPATION OR YEAR FIRST BECAME
NAME EMPLOYMENT(1) AN OFFICER(2)
----- ------------------------- -----------------
<S> <C> <C>
Nicholas Bratt (49) President; Managing 1987
Director of Scudder,
Stevens, & Clark, Inc.
Edmund B. Games, Jr.(59) Vice President; Managing 1987
Director of Scudder,
Stevens & Clark, Inc.
Jerard K. Hartman (64) Vice President; Managing 1987
Director of Scudder,
Stevens & Clark, Inc.
</TABLE>
17
<PAGE> 24
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
FUND;
PRINCIPAL OCCUPATION OR YEAR FIRST BECAME
NAME EMPLOYMENT(1) AN OFFICER(2)
----- ------------------------- -----------------
<S> <C> <C>
David S. Lee (63) Vice President; Managing 1987
Director of Scudder,
Stevens & Clark, Inc.
Thomas F. McDonough (50) Vice President and 1987
Secretary; Principal of
Scudder, Stevens &
Clark, Inc.
Pamela A. McGrath (43) Vice President and 1990
Treasurer; Managing
Director of Scudder,
Stevens & Clark, Inc.
Edward J. O'Connell (52) Vice President and 1987
Assistant Treasurer;
Principal of Scudder,
Stevens & Clark, Inc.
Kathryn L. Quirk (44) Vice President and 1987
Assistant Secretary;
Managing Director of
Scudder, Stevens &
Clark, Inc.
</TABLE>
- - - ------------------------------
(1) Unless otherwise stated, all of the Executive Officers have been associated
with their respective companies
(2) The President, Treasurer and Secretary each holds office until his or her
successor has been duly elected and qualified, and all other officers hold
offices in accordance with the By-laws of the Fund.
TRANSACTIONS WITH, AND REMUNERATION OF, DIRECTORS AND OFFICERS
The aggregate direct remuneration paid by the Fund to Non-interested
Directors was $107,032, including expenses, during the fiscal year ended
December 31, 1996. Each such Non-interested Director currently receives fees,
paid by the Fund, of $750 per regular Directors' meeting attended. Each Non-
interested Director currently receives 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 Non-interested Director also receives
$250 per committee meeting attended (other than Audit Committee meetings and
meetings held for the purposes of considering arrangements between the Fund and
the Investment Manager or an affiliate of the Investment Manager, for which such
Non-interested Director receives a fee of $750). In addition, a Special
Litigation Committee formed by the Board for the purpose of reviewing the
allegations in the lawsuit styled Strougo v. Padegs. Messrs. de Costa and
Froewiss, each a Non-interested Director, are members of the Special Litigation
Committee. Each such Director receives an annual fee of $35,000.
Scudder supervises the Fund's investments, pays the compensation and
certain expenses of its personnel who serve as Directors and Officers of the
18
<PAGE> 25
Fund and receives an investment management fee for its services. Certain 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, although
the Fund makes no direct payments to them other than for reimbursement of travel
expenses in connection with the attendance at Board of Directors and committee
meetings.
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 each Director of the
Fund during the Fund's most recently completed fiscal year ended December
31, 1996.
Columns (3) and (4) Pension or retirement benefits accrued or proposed
to be paid by the Fund.
Column (5) Total compensation received by each Director from funds
managed by Scudder (collectively, the "Fund Complex") during the calendar
year 1996.
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.
COMPENSATION TABLE
<TABLE>
<CAPTION>
(5)
(3) (4) TOTAL
(2) PENSION OR ESTIMATED COMPENSATION
AGGREGATE RETIREMENT ANNUAL FROM THE FUND
(1) COMPENSATION BENEFITS ACCRUED BENEFITS AND
NAME OF PERSON, FROM THE AS PART OF FUND UPON FUND COMPLEX
POSITION FUND COMPLEX EXPENSES RETIREMENT PAID TO DIRECTOR
- - - ------------------------- ------------ ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
Roberto Teixeira da $ 16,600 N/A N/A $16,600
Costa, Director (1 fund)
Edgar R. Fiedler $ 12,000 N/A N/A $108,083*
Director (20 funds)#
Ronaldo A. da Frota $ 16,600 N/A N/A $49,775
Nogueira, Director (4 funds)
Wilson Nolen, $ 12,250 N/A N/A $165,608
Director (17 funds)#
</TABLE>
- - - ------------------------------
* For 1996, Mr. Fiedler's total includes $17,906 accrued in a deferred
compensation program for serving on the Board of Scudder Institutional Fund,
Inc., which has five active portfolios and $23,020 accrued in a deferred
compensation program for serving on the Board of Scudder Fund, Inc., which
had five active portfolios during 1996.
