<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>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SCUDDER SPAIN AND PORTUGAL FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Declaration of Trust)
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] 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 identify 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[SCUDDER LOGO]
SCUDDER SPAIN AND PORTUGAL FUND, INC.
IMPORTANT NEWS
September 1997
FOR SCUDDER SPAIN AND PORTUGAL 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 and
the proposed new investment management, advisory and administration
agreement. The approval of the new investment management, advisory and
administration agreement is an important matter to be voted upon. THE BOARD
MEMBERS OF YOUR FUND, INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE FUND
OR SCUDDER, RECOMMEND THAT YOU VOTE FOR THIS PROPOSAL.
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.
Spain & Portugal
<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. The terms of the new investment
management, advisory and administration agreement are the same in all
material respects as the 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.
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 the proposal 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, ext. 488.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED WITH
THIS TRANSACTION?
A. No, Scudder will bear these costs.
(continues on inside back cover)
<PAGE> 4
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(S) PROMPTLY.
<PAGE> 5
[SCUDDER LOGO]
For more information, please call Shareholder Communications Corporation, your
Fund's information agent, at 1-800-733-8481, ext. 488.
Spain & Portugal
<PAGE> 6
[SCUDDER SPAIN/PORTUGAL LOGO]
345 Park Avenue
New York, New York 10154
SCUDDER SPAIN AND PORTUGAL FUND, INC.
September 2, 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.
THE BOARD MEMBERS OF YOUR FUND BELIEVE THAT THE PROPOSAL 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 SUCH PROPOSAL.
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,
<TABLE>
<S> <C>
/s/ Nicholas Bratt /s/ Daniel Pierce
Nicholas Bratt Daniel Pierce
President Chairman of the Board
</TABLE>
STOCKHOLDERS ARE URGED TO SIGN AND RETURN THE PROXY CARD(S) 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> 7
SCUDDER SPAIN AND PORTUGAL FUND, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of
Scudder Spain and Portugal Fund, Inc.:
Please take notice that a Special Meeting of Stockholders of Scudder Spain
and Portugal 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 21, 1997, at 10:00 a.m., Eastern time, for the
following purpose:
(1) To approve or disapprove a new investment management, advisory
and administration agreement between the Fund and Scudder
Kemper Investments, Inc.
The appointed proxies will vote on any other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of shares of common stock of the Fund at the close of
business on August 8, 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 the 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 the proposal.
By order of the Board of Directors,
Thomas F. McDonough, Secretary
September 2, 1997
IMPORTANT--WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD(S)
IN THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR
YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE SPECIAL
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> 8
SCUDDER SPAIN AND PORTUGAL 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 Scudder Spain and Portugal
Fund, Inc. (formerly known as "The First Iberian Fund, Inc.") (the "Fund") for
use at the Special 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 21, 1997 at 10:00 a.m., Eastern
time, and at any and all adjournments thereof (the "Meeting"). (In the
description of the proposal 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 Special Meeting and the proxy card are
first being mailed to stockholders on or about September 2, 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 the 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 disapprove the 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 the proposal. For purposes of determining the
presence of a quorum for transacting business at the Meeting, abstentions and
broker "non-votes" will be treated as shares that are present but which have not
been voted. Broker non-votes are proxies received by the Fund from brokers or
nominees when the broker or nominee has neither received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter. Accordingly, stockholders are urged to forward
their voting instructions promptly.
<PAGE> 9
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.
Abstentions will have the effect of a "no" vote for Proposal 1. 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.
Holders of record of the shares of the common stock of the Fund at the
close of business on August 8, 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 6,511,154.
The table below sets forth the number of shares of the Fund owned directly
or beneficially by the Directors of the Fund as of June 30, 1997. Directors who
do not own any shares have been omitted from the table.
<TABLE>
<CAPTION>
DIRECTOR SHARES OWNED(1)
------------------------------------------ ---------------
<S> <C>
Nicholas Bratt............................ 3,904
Richard M. Hunt........................... 3,500
Wilson Nolen.............................. 10,000
Daniel Pierce............................. 6,241
All Directors and Officers as a group..... 23,645
</TABLE>
- ---------------
(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's individual
shareholdings of the Fund constitutes less than 1/4 of 1% of the shares
outstanding of the Fund. As a group, the Directors and officers own 0.36% of
the shares of the Fund.
