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:
/ X / Preliminary Proxy Statement / / Confidential, for Use of
the Commission Only
(as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SCUDDER SPAIN AND PORTUGAL FUND, INC.
(Name of Registrant as Specified in Its Articles of Incorporation)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/ X / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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DRAFT September 18, 1998
SCUDDER SPAIN AND PORTUGAL FUND, INC.
IMPORTANT NEWS
OCTOBER 2, 1998
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: Zurich Insurance Company ("Zurich"), which is the majority owner of your
Fund's investment manager, Scudder Kemper Investments, Inc. ("Scudder
Kemper"), has combined its businesses with the financial services
businesses of B.A.T. Industries p.l.c. ("B.A.T."). The resulting company,
Zurich Financial Services, has become Zurich's parent company. Although
this transaction will have virtually no effect on the operations of Scudder
Kemper or your Fund, we are asking the Fund's stockholders to approve a new
investment management agreement to assure that there is no interruption in
the services Scudder Kemper provides to your Fund. The following pages give
you additional information about Zurich Financial Services, the new
investment management agreement and certain other matters. The Board
Members of your Fund, including those who are not affiliated with the Fund,
Scudder Kemper or Zurich, recommend that you vote FOR approval of the new
investment management agreement.
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Q: WHY AM I BEING ASKED TO VOTE ON THE NEW INVESTMENT MANAGEMENT AGREEMENT?
A: As a result of the Zurich-B.A.T. transaction, the former stockholders of
B.A.T. indirectly own a 43% interest in Zurich through a new holding
company, Allied Zurich p.l.c.. This change in ownership of Zurich may be
deemed to have caused a "change in control" of Scudder Kemper, even though
Scudder Kemper's operations will not change as a result. The Investment
Company Act of 1940, which regulates investment companies such as your
Fund, requires that fund stockholders approve a new investment management
agreement whenever there is a change in control of a fund's investment
manager (even in the most technical, definitional sense). Pursuant to an
exemptive order issued by the Securities and Exchange Commission, your Fund
entered into a new investment management agreement, subject to receipt of
stockholder approval within 150 days. Accordingly, we are seeking
stockholder approval of the new investment management agreement with your
Fund.
Q: HOW WILL THE ZURICH-B.A.T. TRANSACTION AFFECT ME AS A FUND STOCKHOLDER?
A: We do not expect the transaction to affect you as a Fund stockholder. Your
Fund and your Fund's investment objective will not change. You will still
own the same shares in the same Fund. The new investment management
agreement is identical to the former investment management agreement,
except for the dates of execution and termination. Similarly, the other
service arrangements of the Fund, including service arrangements between
your Fund and affiliates of Scudder Kemper, will not be affected. If
stockholders do not approve the new investment management agreement, the
agreement will terminate and the Board Members of your Fund will take such
action as they deem to be in the best interests of your Fund and its
stockholders.
Q: WILL THE INVESTMENT MANAGEMENT FEES INCREASE?
A: No, the investment management fees paid by your Fund will remain the same.
Q: WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A: You are also being asked to vote on the election of two Directors of the
Fund and to ratify the selection of the Fund's independent accountants for
the fiscal year ended September 30, 1998.
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, Scudder Kemper or Zurich,
recommend that you vote FOR all of the Proposals on the enclosed proxy
card(s).
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Q: WILL THE FUND PAY FOR THIS PROXY SOLICITATION?
A: No, Zurich or its affiliates will bear these costs.
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. 429.
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.
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SCUDDER SPAIN AND PORTUGAL FUND, INC.
345 Park Avenue
New York, New York 10154
October 2, 1998
Dear Stockholder:
Zurich Insurance Company, the majority owner of Scudder Kemper
Investments, Inc., has combined its businesses with the financial services
businesses of B.A.T. Industries p.l.c. The resulting company, Zurich Financial
Services, has become the parent company of Zurich and the majority owner of
Scudder Kemper. As a result of this transaction, the stockholders of each of the
funds for which Scudder Kemper acts as investment manager, including your Fund,
are being asked to approve a new investment management agreement with Scudder
Kemper.
The Zurich-B.A.T. transaction should not affect you as a Fund
stockholder. Your Fund shares will not change, the advisory fee rates and
expenses paid by your Fund will not increase, and the investment objective of
your Fund will remain the same.
Stockholders are also being asked to approve certain other matters that
have been set forth in the Notice of Meeting. After careful review, the members
of your Fund's Board have approved the new investment management agreement. The
Board members of your Fund believe that each of the Proposals set forth in the
Notice of Meeting for your Fund is important and recommend that you read the
enclosed materials carefully and then vote FOR all Proposals. The stockholders
present at the Meeting will hear a report on the Fund and there will be an
opportunity to discuss matters of interest.
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), you may receive a telephone call from our
proxy solicitor, Shareholder Communications Corporation, reminding you to vote.
Respectfully,
Nicholas Bratt Daniel Pierce
President Chairman of the Board
STOCKHOLDERS ARE URGED TO SIGN THE PROXY CARD AND RETURN IT IN THE POSTAGE PAID
ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
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SCUDDER SPAIN AND PORTUGAL FUND, INC.
Notice of Annual Meeting of Stockholders
To the Stockholders of
Scudder Spain and Portugal Fund, Inc.:
Please take notice that the Annual Meeting of Stockholders of Scudder
Spain and Portugal Fund, Inc. (the "Fund") for the Fund's 1998 fiscal year will
be held at the offices of Scudder Kemper Investments, Inc., 25th Floor, 345 Park
Avenue (at 51st Street), New York, New York 10154 on October 28, 1998, at 2:30
p.m., Eastern time, for the following purposes:
(1) To approve or disapprove a new investment management, advisory and
administration agreement between the Fund and its investment
manager;
(2) To elect two Directors of the Fund to hold office for a term of
three years or until their respective successors shall have been
duly elected and qualified; and
(3) To ratify or reject the action of the Board of Directors in
selecting PricewaterhouseCoopers LLP as the Fund's independent
accountants for the fiscal year ended September 30, 1998.
The appointed proxies will vote in their discretion 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 October 2, 1998 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 a 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 with respect to a Proposal 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 of a Proposal and will
vote against any such adjournment those proxies to be voted against a Proposal.
By Order of the Board of Directors,
Thomas F. McDonough, Secretary
October 2, 1998
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IMPORTANT -- We urge you to sign and date the enclosed proxy card and return it
in the enclosed addressed envelope which requires no postage and is intended for
your convenience. Your prompt return of the enclosed proxy card may save the
necessity and expense of further solicitations to ensure a quorum at the
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.
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SCUDDER SPAIN AND PORTUGAL FUND, INC.
345 Park Avenue, New York, New York 10154
PROXY STATEMENT
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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. (the "Fund") for use at the Annual Meeting of Stockholders, to be
held at the offices of Scudder Kemper Investments, Inc. ("Scudder Kemper"), 25th
Floor, 345 Park Avenue (at 51st Street), New York, New York 10154, on October
28, 1998 at 2:30 p.m., Eastern time, and at any and all adjournments thereof
(the "Meeting"). (In the description below, the word "fund" is sometimes used to
mean investment companies or series thereof in general, and not the Fund whose
proxy statement this is.)