# This does not include membership on the Boards of funds which commenced
operations in 1996.
19
<PAGE> 26
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. The Directors of the Fund recommend that the stockholders vote in favor
of each of the nominees listed in this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION
OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Fund, including a majority of the Non-
interested Directors, has selected Price Waterhouse LLP to act as independent
accountants for the Fund for the Fund's current fiscal year ending December 31,
1997. 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 or management.
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. The Directors recommend that the stockholders of the Fund vote in favor
of this Proposal 3.
ADDITIONAL INFORMATION
GENERAL
Aside from the ordinary expenses incurred by the Fund in conducting an
annual meeting, the cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement and all other costs incurred in
connection with the solicitation of proxies, including any additional
solicitation made by letter, telephone or telegraph, will be paid by Scudder. In
addition to solicitation by mail, certain officers and representatives of the
Fund, officers and employees of Scudder and certain financial services firms and
their representatives, who will receive no extra compensation for their
services, may solicit proxies by telephone, telegram or personally.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Meeting date approaches, certain
stockholders of the Fund may receive a telephone call from a representative of
SCC if their vote has not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from stockholders of the Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. These
20
<PAGE> 27
procedures have been reasonably designed to ensure that the identity of the
stockholder casting the vote is accurately determined and that the voting
instructions of the stockholder are accurately determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each stockholder's full name, address, social security or
employer identification number, title (if the stockholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned
and to confirm that the stockholder has received the proxy statement and card in
the mail. If the information solicited agrees with the information provided to
SCC, then the SCC representative has the responsibility to explain the process,
read the proposals listed on the proxy card, and ask for the stockholder's
instructions on each proposal. The SCC representative, although he or she is
permitted to answer questions about the process, is not permitted to recommend
to the stockholder how to vote, other than to read any recommendation set forth
in the proxy statement. SCC will record the stockholder's instructions on the
card. Within 72 hours, the stockholder will be sent a letter or mailgram to
confirm his or her vote and asking the stockholder to call SCC immediately if
his or her instructions are not correctly reflected in the confirmation.
If the stockholder wishes to participate in the Meeting, but does not wish
to give his or her proxy by telephone, the stockholder may still submit the
proxy card originally sent with the proxy statement or attend in person. Should
stockholders require additional information regarding the proxy or replacement
proxy cards, they may contact SCC toll-free at 1-800-733-8481. Any proxy given
by a stockholder, whether in writing or by telephone, is revocable.
PROPOSALS OF STOCKHOLDERS
Stockholders wishing to submit proposals to be presented at the 1998
meeting of stockholders of the Fund should send their written proposals to the
Secretary of the Fund, c/o Scudder, Stevens & Clark, Inc., 345 Park Avenue, New
York, New York 10154, within a reasonable time before the solicitation of
proxies for such meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors of the Fund is not aware of any matters that will be
presented for action at the Meeting other than the matters set forth herein.
Should any other matters requiring a vote of stockholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote the
shares as to any such other matters in accordance with their best judgment in
the interest of the Fund.
21
<PAGE> 28
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Directors,
Thomas F. McDonough
Secretary
22
<PAGE> 29
EXHIBIT A
INVESTMENT ADVISORY, MANAGEMENT AND
ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of between THE BRAZIL FUND,
INC., a Maryland corporation (herein referred to as the "Fund"), and SCUDDER
KEMPER INVESTMENTS, 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, records, reports and any
other information 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 on Form N-2 under the Securities Act of 1933, as
amended, and 1940 Act, as amended from time to time, providing assistance
in certain accounting and tax matters and investor and public relations,
monitoring the valuation of portfolio securities, assisting in the
calculation of net asset value and calculation and payment of distributions
to stockholders, and overseeing arrangements with the Fund's
<PAGE> 30
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 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 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); fees payable
to the Manager and to any advisor or consultants, including an advisory
board, if applicable; 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
A-2
<PAGE> 31
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 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, 1.00% per
annum of the Fund's average weekly net assets from $300 million up to and
including $500 million and 0.90% per annum of the Fund's average weekly net
assets in excess of $500 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. Upon any termination of this Agreement
before the end of a month, the fee for such part of that month shall be
prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement.