According to filings with the Securities and Exchange Commission on
Schedule 13G made in April 1997, Olliff & Partners PLC reported beneficial
ownership of 1,160,700 shares, or 17.8% of the Fund's outstanding shares, which
includes 1,157,500 shares, or 17.8% of the Fund's outstanding shares, owned by
City of London Investment Management Co. Ltd., which includes 501,900 shares, or
7.8% of the Fund's outstanding shares, owned by Emerging Markets Country Fund.
The address for all three of the above named entities is 10 Eastcheap, London
EC3M 1AJ, England.
2
<PAGE> 10
Except as noted above, to the best of the Fund's knowledge, as of June 30,
1997, no other person owned beneficially more than 5% of the outstanding shares
of the Fund.
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 OF NEW
INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder acts as the investment adviser to and manager for the Fund pursuant
to an Investment Management Agreement dated April 1, 1992 (the "Current
Investment Management Agreement") and as administrator for the Fund pursuant to
an Administration Agreement dated as of May 1, 1992 (the "Administration
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") 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
3
<PAGE> 11
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. In
addition, the terms of an existing Administration Agreement with Scudder are
being incorporated in the New Investment Management Agreement (see "Differences
Between the Current and New Investment Management Agreements," below.)
BOARD OF DIRECTORS RECOMMENDATION
On August 6, 1997 the Board of the Fund, including the 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.
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 June 26 and 27, 1997, representatives of Scudder advised the Non-
interested Directors of the Fund, by means of a telephone conference call and
memorandum, 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 Non-interested 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
4
<PAGE> 12
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 Non-interested 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
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 would be in compliance
with this provision of Section 15(f). 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. 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 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
5
<PAGE> 13
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
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.
On August 6, 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 defined compensation
plan established for the benefit of Scudder and ZKI employees, as well 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
6
<PAGE> 14
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.
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.
7
<PAGE> 15
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.
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, subject to the
supervision of the Board of Directors, Scudder provides the Fund with continuing
investment management services. The Investment Manager manages the investment
operations of the Fund and the composition of the Fund's portfolio, including
the purchase, retention and disposition thereof, in accordance with the Fund's
investment objectives and policies. In so doing, the Investment Manager agrees
to: provide supervision of the Fund's investments and determine from time to
time what investments or securities will be purchased, retained, sold or loaned
by the Fund, and what portion of the assets will be invested or held uninvested
in cash; act in conformity with the Fund's Articles of Incorporation, By-Laws
and Prospectus and with the instructions and directions of the Board of
Directors of the Fund and conform and comply with the requirements of the 1940
Act and all other applicable federal and state laws and regulations; maintain
all books and records required to be maintained under the 1940 Act; render to
the Board of Directors such periodic and special reports as the Board may
reasonably request; and provide to the custodian to the Fund and the Fund on
each business day information relating to all transactions concerning the Fund's
assets.
8
<PAGE> 16
Further, the Investment Manager determines the securities to be purchased
or sold by the Fund and places orders pursuant to its determinations with or
through such persons, brokers or dealers in conformity with the policy with
respect to brokerage as set forth in the Fund's Registration Statement and
Prospectus or as the Board of Directors may direct from time to time. In
providing the Fund with investment supervision, the Investment Manager agrees to
give primary consideration to securing the most favorable price and efficient
execution. Consistent with such policy, the Investment Manager may consider the
financial responsibility, research and investment information and other services
provided by brokers or dealer who may effect or be a party to any such
transaction. In addition, the Investment Manager is authorized to aggregate
securities to be sold or purchased in order to obtain the most favorable price
or lower brokerage commissions and efficient execution.
Under the Current Investment Management Agreement the Investment Manager
agrees to pay the salaries and expenses of all of its personnel and all expenses
incurred by it arising out of its duties under such agreement other than those
assumed by Scudder, acting as administrator (as such the "Administrator") to the
Fund pursuant to the Administration Agreement. Under the Administration
Agreement, the Administrator agrees to render administrative services to the
Fund such as overseeing the determination of the Fund's net asset value in
accordance with the Fund's policy as adopted from time to time by the Board of
Directors, overseeing the maintenance of the books and records of the Fund
required under Rule 31a-1(b)(4) under the 1940 Act, preparing the Fund's
federal, state and local income tax returns, preparing the financial information
for the Fund's proxy statements and annual reports to stockholders, preparing
the Fund's periodic financial reports to the Securities and Exchange Commission,
and responding to, or referring to the Fund's officers or transfer agent,
stockholder inquiries relating to the Fund.