This Proxy Statement, the Notice of Annual Meeting and the proxy card
are first being mailed to stockholders on or about October 2, 1998 or as soon as
practicable thereafter. Any stockholder giving a proxy has the power to revoke
it by mail prior to the Meeting (addressed to the Secretary at the principal
executive office of the Fund, c/o Scudder Kemper Investments, 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
Proposals 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 a Proposal is not obtained at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law, to permit further solicitation of proxies with
respect to such Proposal. Any such adjournment with respect to a Proposal 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.
Proposal 1 requires the affirmative vote of a "majority of the
outstanding voting securities" of the Fund. The term "majority of the
outstanding vote securities" as defined in
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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 with respect to
Proposal 1.
Election of each of the nominees for Director pursuant to Proposal 2
requires the affirmative vote of a plurality of the votes cast at the Meeting.
Ratification of the selection of independent accountants pursuant to Proposal 3
requires the affirmative vote of a majority of the votes cast at the Meeting in
person or by proxy. Abstention and broker non-votes will not be counted in favor
of, but will have no other effect on, the vote for Proposals 2 and 3.
Holders of record of the shares of the common stock of the Fund at the
close of business on October 2, 1998 (the "Record Date"), will be entitled to
one vote per share on all business of the Meeting. The number of shares
outstanding as of October 2, 1998 was ____________.
The Board of Directors recommends that stockholders vote FOR each
Proposal.
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 or quarterly
report, without charge, by calling 1-800-349-4281 or writing the Fund, c/o
Scudder Kemper Investments, Inc., 345 Park Avenue, New York, New York 10154.
PROPOSAL 1: APPROVAL OF NEW
INVESTMENT MANAGEMENT AGREEMENT
Introduction
Scudder Kemper acts as the investment adviser to and manager for the
Fund pursuant to an Investment Advisory, Management and Administration Agreement
dated September 7, 1998. The investment management agreement in effect between
the Fund and Scudder Kemper prior to the consummation of the transaction between
Zurich Insurance Company ("Zurich") and B.A.T. Industries p.l.c. ("B.A.T.") (the
"Zurich-B.A.T. Transaction" or the "Transaction") is referred to in this Proxy
Statement as the "Former Investment Management Agreement." The investment
management agreement currently in effect between the Fund and Scudder Kemper was
executed as of the consummation of the Zurich-B.A.T. Transaction and is referred
to in this Proxy Statement as the "Current Investment Management Agreement."
(Scudder Kemper is sometimes referred to in this Proxy Statement as the
"Investment Manager.")
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On June 26, 1997, one of Scudder Kemper's predecessors, Scudder,
Stevens & Clark, Inc. ("Scudder"), entered into an agreement with Zurich
pursuant to which Scudder and Zurich agreed to form an alliance. On December 31,
1997, Zurich acquired a majority interest in Scudder, and Zurich Kemper
Investments, Inc. ("Kemper"), a Zurich subsidiary, became part of Scudder.
Scudder's name was changed to Scudder Kemper Investments, Inc. The transaction
between Scudder and Zurich (the "Scudder-Zurich Transaction") resulted in the
termination of the Fund's investment management agreement with Scudder.
Consequently, the Former Investment Management Agreement between the Fund and
Scudder Kemper was approved by the Fund's Board on August 6, 1997 and by
stockholders on November 12, 1997.
The Zurich-B.A.T. Transaction. On December 22, 1997, Zurich and B.A.T.
entered into a definitive agreement (the "Merger Agreement") pursuant to which
businesses of Zurich (including Zurich's almost 70% ownership interest in
Scudder Kemper) were to be combined with the financial services businesses of
B.A.T. On October 12, 1997, Zurich and B.A.T. had confirmed that they were
engaged in discussions concerning a possible business combination; on October
16, 1997, Zurich and B.A.T. announced that they had entered into an Agreement in
Principle, dated as of October 15, 1997 (the "Agreement in Principle") to merge
B.A.T.'s financial services businesses with Zurich's businesses. The Merger
Agreement superseded the Agreement in Principle.
In order to effect this combination, Zurich and B.A.T. first
reorganized their respective operations. Zurich became a subsidiary of a new
Swiss holding company, Zurich Allied AG, and Zurich stockholders became Zurich
Allied AG stockholders. At the same time, B.A.T. separated its financial
services business from its tobacco-related businesses by spinning off to its
stockholders a new British company, Allied Zurich p.l.c., which held B.A.T.'s
financial services businesses.
Zurich Allied AG then contributed its interest in Zurich, and Allied
Zurich p.l.c. contributed the B.A.T. financial services businesses, to a jointly
owned company, Zurich Financial Services. These transactions were completed on
September 7, 1998. As a result, upon the completion of the Transaction, the
former Zurich stockholders initially became the owners (through Zurich Allied
AG) of 57% of the voting stock of Zurich Financial Services, and former B.A.T.
stockholders initially became the owners (through Allied Zurich p.l.c.) of 43%
of the voting stock of Zurich Financial Services. Zurich Financial Services now
owns Zurich and the financial services businesses previously owned by B.A.T.
Below is a simplified chart showing the corporate structure of Zurich
Financial Services after these transactions:
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Former B.A.T Former Zurich
shareholders shareholders
ALLIED ZURICH ZURICH ALLIED
(UK listed holding (Swiss listed
company) holding company)
43% 57%
Zurich Financial Services
(Swiss holding company)
Allied Zurich Farmers Zurich
Holdings Group, Inc. Insurance
Subsidiaries Subsidiaries Subsidiaries --
including 70%
interest in Scudder
Kemper
Investments
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Corporate Governance. At the closing of the Zurich-B.A.T. Transaction,
the parties entered into a Governing Agreement that establishes the corporate
governance structure for Zurich Allied AG, Allied Zurich p.l.c. and Zurich
Financial Services.
The Board of Directors of Zurich Financial Services consists of ten
members, five of whom were initially selected by Zurich and five by B.A.T. Mr.
Rolf Huppi, Zurich's current Chairman and Chief Executive Officer, became
Chairman and Chief Executive Officer of Zurich Financial Services. As Chairman,
Mr. Huppi will have a tie-breaking vote on all matters except recommendations of
the Audit Committee, recommendations of the Remuneration Committee in respect of
the remuneration of the Chairman and the CEO, appointment and removal of the
Chairman and CEO, appointments to the Nominations, Audit and Remuneration
Committees and nominations to the Board of Directors not made through the
Nominations Committee.
The Group Management Board of Zurich Financial Services has been given
responsibility by the Board of Directors for the executive management of Zurich
Financial Services and has wide authority for such purpose. Of the 11 initial
members of the Group Management Board, eight are current members of the
Corporate Executive Board of Zurich (including Mr. Edmond D. Villani, CEO of
Scudder Kemper, who is responsible for Global Asset Management for Zurich
Financial Services), and three are current B.A.T. executives.
The Board of Directors of Zurich Allied AG initially consists of 11
members, eight of whom are current Zurich directors and three of whom were
proposed by B.A.T. The Board of Directors of Allied Zurich p.l.c. also initially
consists of 11 members, eight of whom are current B.A.T. directors and three of
whom were proposed by Zurich. The parties have agreed that, as soon as possible,
the Boards of Directors of Zurich Financial Services, Zurich Allied AG and
Allied Zurich p.l.c. will have identical membership.
