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<PAGE> PAGE 2
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SIGNATURE THOMAS F. MCDONOUGH
TITLE SECRETARY
The Brazil Fund, Inc.
Stockholder Meeting Results
================================================================================
- --------------------------------------------------------------------------------
The Annual Meeting of Stockholders of the Fund was held on October 28, 1997, at
the offices of Scudder Kemper Investments, Inc. (formerly Scudder, Stevens &
Clark, Inc.), 25th Floor, 345 Park Avenue (at 51st Street), New York, New York
10154. The following matters were voted upon by stockholders (the resulting
votes for each matter are presented below).
1. To approve the new Investment Management, Advisory and Administration
Agreement between the Fund and Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-votes*
--- ------- ------- -----------------
8,150,794 1,438,390 40,133 0
2. To elect Directors.
Director: Number of Votes:
--------- ----------------
For Withheld
--- --------
Kenneth C. Froewiss 8,855,813 773,504
William H. Luers 8,848,223 781,094
Wilson Nolen 8,866,644 762,673
Harold Williams 8,857,026 772,291
Continuing Directors:
---------------------
Edgar R. Fiedler
Roberto Teixeira da Costa
Ronaldo A. da Frota Nogueira
Juris Padegs
3. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
8,182,333 677,347 769,637
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
INVESTMENT ADVISORY, MANAGEMENT AND
ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of December 31, 1997 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 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
<PAGE>
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
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.
2
<PAGE>
4. The Manager agrees that it will not make a short sale of any
capital stock of the Fund or purchase any share of the capital stock of the Fund
otherwise than for investment.
5. 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, 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.
3
<PAGE>
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
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.
4
<PAGE>
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:
5
<TABLE> <S> <C>
<ARTICLE>6
<LEGEND>
This schedule contains summary financial information extracted from the Brazil
Fund Annual Report for the fiscal year ended 12/31/97 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME>Brazil Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 226,019,075
<INVESTMENTS-AT-VALUE> 471,061,479
<RECEIVABLES> 2,005,128
<ASSETS-OTHER> 2,004,153
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 475,070,760
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,641,009
<TOTAL-LIABILITIES> 45,641,009
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 186,285,601
<SHARES-COMMON-STOCK> 16,256,783
<SHARES-COMMON-PRIOR> 16,229,987
<ACCUMULATED-NII-CURRENT> 1,280,001
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,170,438)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 245,034,587
<NET-ASSETS> 429,429,751
<DIVIDEND-INCOME> 15,842,987
<INTEREST-INCOME> 1,494,157
<OTHER-INCOME> 0
<EXPENSES-NET> 7,516,355
<NET-INVESTMENT-INCOME> 9,820,789
<REALIZED-GAINS-CURRENT> 34,941,748
<APPREC-INCREASE-CURRENT> 19,046,094
<NET-CHANGE-FROM-OPS> 63,808,631
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,290,328)
<DISTRIBUTIONS-OF-GAINS> (44,702,055)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 26,796
<NET-CHANGE-IN-ASSETS> 11,447,882
<ACCUMULATED-NII-PRIOR> 752,956
<ACCUMULATED-GAINS-PRIOR> 5,586,512
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,511,127
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,516,355
<AVERAGE-NET-ASSETS> 513,396,271
<PER-SHARE-NAV-BEGIN> 25.75
<PER-SHARE-NII> 0.60
<PER-SHARE-GAIN-APPREC> 3.33
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> (2.75)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 26.42
<EXPENSE-RATIO> 1.46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
To the Board of Directors and Shareholders of
The Brazil Fund, Inc.
In planning and performing our audit of the financial statements of The Brazil
Fund, Inc., (hereafter referred to as the "Fund") for the year ended December
31, 1997, we considered its internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, and not to provide assurance on internal
control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
control activities. Generally, control activities that are relevant to an audit
pertain to the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with generally accepted
accounting principles. Those control activities include the safeguarding of
assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of any
specific internal control components does not reduce to a relatively low level
the risk that errors or irregularities in amounts that would be material in
relation to the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving internal control,
including control activities for safeguarding securities, that we consider to be
material weaknesses as defined above as of December 31, 1997.
This report is intended solely for the information and use of management and the
Board of Directors of The Brazil Fund, Inc. and the Securities and Exchange
Commission.
Price Waterhouse LLP
February 12, 1998