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, as amended from time to time.
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. In executing transactions for the Fund and selecting brokers or
dealers, the Manager shall use its best efforts to seek the best overall
terms available. In assessing the best overall terms available for any Fund
transaction, the Manager shall consider on a continuing basis all factors
it deems relevant, including, but not limited to, breadth of the market in
the security,
A-3
<PAGE> 32
the price of the security, the financial condition and execution capability
of the broker or dealer and the reasonableness of any commission for the
specific transaction. In selecting brokers or dealers to execute a
particular transaction and in evaluating the best overall terms available,
the Manager may consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Fund and/or other accounts over which the Manager or an
affiliate exercises investment discretion.
6. 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 administrator and
others as contemplated by sections 1 and 2 of this Agreement by advisors
and consultants to the Fund and others; nor shall anything herein be
construed as constituting the Manager as an agent of the Fund.
Whenever the Fund and one or more other accounts or investment
companies advised by the Manager have available funds for investment,
investments suitable and appropriate for each shall be allocated in
accordance with procedures believed by the Manager to be equitable to each
entity. Similarly, opportunities to sell securities shall be allocated in a
manner believed by the Manager to be equitable. The Fund recognizes that in
some cases this procedure may adversely affect the size of the position
that may be acquired or disposed of for the Fund. In addition, the Fund
acknowledges that the persons employed by the Manager to assist in the
performance of the Manager's duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit
or restrict the right of the Manager or any affiliate of the Manager to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
7. 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.
A-4
<PAGE> 33
8. This Agreement shall remain in effect until the date which is one
year from the day and year first written above, 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 parties to this
agreement or interested persons of any party to this agreement, or of any
entity regularly furnishing investment advisory services with respect to
the Fund pursuant to an agreement with any party to this agreement, 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 of the National Monetary Council.
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 notice to the
Fund or the Manager shall be deemed given when received by the addressee.
9. 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 or rules and regulations adopted thereunder. 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 parties to this agreement or
interested persons of any party to this agreement, or of any entity
regularly furnishing investment advisory services with respect to the Fund
pursuant to an agreement with any party to this agreement, cast in person
at a meeting called for the purpose of voting on such approval.
10. This Agreement shall be construed in accordance with the laws of
the State of New York, without giving effect to the conflicts of laws
principles thereof, 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.
11. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it shall not
be
A-5
<PAGE> 34
necessary in making proof of this agreement to produce or account for more
than one such counterpart.
12. This Agreement supersedes all prior investment advisory,
management, and/or administration agreements in effect between the Fund and
the Manager.
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 KEMPER INVESTMENTS, INC.
By:
Title:
A-6
<PAGE> 35
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
MONEY MARKET
Scudder U.S. Treasury Money Fund Safety, liquidity, and stability of capital and, consistent 0.500% of net assets
therewith, current income.
Scudder Cash Investment Trust Stability of capital while maintaining liquidity of capital 0.500% to $250 million
and providing current income from money market securities. 0.450% next $250 million
0.400% next $500 million
0.350% thereafter
Scudder Money Market Series High level of current income consistent with preservation of 0.250% of net assets
capital and liquidity by investing in a broad range of
short-term money market instruments.
Scudder Government Money Market High level of current income consistent with preservation of 0.250% of net assets
Series capital and liquidity by investing exclusively in
obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities and in certain repurchase
agreements.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund Income exempt from regular federal income taxes and 0.500% to $500 million
stability of principal through investments in municipal 0.480% thereafter
securities.
Scudder Tax Free Money Market High level of current income consistent with preservation of 0.250% of net assets
Series capital and liquidity exempt from federal income tax by
investing primarily in high quality municipal obligations.
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
Scudder California Tax Free Money Stability of capital and the maintenance of a constant net 0.500% of net assets
Fund asset value of $1.00 per share while providing California
tax payers income exempt from both California personal and
regular federal income tax through investment in high
quality, short-term tax-exempt California municipal
securities.
Scudder New York Tax Free Money Stability of capital and income exempt from New York state 0.500% of net assets
Fund and New York City personal income taxes and regular federal
income tax through investment in high quality, short-term
municipal securities in New York.