In return for the services provided by the Investment Manager as investment
manager, and the expenses it assumes under the Current Investment Management
Agreement, the Fund pays the Investment Manager a monthly fee which, on an
annual basis, is equal to 1.00% of the Fund's average weekly net assets. This
fee is higher than advisory fees paid by most other investment companies,
primarily because of the Fund's objective of investing in European securities
and the additional time and expense required of the Investment Manager in
pursuing such objective. During the fiscal year ended September 30, 1996, the
fees paid to the Investment Manager under the Current Investment Management
Agreement amounted to $693,672. In addition, for its services provided pursuant
to the Administration Agreement, the Administrator receives a monthly fee at the
annual rate of 0.20% of the Fund's average net assets, based on the net asset
value on the last business day of each week. During the fiscal year ended
September 30, 1996, the fees paid to the Investment Manager under the
Administration Agreement amounted to $138,740.
9
<PAGE> 17
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 Spanish and Portuguese issuers.
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 not more than 60 days' or less than 30 days' written notice. The
Current Investment Management Agreement automatically terminates in the event of
its assignment (as defined under the 1940 Act).
The Current Investment Management Agreement provides that the Investment
Manager is not liable for any error of judgment or any loss suffered by the
Fund, in connection with matters to which the Current 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 August 25, 1987. The Current Investment Management
Agreement is dated April 1, 1992, and was last approved by the Directors on
October 30, 1996 and by the stockholders of the Fund on June 15, 1992 and
continues until October 31, 1997. The purpose of the last submission to
stockholders of the Current Investment Management Agreement was to approve such
agreement.
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 its execution, 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 and the Administration
Agreement will each remain in effect until the closing of the Transactions, at
which time each would terminate. The Board of the Fund will take such action, if
any, 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 and the Administration Agreement for such periods as may be
approved at least annually by the Board, including a majority of the
Non-interested Directors.
10
<PAGE> 18
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 New
Investment Management Agreement reflects conforming changes that have been made
in order to promote consistency among all the funds to be advised by Scudder
Kemper and to permit ease of administration. The New Investment Management
Agreement may therefore differ from the Current Investment Management Agreement
with respect to the form of the agreement and the detail of the description of
certain provisions, but the terms of the New Investment Management Agreement do
not differ materially from those of the Current Investment Management Agreement.
In addition, the Fund proposes to clarify the scope of the licensing
provisions governing the use of the Scudder name. Specifically, the New
Investment Management Agreement identifies Scudder Kemper as the exclusive
licensee of the rights to use and sublicense the names "Scudder," "Scudder
Kemper Investments, Inc." and "Scudder, Stevens & Clark, Inc." (together the
"Scudder Marks"). Under this license, the Fund has the nonexclusive right to use
the sublicense and Scudder name and mark as part of its name, and to use the
Scudder Marks in the Fund's investment products and services. This license
continues only as long as the New Investment Management Agreement is in place,
and only as long as Scudder Kemper continues to be a licensee of the Scudder
Marks from Scudder Trust Company, which is the owner and licensor of the Scudder
Marks. As a condition of the license, the Fund undertakes certain
responsibilities and agrees to certain restrictions, such as agreeing not to
challenge the validity of the Scudder Marks or ownership by Scudder Trust
Company and the obligation to use the name within commercially reasonable
standards of quality. In the event the agreement is terminated, the Fund must
not use a name likely to be confused with those associated with the Scudder
Marks.
Further, the New Investment Management Agreement provides that the
Investment Manager 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. The New Investment Management Agreement will also clarify that such
agreement supersedes all prior agreements.
Finally, for ease of administration, the New Investment Management
Agreement incorporates, in all material respects, the terms of the
Administration Agreement, and the Administration Agreement will terminate as a
stand alone document upon execution of the New Investment Management Agreement.
The fees paid by the Fund will remain the same. The New Investment Management
Agreement provides for a fee of 1.20% of the Fund's average net assets, which is
equal to the aggregate amount of the current fees paid by the Fund under each of
the Current Investment Management Agreement and the Administration Agreement.