Shareholder resolutions of Zurich Financial Services in general require
approval by at least 58% of all shares outstanding.
The Governing Agreement also contains provisions relating to dividend
equalization and provisions intended to ensure equal treatment of Zurich Allied
AG and Allied Zurich p.l.c. stockholders in the event of a takeover bid for
either company.
The B.A.T. financial services businesses, which, since the closing of
the Transaction, are owned by Zurich Financial Services, include: the Farmers
Group of Insurance companies; the Eagle Star Insurance business, primarily in
the U.K.; Allied-Dunbar, one of the leading U.K. unit-linked life insurance and
pensions companies; and Threadneedle Asset Management, which was formed
initially to manage the investment assets of Eagle Star and Allied-Dunbar, and
which, at December 31, 1997, had $58.8 billion under management. Overall, at
year-end 1997, the financial services businesses of B.A.T. had $79 billion in
assets under management, including $18 billion in third party assets.
Zurich has informed the Funds that the financial services businesses of
B.A.T. do not include any of B.A.T.'s tobacco businesses and that, after careful
review, Zurich has concluded that the tobacco-related liabilities connected with
B.A.T.'s tobacco business should not adversely affect Zurich or the present
Zurich subsidiaries, including Scudder Kemper.
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Consummation of the Zurich-B.A.T. Transaction may be deemed to have
constituted an "assignment," as that term is defined in the 1940 Act, of the
Fund's Former Investment Management Agreement with Scudder Kemper. As required
by the 1940 Act, the Former Investment Management Agreement provided for its
automatic termination in the event of its assignment. Accordingly, the Current
Investment Management Agreement between the Fund and Scudder Kemper was approved
by the Board members of the Fund and is now being proposed for approval by
stockholders of the Fund. Scudder Kemper has received an exemptive order from
the Securities and Exchange Commission (the "SEC" or the "Commission")
permitting the Fund to obtain stockholder approval of its Current Investment
Management Agreement within 150 days after the consummation of the Transaction
(and, consequently, within 150 days after the termination of its Former
Investment Management Agreement), instead of before the consummation of the
Transaction. Pursuant to the exemptive order, the Fund's investment management
fees are being held in escrow until the earlier of stockholder approval of the
Current Investment Management Agreement or the expiration of the 150 day period.
A copy of the form of the Current Investment Management Agreement is attached
hereto as Exhibit A. THE CURRENT INVESTMENT MANAGEMENT AGREEMENT FOR THE FUND IS
IN ALL MATERIAL RESPECTS ON THE SAME TERMS AS THE FORMER INVESTMENT MANAGEMENT
AGREEMENT, EXCEPT FOR THE DATES OF EXECUTION AND TERMINATION. The material terms
of the Current Investment Management Agreement are described under "Description
of the Investment Management Agreement" below.
Board of Directors Recommendation
On July 23, 1998 the Board of the Fund, including Directors who are not
parties to such agreement or "interested persons" (as defined under the 1940
Act) ("Non-interested Directors") of any such party, voted to approve the
Current 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.
If the stockholders do not approve the Current Investment Management
Agreement, the Current Investment Management Agreement will terminate and the
Board of Directors will take such action as they deem in the best interests of
stockholders.
The Board of the Fund recommends that stockholders vote FOR approval of
the Current Investment Management Agreement.
Board of Directors Evaluation
The Non-interested Directors have been aware of the proposed
Zurich-B.A.T. Transaction since the announcement of the Agreement in Principle
on October 16, 1997. The Board members of the Fund were kept informed by Scudder
Kemper of significant subsequent developments regarding the Transaction,
including the execution of the Merger Agreement on December 22, 1997 and the
receipt of necessary regulatory approvals.
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In the course of the annual review by the Non-interested Directors of
the continuance of the Former Investment Management Agreement between the Fund
and Scudder Kemper, Scudder Kemper furnished the Board members with detailed
information regarding the proposed Transaction, including information provided
to the stockholders of Zurich and B.A.T. and information regarding the structure
of the Transaction, the resulting ownership and governance arrangements of
Zurich and the investment management business of B.A.T. expected to be acquired
by Scudder Kemper following completion of the Transaction. The Non-interested
Board members had the opportunity to consider this information with the
assistance of their independent counsel and to ask questions of Scudder Kemper
representatives. In the course of these deliberations, Scudder Kemper advised
the Non-interested Directors that the proposed Transaction would not have a
material effect on the operations of the Fund or on its stockholders.
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 Kemper to the Fund; the necessity of Scudder
Kemper's maintaining and enhancing its ability to retain and attract capable
personnel to serve the Fund; the increased complexity of the domestic and
international securities markets; the investment record of Scudder Kemper in
managing the Fund; Scudder Kemper's profitability with respect to the Fund and
the other investment companies managed by Scudder Kemper before marketing
expenses paid by Scudder Kemper; possible economies of scale; comparative data
as to investment performance, advisory fees and expense ratios; Scudder Kemper's
expenditures in developing worthwhile and innovative shareholder services for
the Fund; improvements in the quality and scope of the shareholder services
provided to the Fund's stockholders; the advantages and possible disadvantages
to the Fund of having an adviser of the Fund which also serves other investment
companies as well as other accounts; possible benefits to Scudder Kemper from
serving as adviser and from an affiliate of Scudder Kemper serving fund
accounting agent of the Fund; current and developing conditions in the financial
services industry, including the entry into the industry of large and well
capitalized companies which are spending and appear to be prepared to continue
to spend substantial sums to engage personnel and to provide services to
competing investment companies; the financial resources of Scudder Kemper and
the continuance of appropriate incentives to assure that Scudder Kemper will
continue to furnish high quality services to the Fund; and various other
factors.
The Board of the Fund was advised that Zurich 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. Prior to the consummation of the Transaction, the Board
was 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
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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 Transaction. Zurich or its affiliates will 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 Transaction, including the fees and expenses of legal counsel and
consultants to the Fund and the Non-interested Directors.
In addition to the foregoing factors, the Non-interested Directors gave
careful consideration to the likely impact of the Transaction on the Scudder
Kemper organization. In this regard, the Non-interested Directors considered,
among other things, the fact that the Transaction does not appear to alter in
any material respect the substantial autonomy afforded to Scudder Kemper
executives over Scudder Kemper's operations, the equity participation and
incentives for many Scudder Kemper employees, or Zurich's strategy for the
development of its asset management business through Scudder Kemper. Based on
the foregoing, the Non-interested Directors concluded that the Transaction
should cause no reduction in the quality of services provided to the Fund and
believe that the Transaction should enhance Scudder Kemper's capabilities and
strengths.
Description of the Current Investment Management Agreement
Except for the dates of execution and termination, the Current
Investment Management Agreement is identical to the Former Investment Management
Agreement. Under the Current Investment Management Agreement, subject to the
supervision of the Board of Directors, Scudder Kemper 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 objective and policies. In so doing, the Investment
Manager agrees to: make available to the Fund research and statistical data and
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
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 provided such books and
records are not maintained or furnished by the custodian or other agent of the
Fund; 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.