TAX FREE
Scudder Limited Term Tax Free Fund High level of income exempt from regular federal income tax 0.600% of net assets
consistent with a high degree of principal stability.
Scudder Medium Term Tax Free Fund High level of income exempt from regular federal income tax 0.600% to $500 million
and limited principal fluctuation through investment 0.500% thereafter
primarily in high grade intermediate term municipal
securities.
Scudder Managed Municipal Bonds Income exempt from regular federal income tax primarily 0.550% to $200 million
through investments in high-grade long-term municipal 0.500% next $500 million
securities. 0.475% thereafter
Scudder High Yield Tax Free Fund High level of income, exempt from regular federal income 0.650% to $300 million
tax, from an actively managed portfolio consisting primarily 0.600% thereafter
of investment grade municipal securities.
Scudder California Tax Free Fund Income exempt from both California state personal income tax 0.625% to $200 million
and regular federal income tax primarily through investment 0.600% thereafter
grade municipal securities.
Scudder Massachusetts Limited Term A high level of income exempt from both Massachusetts 0.600% of net assets
Tax Free Fund personal income tax and regular federal income tax as is
consistent with a high degree of price stability.
</TABLE>
B-1
<PAGE> 37
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
Scudder Massachusetts Tax Free A high level of income exempt from both Massachusetts 0.600% of net assets
Fund personal income tax and regular federal income tax through
investment primarily in long-term investment-grade municipal
securities in Massachusetts.
Scudder New York Tax Free Fund Income exempt from New York state and New York City personal 0.625% to $200 million
income taxes and regular federal income tax through 0.600% thereafter
investment primarily in long-term investment-grade municipal
securities in New York.
Scudder Ohio Tax Free Fund Income exempt from Ohio personal income tax and regular 0.600% of net assets
federal income tax through investment primarily in
investment-grade municipal securities in Ohio.
Scudder Pennsylvania Tax Free Fund Income exempt from Pennsylvania personal income tax and 0.600% of net assets
regular federal income tax through investment primarily in
investment-grade municipal securities in Pennsylvania.
U.S. INCOME
Scudder Short Term Bond Fund High level of income consistent with a high degree of 0.600% to $500 million
principal stability through investments primarily in high 0.500% next $500 million
quality short-term bonds. 0.450% next $500 million
0.400% next $500 million
0.375% next $1 billion
0.350% thereafter
Scudder Zero Coupon 2000 Fund High investment returns over a selected period as is 0.600% of net assets
consistent with investment in U.S. Government securities and
the minimization of reinvestment risk.
Scudder GNMA Fund High current income and safety of principal primarily from 0.650% to $200 million
investment in U.S. Government mortgage-backed GNMA 0.600% next $300 million
securities. 0.550% thereafter
Scudder Income Fund A high level of income, consistent with the prudent 0.650% to $200 million
investment of capital, through a flexible investment program 0.600% next $300 million
emphasizing high-grade bonds. 0.550% thereafter
</TABLE>
B-2
<PAGE> 38
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
Scudder High Yield Bond Fund A high level of current income and capital appreciation 0.700% of net assets
through investment primarily in below investment-grade
domestic debt securities.
GLOBAL INCOME
Scudder Global Bond Fund Total return with an emphasis on current income by investing 0.750% to $1 billion
primarily in high-grade bonds denominated in foreign 0.700% thereafter
currencies and the U.S. dollar.
Scudder International Bond Fund Income primarily by investing in high-grade international 0.850% to $1 billion
bonds and protection and possible enhancement of principal 0.800% thereafter
value by actively managing currency, bond market and
maturity exposure and by security selection.
Scudder Emerging Markets Income High current income and, secondarily, long-term capital 1.000% of net assets
Fund appreciation by investing primarily in high-yielding debt
securities issued in emerging markets.
ASSET ALLOCATION
Scudder Pathway Conservative Current income and, secondarily, long-term growth of capital 0.000%
Portfolio by investing substantially in bond mutual funds, but will
have some exposure to equity mutual funds.
Scudder Pathway Balanced Portfolio Balance of growth and income by investing in a mix of money 0.000%
market, bond and equity mutual funds.
Scudder Pathway Growth Portfolio Long-term growth of capital by investing predominantly in 0.000%
equity mutual funds designed to provide long-term growth.