11
<PAGE> 19
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 and provides fund accounting services for the Fund.
Scudder Service Corporation ("SSC"), also a subsidiary of Scudder, is the
shareholding agent for the Fund. For the fiscal year ended September 30, 1996,
the fees paid to SFAC and SSC by the Fund were $43,734 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.
- ------------------------------
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
@ Two Prudential Plaza, 180 North Stetson, Suite 5400, Chicago, Illinois
+ 101 California Street, San Francisco, California
12
<PAGE> 20
Exhibit B sets forth the fees and other information regarding certain 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.
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.
ADDITIONAL INFORMATION
GENERAL
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 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
13
<PAGE> 21
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 proposal listed on the proxy card, and ask for the stockholder's
instructions on such 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, ext. 488. 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 matter 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.
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,
/s/ Thomas F. McDonough
Thomas F. McDonough
Secretary
14
<PAGE> 22
EXHIBIT A
FORM OF NEW
INVESTMENT ADVISORY,
MANAGEMENT AND ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of between SCUDDER SPAIN
AND PORTUGAL 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") 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 the 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
<PAGE> 23
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 and shall not be responsible
for any expenses assumed by the administrator of the Fund pursuant to the
Administration Agreement. 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 an advisor or consultant to 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. As exclusive licensee of the rights to use and sublicense the use
of the "Scudder" and "Scudder Kemper Investments, Inc."/"Scudder, Stevens &
Clark" trademarks (together, the "Scudder Marks"), the Manager hereby
grants the Fund a nonexclusive right and sublicense to use (i) the
"Scudder" name and mark as part of the Fund's name (the "Fund Name"),
A-2
<PAGE> 24
and (ii) the Scudder Marks in connection with the Fund's investment
products and services, in each case only for so long as this Agreement, any
other investment management agreement between the Fund and the Manager (or
any organization which shall have succeeded to the Manager's business as
investment manager (the "Manager's Successor")), or any extension, renewal
or amendment hereof or thereof remains in effect, and only for so long as
the Manager is a licensee of the Scudder Marks, provided, however, that the
Manager agrees to use its best efforts to maintain its license to use and
sublicense the Scudder Marks. The Fund agrees that it shall have no right
to sublicense or assign rights to use the Scudder Marks, shall acquire no
interest in the Scudder Marks other than the rights granted herein, that
all of the Fund's uses of the Scudder Marks shall inure to the benefit of
Scudder Trust Company as owner and licensor of the Scudder Marks (the
"Trademark Owner"), and that the Fund shall not challenge the validity of
the Scudder Marks or the Trademark Owner's ownership thereof. The Fund
further agrees that all services and products it offers in connection with
the Scudder Marks shall meet commercially reasonable standards of quality,
as may be determined by the Manager or the Trademark Owner from time to
time, provided that the Manager acknowledges that the services and products
the Fund rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Fund shall
cooperate with the Manager and the Trademark Owner and shall execute and
deliver any and all documents necessary to maintain and protect (including
but not limited to in connection with any trademark infringement action)
the Scudder Marks and/or enter the Fund as a registered user thereof. At
such time as this Agreement or any other investment management agreement
shall no longer be in effect between the Manager (or the Manager's
Successor) and the Fund, or the Manager no longer is a licensee of the
Scudder Marks, the Fund shall (to the extent that, and as soon as it
lawfully can) cease to use the Fund Name or any other name indicating that
it is advised by, managed by or otherwise connected with the Manager (or
the Manager's Successor) or the Trademark Owner. In no event shall the Fund
use the Scudder Marks or any other name or mark confusingly similar thereto
(including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement
between the Manager (or the Manager's Successor) and the Fund is
terminated.
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.
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
A-3
<PAGE> 25
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, 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
Spanish or Portuguese issuers, or from utilizing (in providing such
services) information furnished to the Manager 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.
A-4
<PAGE> 26
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.
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.
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
A-5
<PAGE> 27
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.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
officers thereunto duly authorized as of the day and year first written above.
SCUDDER SPAIN AND PORTUGAL FUND, INC.
By:
---------------------------------------------------------------
President
SCUDDER KEMPER INVESTMENTS, INC.