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
-14-
<PAGE>
with such policy, the Investment Manager may consider the financial
responsibility, research and investment information and other services provided
by brokers or dealers 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 and any
fees and expenses of such of the Fund's directors as are directors, officers or
employees of the Investment Manager (with the exception of travel expenses of
directors and officers of the Fund who are directors, officers or employees of
the Investment Manager to the extent such expenses relate to attendance at
meetings of the Board or any committees thereof), and to furnish at the
Investment Manager's expense for the use of the Fund office space and facilities
the Fund may reasonably require in New York City and to furnish clerical
services in the United States related to research, statistical and investment
work. The Investment Manager also agrees to render administrative services to
the fund such as monitoring the valuation of portfolio securities and 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, providing assistance in certain accounting and tax matters
and investor and public relations, 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 Commission and other regulatory and self-regulatory
organizations, preparing reports and notices to stockholders, and responding to,
or referring to the Fund's officers or transfer agent, stockholder inquiries
relating to the Fund.
Under the Current Investment Management Agreement, the Fund is
responsible for other expenses, including organization and certain offering
expenses of the Fund (including out-of-pocket expenses, but not including
overhead or employee costs of the Investment Manager or of any one or more
organizations retained by the Fund or by the Investment Manager as an advisor or
consultant to the Fund); fees payable to the Investment 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; expenses relating to the Fund's dividend reinvestment and
cash purchase plan (except for brokerage expenses paid by participants in such
plan); and other expenses.
-15-
<PAGE>
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 1.20% 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, 1998, the
Fund paid investment management fees of $________ . In addition, prior to the
consummation of the Scudder-Zurich Transaction, the Fund had a separate
administration agreement with Scudder pursuant to which it paid Scudder a
monthly fee at an 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. This
administration agreement was incorporated, in all material respects, into the
Former Investment Management Agreement, and remains a part of the Current
Investment Management Agreement. For the fiscal year ended September 30, 1998,
the Fund paid administration fees to Scudder of $___________. As of September
30, 1998, the Fund had net assets of $_____________.
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, and to
utilize in providing such services information furnished to the Investment
Manager by advisors and consultants to the Fund. The Current Investment
Management Agreement also provides that purchase and sale opportunities suitable
for more than one client of the Investment Manager will be allocated in an
equitable manner.
The Current Investment Management Agreement may be terminated at any
time without payment of penalty by the Board of Directors, by vote of holders of
a majority of the outstanding voting securities of the Fund, or by the
Investment Manager on 60 days' written notice. The Current Investment Management
Agreement automatically terminates in the event of its assignment (as defined
under the 1940 Act). The Current Investment Management Agreement also provides
that it supersedes all prior investment management and administration
agreements.
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.
The Current 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 Current 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
-16-
<PAGE>
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 Current 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 Current Investment Management Agreement, pending stockholder
approval, will remain in effect through September 30, 1999, 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. Scudder Kemper
or its predecessor has acted as the Investment Manager for the Fund since the
Fund commenced operations on April, 1992.
Investment Manager
Scudder Kemper, which resulted from the combination of the businesses
of Scudder and Kemper, an indirect subsidiary of Zurich, in connection with the
Scudder-Zurich Transaction, is one of the largest and most experienced
investment counsel firms in the United States. Scudder was established in 1919
as a partnership and was restructured as a Delaware corporation in 1985. Scudder
launched its first fund in 1928. Kemper launched its first fund in 1948. Since
December 31, 1997, Scudder Kemper has served as investment adviser to both
Scudder and Kemper funds. As of July 1998, Scudder Kemper has more than $230
billion in assets under management. The principal source of Scudder Kemper's
income is professional fees received from providing continuing investment
advice. Scudder Kemper provides investment counsel for many individuals and
institutions, including insurance companies, endowments, industrial corporations
and financial and banking organizations.
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. Zurich owns approximately 70% of the Investment Manager,
with the balance owned by the Investment Manager's officers and employees.
As stated above, Scudder Kemper is a Delaware corporation. Rolf Huppi *
is the Chairman of the Board and Director, Edmond D. Villani# is the President,
Chief Executive Officer and Director, Stephen R. Beckwith# is the Treasurer and
Chief Financial Officer, Kathryn L. Quirk# is the General Counsel, Chief
Compliance Officer and Secretary, Lynn S. Birdsong# is a Corporate Vice
President and Director, Cornelia M. Small# is a Corporate Vice President and
- --------------------
* Mythenquai 2, Zurich Switzerland.
# 345 Park Avenue, New York, New York
-17-
<PAGE>
Director, Laurence Cheng* is a Director and Marcus Rohrbasser* is a Director of
the Investment Manager. The principal occupation of each of Edmond D. Villani,
Stephen R. Beckwith, Kathryn L. Quirk, Lynn S. Birdsong and Cornelia M. Small is
serving as a Managing Director of the Investment Manager; the principal
occupation of each of Rolf Huppi and Marcus Rohrbasser is serving as an officer
of Zurich; the principal occupation of Laurence Cheng is serving as a senior
partner of Capital Z Partners, an investment fund. The Executive Committee
members are Messrs. Birdsong, Rohrbasser and Villani (Chairman).
The outstanding voting securities of the Investment Manager are held of
record 36.63% by Zurich Holding Company of America ("ZHCA"), a subsidiary of
Zurich; 32.85% by ZKI Holding Corp. ("KIH"), a subsidiary of Zurich; 20.86% by
Stephen R. Beckwith, Lynn S. Birdsong, Kathryn L. Quirk, Cornelia M. Small and
Edmond D. Villani, in their capacity as representatives (the "Management
Representatives") of the Investment Manager's management holders and retiree
holders pursuant to a Second Amended and Restated Security Holders Agreement
(the "Security Holders Agreement") among the Investment Manager, Zurich, ZHCA,
ZKIH, the Management Representatives, the management holders, the retiree
holders and Edmond D. Villani, as trustee of Scudder Kemper Investments, Inc.
Executive Defined Contribution Plan Trust (the "Trust"); and 9.66% by the Trust.
There are no outstanding non-voting securities of the Investment Manager.
In connection with the Scudder-Zurich Transaction (described above),
pursuant to which Zurich acquired a two-thirds interest in Scudder for $866.7
million in cash in December 1997, Daniel Pierce, a Director of the Fund, sold
85.4% of his holdings in Scudder to Zurich for cash.
Pursuant to the Security Holders Agreement (which was entered into in
connection with the Scudder-Zurich Transaction), the Board of Directors of the
Investment Manager consists of four directors designated by ZHCA and ZKIH and
three directors designated by Management Representatives.
The Security Holders Agreement requires the approval of a majority of
the Scudder-designated directors for certain decisions, including changing the
name of Scudder Kemper, effecting an initial 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 Security Holders Agreement also provides for various put and
call rights with respect to Scudder Kemper stock held by persons who were
employees of Scudder at the time of the Scudder-Zurich Transaction, 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 stockholders of Scudder continuing after the Scudder-Zurich
Transaction.
Directors, officers and employees of Scudder Kemper from time to time
may enter into transactions with various banks, including the Fund's custodian
bank. It is Scudder Kemper's opinion that the terms and conditions of those
transactions will not be influenced by existing or potential custodial or other
Fund relationships.