Scudder Pathway International Maximize total return by investing in a select mix of 0.000%
Portfolio established international and global Scudder Funds.
</TABLE>
B-3
<PAGE> 39
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
U.S. GROWTH AND INCOME
Scudder Balanced Fund A balance of growth and income from a diversified portfolio 0.700% of net assets
of equity and fixed income securities and long-term
preservation of capital through a quality oriented
investment approach designed to reduce risk.
Scudder Growth and Income Fund Long-term growth of capital, current income and growth of 0.600% to $500 million
income primarily from common stocks, preferred stocks and 0.550% next $500 million
securities convertible into common stocks. 0.500% next $500 million
0.475% next $500 million
0.450% next $1 billion
0.425% next $1 billion
0.405% thereafter
U.S. GROWTH
Scudder Large Company Value Fund Maximize long-term capital appreciation through a value 0.750% to $500 million
(formerly Scudder Capital Growth driven investment program emphasizing common stocks and 0.650% next $500 million
Fund) preferred stocks.
Scudder Value Fund Long-term growth of capital through investment in 0.700% of net assets
undervalued equity securities.
Scudder Small Company Value Fund Long-term growth of capital by investing primarily in 0.750% of net assets
undervalued equity securities of small U.S. companies.
Scudder Micro Cap Fund Long-term growth of capital by investing primarily in a 0.750% of net assets
diversified portfolio of U.S. micro-cap common stocks.
Scudder Classic Growth Fund Long-term growth of capital while keeping the value of its 0.700% of net assets
shares more stable than other growth mutual funds.
</TABLE>
B-4
<PAGE> 40
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
Scudder Large Company Growth Fund Long-term growth of capital through investment primarily in 0.700% of net assets
(formerly Scudder Quality Growth the equity securities of seasoned, financially strong U.S.
Fund) growth companies.
Scudder Development Fund Long-term growth of capital by investing primarily in equity 1.000% to $500 million
securities of emerging growth companies. 0.950% next $500 million
0.900% thereafter
Scudder 21st Century Growth Fund Long-term growth of capital by investing primarily in the 1.000% of net assets
securities of emerging growth companies poised to be leaders
in the 21st century.
GLOBAL GROWTH
Scudder Global Fund Long-term growth of capital through investment in a Effective 9/11/97
diversified
portfolio of marketable foreign and domestic securities, 1.000% to $500 million
primarily equity securities. 0.950% next $500 million
0.900% next $500 million
0.850% thereafter
Institutional International Equity Long-term growth of capital primarily through a diversified 0.900% of net assets
Portfolio portfolio of marketable foreign equity securities.
Scudder International Growth and Long-term growth of capital and current income primarily 1.000% of net assets
Income Fund from foreign equity securities
Scudder International Fund Long-term growth of capital primarily through a diversified 0.900% to $500 million
portfolio of marketable foreign equity securities. 0.850% next $500 million
0.800% next $1 billion
0.750% next $1 billion
0.700% thereafter
Scudder Global Discovery Fund Above-average capital appreciation over the long-term by 1.100% of net assets
investing primarily in the equity securities of small
companies located throughout the world.
Scudder Emerging Markets Growth Long-term growth of capital primarily through equity 1.25% of net assets
Fund investments in emerging markets around the globe.
</TABLE>
B-5
<PAGE> 41
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
Scudder Gold Fund Maximum return consistent with investing in a portfolio of 1.000% of net assets
gold-related equity securities and gold.
Scudder Greater Europe Growth Fund Long-term growth of capital through investment primarily in 1.000% of net assets
the equity securities of European companies.
Scudder Pacific Opportunities Fund Long-term growth of capital primarily through investment in 1.100% of net assets
the equity securities of Pacific Basin companies, excluding
Japan.
Scudder Latin America Fund Long-term capital appreciation through investment primarily Effective 9/11/97:
in the securities of Latin American issuers.
1.250% to $1 billion
1.150% thereafter
The Japan Fund, Inc. Long-term capital appreciation through investment primarily 0.850% to $100 million
in equity securities of Japanese companies. 0.750% next $200 million
0.700% next $300 million
0.650% thereafter
CLOSED-END FUNDS
The Argentina Fund, Inc. Long-term capital appreciation through investment primarily Adviser:
in equity securities of Argentine issuers. Effective 11/1/97
1.100% of net assets
Sub-Adviser:
Paid by Adviser.