By:
---------------------------------------------------------------
A-6
<PAGE> 28
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR CERTAIN FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
GLOBAL GROWTH
Scudder Global Fund Long-term growth of capital 1.000% to $1,604,465,769
through investment in a $500 million
diversified portfolio of 0.950% next
marketable foreign and domestic $500 million
securities, primarily equity 0.900% thereafter
securities.
Institutional International Long-term growth of capital 0.900% of $ 17,897,508
Equity Portfolio primarily through a diversified net assets+
portfolio of marketable foreign
equity securities.
Scudder International Growth Long-term growth of capital and 1.000% of $ 25,631,898**
and Income Fund current income primarily from net assets+
foreign equity securities
Scudder International Fund Long-term growth of capital 0.900% to $2,583,030,686
primarily through a diversified $500 million
portfolio of marketable foreign 0.850% next
equity securities. $500 million
0.800% next
$1 billion
0.750% next
$1 billion
0.700% thereafter
Scudder Global Discovery Above-average capital 1.100% of $ 350,829,980
Fund appreciation over the long-term net assets
by investing primarily in the
equity securities of small
companies located throughout the
world.
Scudder Emerging Markets Long-term growth of capital 1.250% of $ 75,793,693
Growth Fund primarily through equity net assets+
investments in emerging markets
around the globe.
Scudder Greater Europe Long-term growth of capital 1.000% of $ 120,300,058
Growth Fund through investment primarily in net assets
the equity securities of European
companies.
Scudder Pacific Long-term growth of capital 1.100% of $ 329,391,540
Opportunities Fund primarily through investment in net assets
the equity securities of Pacific
Basin companies, excluding Japan.
Scudder Latin America Fund Long-term capital appreciation Effective 9/11/97: $ 621,914,690
through investment primarily in 1.250% to
the securities of Latin American $1 billion
issuers. 1.150% thereafter
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
The Japan Fund, Inc. Long-term capital appreciation 0.850% to $ 385,963,962
through investment primarily in $100 million
equity securities of Japanese 0.750% next
companies. $200 million
0.700% next
$300 million
0.650% thereafter
CLOSED-END FUNDS
The Argentina Fund, Inc. Long-term capital appreciation Adviser: $ 117,596,046
through investment primarily in Effective 11/1/97:
equity securities of Argentine 1.100% of
issuers. net assets
Sub-Adviser:
Paid by Adviser.
0.160% of
net assets
The Brazil Fund, Inc. Long-term capital appreciation 1.200% to $ 417,981,869
through investment primarily in $150 million
equity securities of Brazilian 1.050% next
issuers. $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 Adviser: $ 661,690,073
through investment primarily in 1.150% to
equity securities of Korean $50 million
companies. 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
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
</TABLE>
B-2
<PAGE> 30
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder New Asia Fund, Inc. Long-term capital appreciation 1.250% to $ 133,363,686
through investment primarily in $75 million
equity securities of Asian 1.150% next
companies. $125 million
1.100% thereafter
Scudder New Europe Fund, Long-term capital appreciation 1.250% to $ 266,418,730
Inc. through investment primarily in $75 million
equity securities of companies 1.150% next
traded on smaller or emerging $125 million
European markets and companies 1.100% thereafter
that are viewed as likely to
benefit from changes and
developments throughout Europe.
Scudder Spain and Portugal Long-term capital appreciation Adviser: $ 75,127,194
Fund, Inc. through investment primarily in 1.000% of
(formerly The First equity securities of Spanish & net assets
Iberian Fund, Inc.) Portuguese issuers. Administrator:
0.200% of
net assets
Scudder World Income High income and, consistent 1.200% of $ 54,488,637
Opportunities Fund, Inc. therewith, capital appreciation. net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
</TABLE>
B-3
<PAGE> 31
SCUDDER SPAIN AND PORTUGAL FUND, INC.
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS -- OCTOBER 21, 1997
The undersigned hereby appoints Paul Elmlinger, Daniel Pierce and Wilson
Nolen and each of them, the proxies of the undersigned, with the power of
substitution to each of them, to vote all shares of Scudder Spain and Portugal
Fund, Inc. (the "Fund") which the undersigned is entitled to vote at the Special
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 21, 1997 at 10:00 a.m., eastern time, and at
any adjournments thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
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
[continued on other side]
<PAGE> 32
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