-18-
<PAGE>
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder
Kemper, computes net asset value and provides fund accounting services for the
Fund for an annual asset based fee of 0.065% of weekly net assets on the first
$50 million of net assets, 0.04% of weekly net assets for the next $850 million,
and 0.020% of weekly net assets for amounts over $1 billion of net assets, plus
transaction and holding fees. For the fiscal year ended September 30, 1998, the
fees paid to SFAC by the Fund were $_________. Scudder Service Corporation
("SSC"), also a subsidiary of Scudder Kemper, acts as the shareholder servicing
agent for the Fund at no fee. SFAC and SSC will continue to provide fund
accounting and shareholding services to the Fund under the Current Investment
Management Agreement.
Exhibit B sets forth the fees and other information regarding certain
other investment companies advised by Scudder Kemper.
Brokerage Commissions on Portfolio Transactions
To the maximum extent feasible, Scudder Kemper places orders for
portfolio transactions through Scudder Investor Services, Inc. ("SIS"), Two
International Place, Boston, Massachusetts 02110, which in turn places orders on
behalf of the Fund with issuers, underwriters or other brokers and dealers. SIS
is a corporation registered as a broker/dealer and a subsidiary of Scudder
Kemper. In selecting brokers and dealers with which to place portfolio
transactions for the Fund, Scudder Kemper will not consider sales of shares of
funds currently advised by Scudder Kemper as a decision-making factor, although
it may place such transactions with brokers and dealers that sell shares of
funds currently advised by Scudder Kemper. When it can be done consistently with
the policy of obtaining most favorable net results, Scudder Kemper may place
such orders with brokers and dealers who supply research, market and statistical
information to the Fund or to Scudder Kemper. SIS does not receive any
commissions, fees or other remuneration from the Fund for this service.
Allocation of portfolio transactions is supervised by Scudder Kemper.
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 FOR this Proposal 1.
PROPOSAL 2: ELECTION OF DIRECTORS OF THE FUND
At the Meeting, two individuals are nominated for re-election to the
Board of Directors of the Fund, to serve for a term of three years or until
their successors are duly elected and qualified. For election of Directors at
the Meeting, the Board of Directors has approved the nomination as Class III
Directors Richard M. Hunt and Daniel Pierce, both current Directors of the Fund.
Messrs. Hunt and Pierce have consented to being nominated for re-election and to
serve if elected.
-19-
<PAGE>
The persons named as proxies on the enclosed proxy card will vote for
the election of the nominees named above unless authority to vote for any or all
of the nominees is withheld in the proxy. If any nominee should be unable to
serve, an event not now anticipated, the proxies will be voted for such person,
if any, as shall be designated by the Board of Directors to replace such
nominee.
Information Concerning Nominees
Unless otherwise noted, each nominee has engaged in the principal
occupation listed in the following table for more than five years, but not
necessarily in the same capacity.
<TABLE>
<CAPTION>
Principal Occupation or
Name (Age) Employment and Directorships
- ---------- ----------------------------
<S> <C>
Daniel Pierce (64)*+ Managing Director of Scudder Kemper Investments, Inc.; Director,
Fiduciary Trust Company (bank and trust company) and
Fiduciary Company Incorporated (bank and trust company). Mr. Pierce first
became a Director of the Fund in 1991. As of August 15, 1998, Mr. Pierce
owned 7,414 shares of the Fund. Mr. Pierce serves on the boards of __ funds
managed by Scudder Kemper with __ fund portfolios.
Richard M. Hunt (71) University Marshal and Senior Lecturer, Harvard University; Vice Chairman,
American Council on Germany; Director, Council on the United States and
Italy; Life Trustee, American Field Service; and Partner, Elmhurst
Investment Trust (family investment firm). Mr. Hunt first became a Director
of the Fund in 1994. As of August 15, 1998, Mr. Hunt owned 3,500 shares of
the Fund. Mr. Hunt serves on the boards of __ funds managed by Scudder
Kemper with __ fund portfolios.
</TABLE>
Information Concerning Continuing Directors
Pursuant to the organizational documents of the Fund, the Board is
divided into three classes, each class having a term of three years. At the
annual meeting of stockholders in each year, the term of one class of Board
members expires. Accordingly, only those Board members in once class may be
changed in any one year, and it would require two years to change a majority of
the Board. This system of electing Board members may have the effect of
maintaining the continuity of management and, thus, make it more difficult for
the Fund's stockholders to change the majority of Board members. Pursuant to the
Fund's Articles of Incorporation, the number of
-20-
<PAGE>
Board members shall be apportioned among the classes so as to maintain the
classes as nearly equal in number as possible. The term of the Class I, II and
III Board members expires in the year 1999, 2000, and 1998, respectively. Those
current Class I and Class II Directors are not nominees at the Meeting. Messrs.
Martin and Perez Llorca are Class I Directors, and Mr. Nolen is a Class II
Director.
Class II - Director serving until 2000 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
Name (Age) Present Office with the Fund, if any; Year First Shares
- ---------- Principal Occupation or Employment and Became a Beneficially
Directorships in Publicly Held Director Owned as of
Companies -------- August 15,
--------- 1998
----
<S> <C> <C> <C>
Wilson Nolen (71)+ Consultant; Trustee, Cultural Institutions 1992 10,000
Retirement Fund, Inc., New York Botanical
Garden, Skowhegan School of Painting and
Sculpture; Director, Ecohealth, Inc.
(biotechnology company) (until 1996); and
Director, Chattem, Inc. (drug and chemical
company) (until 1993). Mr. Nolen serves on
the boards of __ funds managed by Scudder
Kemper with __ fund portfolios.
Class I - Directors Serving until 1999 Annual Meeting of Stockholders:
Rogerio C. S. Martins (69) Chairman of the Board, Atlas-Copco de 1987 None
Portugal (air compressor equipment); Director,
Credit Lyonnais Portugal; Adviser to the
Portuguese Minister of Economy. Until 1996,
Columnist, Publico (newspaper); Professor,
Institute Superior de Estudos Financeirose
Fiscals; Director, Ramalho Rosa (construction) and
Lusotur Sociedade Financeira de Turismo (tourism).
-21-
<PAGE>
Jose Pedro Perez Llorca (57) Attorney, Garcia Anoveros and Perez Llorca; 1992 None
President, Atlantic Association
(international relations organization); and
Director, Foster Wheeler Spain and NCR
Spain; and Consultant, 3M Espana.
</TABLE>
- -----------------------
* Persons considered by the Fund and its counsel to be "interested persons"
(which as used in this Proxy Statement is as defined in the 1940 Act) of
the Fund or of Scudder Kemper. Mr. Pierce is deemed to be interested a
person because of his affiliation with Scudder Kemper.
+ Messrs. Pierce and Nolen are members of the Executive Committee of the
Fund.
(1) The information as to beneficial ownership is based on statements furnished
to the Fund by the Directors. Unless otherwise noted, beneficial ownership
is based on sole voting and investment power.
Executive Officers
In addition to Mr. Pierce, a Director who is also an officer of the Fund,
the following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
Name (Age) Present Office with the Fund;
---------- Principal Occupation or Employment(1)
----------------------------------
<S> <C> <C>
Nicholas Bratt (50) President; Managing Director of Scudder Kemper.
Carol L. Franklin (45) Vice President, Managing Director of Scudder Kemper.