0.160% of net assets
</TABLE>
B-6
<PAGE> 42
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
The Brazil Fund, Inc. Long-term capital appreciation through investment primarily 1.200% to $150 million
in equity securities of Brazilian issuers. 1.050% next $150 million
1.000% thereafter
Effective 10/29/97:
1.200% to $150 million
1.050% next $150 million
1.000% next $200 million
0.900% thereafter
Administrator:
Receives an annual
fee of $50,000
The Korea Fund, Inc. Long-term capital appreciation through investment primarily Advisor:
in equity securities of Korean issuers. 1.150% to $50 million
1.100% next $50 million
1.000% next $250 million
0.950% next $400 million
0.900% thereafter
Sub-Adviser -- Daewoo:
Paid by Adviser.
0.2875% to $50 million
0.275% next $50 million
0.250% next $250 million
0.2375% next $400 million
0.225% thereafter
The Latin America Dollar Income High level of current income and, secondarily, capital 1.200% of net assets
Fund, Inc. appreciation through investment principally in dollar-
denominated Latin American debt instruments.
Montgomery Street Income High level of current income consistent with prudent 0.500% to $150 million
Securities, Inc. investment risks through a diversified portfolio primarily 0.450% next $50 million
of debt securities. 0.400% thereafter
</TABLE>
B-7
<PAGE> 43
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
Scudder New Asia Fund, Inc. Long-term capital appreciation through investment primarily 1.250% to $75 million
in equity securities of Asian companies. 1.150% next $125 million
1.100% thereafter
Scudder New Europe Fund, Inc. Long-term capital appreciation through investment primarily 1.250% to $75 million
in equity securities of companies traded on smaller or 1.150% next $125 million
emerging European markets and companies that are viewed as 1.100% thereafter
likely to benefit from changes and developments throughout
Europe.
Scudder Spain and Portugal Fund, Long-term capital appreciation through investment primarily Adviser:
Inc. in equity securities of Spanish & Portuguese issuers
1.000% of net assets
Administrator:
0.200% of net assets
Scudder World Income Opportunities High income and, consistent therewith, capital appreciation. 1.200% of net assets
Fund, Inc.
INSURANCE PRODUCTS
Balanced Portfolio Balance of growth and income consistent with long-term 0.475% of net assets
preservation of capital through a diversified portfolio of
equity and fixed income securities.
Bond Portfolio High level of income consistent with a high quality 0.475% of net assets
portfolio of debt securities.
Capital Growth Portfolio Long-term capital growth from a portfolio consisting 0.475% to $500 million
primarily of equity securities. 0.450% thereafter
Global Discovery Portfolio Above-average capital appreciation over the long-term by 0.975% of net assets
investing primarily in the equity securities of small
companies located throughout the world.
Growth and Income Portfolio Long-term growth of capital, current income and growth of 0.475% of net assets
income.
</TABLE>
B-8
<PAGE> 44
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
International Portfolio Long-term growth of capital primarily through diversified 0.875% to $500 million
holdings of marketable foreign equity investments. 0.775% thereafter
Money Market Portfolio Stability of capital and, consistent therewith, liquidity of 0.370% of net assets
capital and current income.