Paul J. Elmlinger (39) Vice President and Assistant Secretary; Managing
Director of Scudder Kemper.
Joan R. Gregory (52) Vice President; Vice President of Scudder Kemper.
Jerard K. Hartman (65) Vice President; Managing Director of Scudder Kemper.
Thomas F. McDonough (51) Vice President, Secretary and Treasurer; Senior Vice
President of Scudder Kemper.
Bruce H. Goldfarb (33) Vice President and Assistant Secretary; Senior Vice
President, Scudder Kempe since 1997; previously practiced law
with the law firm of Cravath, Swaine & Moore.
-22-
<PAGE>
Caroline Pearson (35) Assistant Secretary; Senior Vice President, Scudder Kemper
since 1997; previously practiced law with the law firm of Dechert
Price & Rhoads.
John R. Hebble (39) Assistant Treasurer; Senior Vice President, Scudder
Kemper.
</TABLE>
(1) Unless otherwise stated, all the Executive Officers have been associated
with Scudder Kemper for more than five years, although not necessarily in
the same capacity.
(2) The President, Treasurer and Secretary each hold office until his or her
successor has been duly elected and qualified, and all other officers hold
office in accordance with the By-Laws of the Fund.
Transactions with and Remuneration of Directors and Officers
The aggregate direct remuneration by the Fund of Directors not
affiliated with Scudder was $______, including expenses, during the fiscal year
ended September 30, 1998. Each such unaffiliated Director currently receives
fees paid by the Fund of $750 per Directors' meeting attended and an annual
Director's fee of $6,000. Each Director also receives $250 per committee meeting
attended (other than the Audit Committee meetings and meetings held for the
purposes of considering arrangements between the Fund and Scudder Kemper or an
affiliate of Scudder Kemper, for which such Director receives a fee of $750).
Several of the Fund's officers and Directors are also officers, directors,
employees or stockholders of Scudder Kemper and participate in the fees paid to
that firm, although the Fund makes no direct payments to them other than for
reimbursement of travel expenses in connection with the attendance of Directors'
and committee meetings.
The following Compensation Table, provides in tabular form, the following data:
Column (1) All Directors of the Fund who receive compensation from the Fund.
Column (2) Aggregate compensation received by a Director of the Fund from the
Fund.
Columns (3) and (4) Pension or retirement benefits accrued or proposed to be
paid by the Fund. The Fund does not pay its Directors such benefits.
Column (5) Total compensation received by a Director from the Fund, plus
compensation received from all funds managed by Scudder Kemper for which a
Director serves. The total number of funds from which a Director receives such
compensation is also provided in column (5). In some cases, compensation
received by a Director for serving on the Board of a closed-end fund is greater
than the compensation received by a Director for serving on the Board of an
open-end fund.
-23-
<PAGE>
Compensation Table
for the fiscal year ended September 30, 1998
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Person, Aggregate Pension or Estimated Annual Total Compensation
Position Compensation Retirement Benefits Benefits Upon From the Fund and
from the Fund Accrued as part of Retirement Fund Complex Paid to
Fund Expenses Director (calendar
year 1997)
<S> <C> <C> <C> <C> <C>
Richard M. Hunt, $______ N/A N/A $______
Director ([__] funds)
Jose Pedro Perez $______ N/A N/A $______
Llorca, ([__] fund)
Director
Rogerio C.S. Martins, $______ N/A N/A $______
Director ([__] fund)
Dr. Wilson Nolen, $______ N/A N/A $______
Director ([__] funds)
</TABLE>
* Aggregate compensation does not reflect amounts paid by Scudder Kemper to the
Directors for meetings in connection with Zurich-B.A.T. Transaction. Such
amounts totaled $______, $______, $______and $______ for Messrs. Hunt, Perez
Llorca, Martins and Nolen respectively.
Committees of the Board - Board Meetings. The Board of Directors of the Fund met
__ times during the fiscal year ended September 30, 1998. [Each Director
attended at least 75% of the total number of meetings of the Board of Directors
and of all committees of the Board on which they served as regular members].
The Board of Directors, in addition to an Executive Committee, has an
Audit Committee, a Valuation Committee and a Committee on Independent Directors.
The Executive and Valuation Committees consist of regular members, allowing
alternates.
Audit Committee. The Board has an Audit committee consisting of those
Directors who are not interested persons of the Fund or of Scudder Kemper
("Non-interested Directors") as defined in the 1940 Act, which met on January
15, 1998. the Audit Committee reviews with management and the independent
accountants for the Fund, among other things, the scope of the
-24-
<PAGE>
audit and the controls of the Fund and its agents, reviews and approves in
advance the type of services to be rendered by independent accountant,
recommends the selection of independent accountants for the Fund to the Board
and in general considers and reports to the Board on matters regarding the
Fund's accounting and bookkeeping practices.
Committee on Independent Directors. The Board has a Committee on
Independent Directors consisting of the Non-interested Directors. The Committee
is charged with the duty of making all nominations for Non-interested Directors
and consideration of other related matters. Stockholders' recommendations as to
nominees received by management are referred to the Committee for its
consideration and action. The Committee met on March 18, 1998, to consider and
nominate the nominees set forth above who, upon election to the Board, would be
Non-interested Directors of the Fund.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the
Securities Exchange Act of 1934 and Section 30(h) of the Investment Company Act,
as applied to a fund, requires the fund's officers and directors, investment
manager, affiliates of the investment manager, and persons who beneficially own
more than ten percent of a registered class of the fund's outstanding securities
("Reporting Persons"), to file reports of ownership of the fund's securities and
changes in such ownership with the Commission and the New York Stock Exchange.
Such persons are required by Commission regulations to furnish the Fund with
copies of all such filings.
Based solely upon its review of the copies of such forms received by it
and written representations from certain Reporting Persons that no year-end
reports were required for those persons, [the Fund believes that during the
fiscal year ended September 30, 1998, its Reporting Persons complied with all
applicable filing requirements.]
Required Vote
Election of each of the nominees for Director requires the affirmative
vote of a plurality of the votes cast at the Meeting. The Directors of the Fund
recommend that the stockholders vote FOR each of the nominees listed in this
Proposal 2.
PROPOSAL 3: RATIFICATION OF INDEPENDENT ACCOUNTANTS
At a meeting held on April 14, 1998, the Board of Directors of the
Fund, including a majority of the Non-interested Directors, recommended to
stockholders the selection of PricewaterhouseCoopers LLP to act as independent
accountants for the Fund for the fiscal year ending September 30, 1998.
PricewaterhouseCoopers LLP are independent accountants and have advised the Fund
that they have no direct financial interest or material indirect financial
interest in the Fund. One or more representatives of PricewaterhouseCoopers LLP
are expected to be present at the Meeting and will have an opportunity to make a
statement if they so desire. Such representatives are expected to be available
to respond to appropriate questions posed by stockholders and management.
-25-
<PAGE>
The Fund's financial statements for the fiscal year ended September 30,
1997 were audited by Price Waterhouse LLP, the predecessor of
PricewaterhouseCoopers LLP. In connection with its audit services, Price
Waterhouse LLP reviewed the financial statements included in the Fund's
semiannual and annual reports and its filings with the Commission.
Required Vote
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. The Directors of the Fund recommend that stockholders vote FOR
ratification of the selection of PricewaterhouseCoopers LLP as independent
accountants.
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 Zurich or
its affiliates. In addition to solicitation by mail, certain officers and
representatives of the Fund, officers and employees of Scudder Kemper 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 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 each proposal. The SCC representative,
although he or she is permitted to answer questions about the process, is not
permitted to recommend to the stockholder how to vote, other than to read any
recommendation set forth in the proxy statement. SCC will record the
stockholder's instructions on the card. Within 72 hours, the stockholder will be
sent a letter or mailgram to confirm his or her vote and
-26-
<PAGE>
asking the stockholder to call SCC immediately if his or her instructions are
not correctly reflected in the confirmation.
If the stockholder wishes to participate in the Meeting, but does not
wish to give his or her proxy by telephone, the stockholder may still submit the
proxy card originally sent with the proxy statement or attend in person. Should
stockholders require additional information regarding the proxy or replacement
proxy cards, they may contact SCC toll-free at 1-800-733-8481. Any proxy given
by a stockholder, whether in writing or by telephone, is revocable until the
Meeting.
Control Persons and Principal Holders of Securities
According to filings made with the Securities and Exchange Commission,
as of ________, 1998, __________ shares, representing _______________% of the
outstanding shares of the Fund, were beneficially owned by
___________________________. A holder of 5% or more of the outstanding voting
securities of the Fund is an affiliated person of that Fund for purposes of the
1940 Act.
Except as noted above, to the best of the Fund's knowledge, as of
__________, 1998, no other person owned beneficially more than 5% of the
outstanding shares of the Fund.
As of _________, 1998 the Fund's Directors and officers as a group
beneficially owned less than 1% of the outstanding shares of the Fund.
Proposals of Stockholders
Stockholders wishing to submit proposals to be presented at the 1999
Annual Meeting of Stockholders of the Fund and included in the Fund's proxy
materials should send their written proposals to the Secretary of the Fund, c/o
Scudder Kemper Investments, Inc., 345 Park Avenue, New York, New York 10154, not
later than February 15, 1999, which has been calculated to be a reasonable time
before the Fund will begin to print and mail the proxy materials for the 1999
Annual Meeting of Stockholders. The timely submission of a proposal does not
guarantee its inclusion.
Stockholders wishing to present proposals at the 1999 Annual Meeting of
Stockholders of the Fund not to be included in the Fund's proxy materials should
send written notice to the Secretary of the Fund of such proposals by the later
of the close of business 60 days prior to the Meeting or fourteen days following
the date such Meeting is first publicly announced or disclosed.
Other Matters to Come Before the Meeting
The Board of Directors of the Fund is not aware of any matters that
will be presented for action at the Meeting other than the matters set forth
herein. Should any other matters requiring a vote of stockholders arise, the
proxy in the accompanying form will confer upon the person or persons entitled
to vote the shares represented by such proxy the discretionary authority to vote
the shares as to any such other matters in accordance with their best judgment
in the interest of the Fund.
-27-
<PAGE>
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Directors,
Thomas F. McDonough
Secretary
-28-
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY,
MANAGEMENT AND ADMINISTRATION AGREEMENT
AGREEMENT, dated and effective as of September 7, 1998 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 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,
A-1
<PAGE>
officers or employees of the Manager; provided, however, that the Fund, and not
the Manager, shall bear travel expenses (or an appropriate portion thereof) of
directors and officers of the Fund who are directors, officers or employees of
the Manager to the extent that such expenses relate to attendance at meetings of
the Board of Directors of the Fund or any committees thereof or advisers
thereto. The Manager shall bear all expenses arising out of its duties hereunder
but shall not be responsible for any expenses of the Fund other than those
specifically allocated to the Manager in this paragraph 1. In particular, but
without limiting the generality of the foregoing, the Manager shall not be
responsible, except to the extent of the reasonable compensation of such of the
Fund's employees as are directors,officers or employees of the Manager whose
services may be involved, for the following expenses of the Fund: organization
and certain offering expenses of the Fund (including out-of-pocket expenses, but
not including overhead or employee costs of the Manager or of any one or more
organizations retained by the Fund or by the Manager as 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"), 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
A-2
<PAGE>
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 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
A-3
<PAGE>
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.
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 for an initial period ending
September 30, 1999, and shall continue in effect from year to year thereafter,
but only so long as
A-4
<PAGE>
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 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.
A-5
<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.
SCUDDER SPAIN AND PORTUGAL FUND, INC.
By:
------------------------------
President
SCUDDER KEMPER INVESTMENTS, INC.
By:
------------------------------
A-6
<PAGE>
EXHIBIT B
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR CERTAIN OTHER FUNDS ADVISED BY
SCUDDER KEMPER INVESTMENTS, INC.
SCUDDER FUNDS
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS++
---- --------- -------- --------
<S> <C> <C> <C> <C>
Global Growth
Global Discovery Fund Above-average capital appreciation 1.100% of net assets $ 349,121,954
over the long term by investing
primarily in the equity securities of
small companies located throughout the
world.
Scudder Emerging Markets Long term growth of capital primarily 1.25% of net assets+ $ 219,624,481
Growth Fund through equity investment in emerging
markets around the globe.
Scudder Global Fund Long term growth of capital through a 1.000% to $500 million $ 1,766,207,742
diversified portfolio of marketable 0.950% next $500 million
securities, primarily equity securities, 0.900% next $500 million
including common stock, preferred stocks 0.850% over $1.5 billion
and debt securities convertible into
common stocks.
+ Subject to waivers and/or expense limitations.
++ Assets are shown as of the Fund's most recent fiscal year end.
B-1
<PAGE>
FUND OBJECTIVE FEE RATE ASSETS++
---- --------- -------- --------
Scudder Gold Fund Maximum return (principal change and 1.000% of net assets $ 132,131,545
income) consistent with investing in
a portfolio of gold-related equity
securities and gold.
Scudder Greater Europe Growth Fund Long term growth of capital through 1.00% to $1 billion $ 195,514,335
investments primarily in the equity 0.90% thereafter*
securities of European companies.
Scudder International Fund Long term growth of capital primarily 0.900% to $500 million $ 2,884,919,345
from foreign equity securities. 0.850% next $500 million
0.800% next $1 billion
0.750% next $1 billion
0.700% thereafter
Scudder International Growth and Long term growth of capital and 1.000% of net assets+ $ 48,880,164
Income Fund current income primarily from
foreign equity securities.
Scudder International Growth Fund Long term capital appreciation 1.000% of net assets N/A**
through investment primarily in
the equity securities of foreign
companies with high growth potential.
Scudder International Value Fund Long term capital appreciation 1.000% of net assets N/A**
through investment primarily in
undervalued foreign equity securities.
Scudder Latin America Fund Long term capital appreciation 1.250% to $1 billion $ 882,555,049
through investment primarily in the 1.150% thereafter
securities of Latin American issuers.
+ Subject to waivers and/or expense limitations.
* The addition of this breakpoint is effective September 30, 1998.
** Commenced operations on 9/1/98.
B-2
<PAGE>
FUND OBJECTIVE FEE RATE ASSETS++
---- --------- -------- --------
Scudder Pacific Opportunities Fund Long term growth of capital primarily 1.100% of net assets $ 147,276,692
through investment in the equity
securities of Pacific Basin
companies, excluding Japan.