FEE RATE PROGRAM ASSETS
-------- -----------------
AARP FUNDS
AARP High Quality Money Fund Current income and liquidity, consistent with maintaining 0.350% to $2 billion
stability and safety of principal, through investment in 0.330% next $2 billion
high quality securities. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of net assets
<CAPTION>
FEE RATE PROGRAM ASSETS
-------- -----------------
<S> <C> <C> <C>
AARP Balanced Stock and Bond Fund Long-term growth of capital and income, consistent with a 0.350% to $2 billion
stable share price, through investment in a combination of 0.330% next $2 billion
stocks, bonds and cash reserves. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of net assets
</TABLE>
B-9
<PAGE> 45
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
AARP Capital Growth Fund Long-term capital growth, consistent with a stable share 0.350% to $2 billion
price, through investment primarily in common stocks and 0.330% next $2 billion
securities convertible into common stocks. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.320% of net assets
</TABLE>
<TABLE>
<CAPTION>
FEE RATE PROGRAM ASSETS
-------- -----------------
<S> <C> <C> <C>
AARP Global Growth Fund Long-term growth of capital, consistent with a stable share 0.350% to $2 billion
price, through investment primarily in a diversified 0.330% next $2 billion
portfolio of equity securities of corporations worldwide. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.550% of net assets
<CAPTION>
FEE RATE PROGRAM ASSETS
-------- -----------------
<S> <C> <C> <C>
AARP Growth and Income Fund Long-term growth of capital and income, consistent with a 0.350% to $2 billion
stable share price, through investment primarily in common 0.330% next $2 billion
stocks and securities convertible into common stocks. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of net assets
</TABLE>
B-10
<PAGE> 46
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
AARP International Stock Fund Long-term growth of capital, consistent with a stable share 0.350% to $2 billion
price, through investment primarily in foreign equity 0.330% next $2 billion
securities. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.600% of net assets
</TABLE>
<TABLE>
<CAPTION>
FEE RATE PROGRAM ASSETS
-------- -----------------
<S> <C> <C> <C>
AARP Small Company Stock Fund Long-term growth of capital, consistent with a stable share 0.350% to $2 billion
price, through investment primarily in stocks of small U.S. 0.330% next $2 billion
companies. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.550% of net assets
AARP U.S. Stock Index Fund Long-term growth of capital, consistent with greater share 0.350% to $2 billion
price stability than a S&P 500 index fund, by taking an 0.330% next $2 billion
indexing approach to investing in common stocks, emphasizing 0.300% next $2 billion
higher dividend stocks while maintaining investment 0.280% next $2 billion
characteristics otherwise similar to the S&P 500 index. 0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.000% of net assets
</TABLE>
B-11
<PAGE> 47
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
AARP Bond Fund for Income High level of current income, consistent with greater share 0.350% to $2 billion
price stability than a long term bond, through investment 0.330% next $2 billion
primarily in investment-grade debt securities. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.280% of net assets
</TABLE>
<TABLE>
<CAPTION>
FEE RATE PROGRAM ASSETS
-------- -----------------
<S> <C> <C> <C>
AARP GNMA and U.S. Treasury Fund High level of current income, consistent with greater share 0.350% to $2 billion
price stability than a long-term bond, through investment 0.330% next $2 billion
principally in U.S. Government-guaranteed GNMA securities 0.300% next $2 billion
and U.S. Treasury obligations. 0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.120% of net assets
AARP High Quality Bond Fund High level of income, consistent with greater share price 0.350% to $2 billion
stability than a long-term bond, through investment 0.330% next $2 billion
primarily in a portfolio of high quality securities. 0.300% next $2 billion
0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of net assets
</TABLE>
B-12
<PAGE> 48
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE PROGRAM ASSETS
- - - ------------------------------------ ------------------------------------------------------------ -------- -----------------
<S> <C> <C> <C>
AARP Diversified Growth Portfolio Long-term growth of capital through investment primarily in There will be no fee as the
AARP stock mutual funds. manager will receive a fee
from the underlying funds.
AARP Diversified Income Portfolio Current income with modest capital appreciation through There will be no fee as the
investment primarily in AARP bond mutual funds. manager will receive a fee
from the underlying funds.
FEE RATE PROGRAM ASSETS
-------- -----------------
AARP High Quality Tax Free Money Current income exempt from federal income taxes and 0.350% to $2 billion
Fund liquidity, consistent with maintaining stability and safety 0.330% next $2 billion
of principal, through investment in high-quality municipal 0.300% next $2 billion
securities. 0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of net assets
AARP Insured Tax Free General Bond High level of income free from federal income taxes, 0.350% to $2 billion
Fund consistent with greater share price stability than a 0.330% next $2 billion
long-term municipal bond, through investment primarily in 0.300% next $2 billion
municipal securities covered by insurance. 0.280% next $2 billion
0.260% next $3 billion
0.250% next $3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of net assets
</TABLE>
B-13
<PAGE> 49
THE BRAZIL FUND, INC.
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- OCTOBER 28, 1997
The undersigned hereby appoints Edgar R. Fiedler, 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. (the
"Fund") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Fund 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 28, 1997 at 8:30 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.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management, Advisory and Administration
Agreement between the Fund and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Directors;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Kenneth C. Froewiss, William H. Luers, Wilson Nolen and Harold
Williams.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
[continued on other side]
<PAGE> 50
3. Ratification of the selection of Price Waterhouse LLP as the Fund's
independent accountants.
[ ] 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)
Dated, , 1997
-----------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