The Japan Fund, Inc. Long term capital appreciation 0.850% to $100 million $ 265,181,931
through investment primarily in 0.750% next $200 million
equity securities, (including 0.700% next $300 million
American Depository Receipts of 0.650% thereafter
Japanese companies).
Closed-End Funds
The Argentina Fund, Inc. Long term capital appreciation Adviser: $ 135,327,320
through investment primarily in 1.100% of net assets
equity securities of Argentine issuers.
Sub-Adviser:
Paid by Adviser. 0.100% of net
assets
The Brazil Fund, Inc. Long term capital appreciation 1.200% to $150 million $ 429,429,751
through investment primarily in 1.050% next $150 million
equity securities of Brazilian 1.000% next $200 million 0.900%
issuers. thereafter
Administrator: Receives an
annual fee of $50,000
The Korea Fund, Inc. Long term capital appreciation Adviser: 1.150% to $50 million $ [661,690,073]
through investment primarily 1.100% next $50 million
in equity securities of Korean 1.000% next $250 million
companies. 0.950% next $400 million
0.900% thereafter
Sub-Adviser - Daewoo:
B-3
<PAGE>
FUND OBJECTIVE FEE RATE ASSETS++
---- --------- -------- --------
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
Montgomery Street Income High level of current income 0.500% to $150 million $ 207,315,702
Securities, Inc. consistent with prudent investment 0.450% next $50 million
risks through a diversified 0.400% thereafter
portfolio primarily of debt securities.
Scudder Global High Income Fund, High level of current income and, 1.200% of net assets $ 80,721,844
Inc. (formerly The Latin America secondarily, capital appreciation
Dollar Income Fund, Inc.) through investment principally in
dollar-denominated Latin American
debt instruments.
Scudder New Asia Fund, Inc. Long term capital appreciation 1.250% to $75 million $ 98,866,168
throughinvestment primarily in 1.150% next $125 million
equity securities of Asian companies. 1.100% thereafter
Scudder New Europe Fund, Inc. Long term capital appreciation 1.250% to $75 million $ 320,293,393
through investment primarily in 1.150% next $125 million
equity securities of companies 1.100% thereafter
traded on smaller or emerging
European markets and companies
Inc. that are viewed as likely
to benefit from changes and
developments throughout Europe.
AARP FUNDS
AARP International Growth and Long term capital growth, consistent 0.350% to $2 billion $ 20,259,062
Income Fund with a share price more stable than 0.330% next $2 billion
other international mutual funds, 0.300% next $2 billion
B-4
<PAGE>
FUND OBJECTIVE FEE RATE ASSETS++
---- --------- -------- --------
through investment primarily in a 0.280% next $2 billion
diversified portfolio of foreign 0.260% next $3 billion
common stocks with above-average 0.250% next $3 billion
dividend yields and foreign 0.240% thereafter+
securities convertible into common Individual Fund Fee
stocks. 0.600% of net assets
+ Subject to waivers and/or expense limitations.
B-5
<PAGE>
TRUST/FUND OBJECTIVE FEE RATE ASSETS++
---------- --------- -------- --------
KEMPER FUNDS
Kemper International Long-term growth of capital and 1.000% of net assets
Growth and Income current income, primarily from foreign
Portfolio equity securities.
Kemper International Total return, a combination of capital 0.750% of net assets $ 200,046,000
Portfolio growth and income, principally through
an internationally diversified
portfolio of equity securities.
Kemper Asian Growth Fund Long-term capital growth by 0.850% to $250 million $ 6,398,000
investing in a diversified portfolio 0.820% next $750 million
of Asian equity securities. 0.800% next $1.5 billion
0.780% next $2.5 billion
0.750% next $2.5 billion
0.740% next $2.5 billion
0.730% next $2.5 billion
0.720% thereafter*
Kemper Europe Fund Long-term capital growth by 0.750% to $250 million $ 23,910,000
investing in a diversified 0.720% next $750 million
portfolio of European equity 0.700% next $1.5 billion
securities. 0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
B-6
<PAGE>
TRUST/FUND OBJECTIVE FEE RATE ASSETS++
---------- --------- -------- --------
KEMPER FUNDS
* The addition of this breakpoint is effective 9/30/98.
Kemper International Fund Total return, a combination of 0.750% to $250 million $ 588,069,000
capital growth and income, 0.720% next $750 million
principally through an 0.700% next $1.5 billion
internationally diversified 0.680% next $2.5 billion
portfolio of equity securities. 0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
The Growth Fund of Spain, Inc. Long-term capital appreciationg 1.000% of net assets
by investin primarily in equity
securities of Spanish companies.
Kemper Global/International Series,
Inc.
*Commenced operations on 9/1/98
B-7
<PAGE>
TRUST/FUND OBJECTIVE FEE RATE ASSETS++
---------- --------- -------- --------
KEMPER FUNDS
Kemper Emerging Markets Growth Long-term growth of capital 1.250% of net assets
Fund primarily through equity investment
in emerging markets around
the globe.
Kemper Global Blue Chip Fund Long-term growth of capital through 1.000% to $250 million
a diversified worldwide portfolio 0.950% next $750 million
of marketable securities, primarily 0.900% thereafter
equity securities.
Kemper International Growth and Long-term growth of capital and 1.000% of net assets
Income Fund income, primarily from foreign
equity securities.
Kemper Latin America Fund Long-term capital appreciation through 1.250% to $250 million
investment primarily in the securities 1.200% next $750 million
of Latin American issuers. 1.150% thereafter
Kemper Global Discovery Fund Above-average capital appreciation
over the long term by investing
primarily in the equity securities
of small companies located throughout
the world.
</TABLE>
B-8
<PAGE>
PROXY SCUDDER SPAIN AND PORTUGAL FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - October 28, 1998
The undersigned hereby appoints Daniel Pierce, Nicholas Bratt, Paul
Elmlinger 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 Annual Meeting of Stockholders of the Fund to be held at the offices
of Scudder Kemper Investments, Inc., 25th Floor, 345 Park Avenue (at 51st
Street), New York, New York 10154, on Wednesday, October 28, 1998 at 2:30 p.m.,
eastern time, and at any adjournments thereof. Each item below is a Proposal of
the Fund
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 Kemper, recommend that you vote FOR each item.
<TABLE>
<S> <C>
1. To approve the current Investment Management,
Advisory and Administration Agreement
between the Fund and Scudder Kemper
Investments, Inc.; FOR / / AGAINST / / ABSTAIN / /
2. Election of Directors;
/ / FOR all nominees listed below (except as / / WITHHOLD AUTHORITY to vote
marked to the contrary) for all nominees listed below
Nominees: Richard M. Hunt and Daniel Pierce
(Instruction: To withhold authority to vote for any individual
nominee, write the name of that nominee below.)
---------------------------------------
3. To ratify the selection of PricewaterhouseCoopers LLP as the Fund's
independent accountants for the fiscal year ended September 30, 1998.
FOR / / AGAINST / / ABSTAIN / /
</TABLE>
B-9
<PAGE>
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 ___________________, 1998
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.
B-10
