<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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VALUE EQUITY TRUST
INVESTMENT TRUST
GLOBAL/INTERNATIONAL FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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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Preliminary Proxy Materials Dated: October 20, 1998
October , 1998
GLOBAL/INTERNATIONAL FUND, INC.
INVESTMENT TRUST
VALUE EQUITY TRUST
IMPORTANT NEWS
While we encourage you to read the full text of the enclosed Proxy
Statement, here's a brief overview of some matters affecting your Fund that will
be the subject of a shareholder 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 ("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
shareholders 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.
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 shareholders 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 shareholders approve a new investment management agreement
whenever there is a change in control of a fund's investment manager (even
in the most technical 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 shareholder approval within 150
days. Accordingly, we are
<PAGE> 3
seeking shareholder approval of the new investment management agreement with
your Fund.
Q: HOW WILL THE ZURICH-B.A.T TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A: We do not expect the transaction to affect you as a Fund shareholder. Your
Fund and your Fund's investment objectives will not change as a result of
the transaction. You will still own the same shares in the same Fund. The
new investment management agreement is substantially identical to the former
investment management agreement, except for the dates of execution and
termination and the addition, for Value Fund, of a breakpoint in the fee
structure. Similarly, the other service arrangements between your Fund and
Scudder Kemper or affiliates of Scudder Kemper will not be affected by the
transaction. If shareholders 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 shareholders.
Q: WILL THE INVESTMENT MANAGEMENT FEES INCREASE?
A: No, the investment management fee rates paid by your Fund will remain the
same. For Value Fund, effective investment management fee rates may even
decrease in the future, as a result of the addition of a breakpoint in the
fee structure (as described in the enclosed Proxy Statement under
"Differences Between the Former and New Investment Management Agreements").
Q: WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A: In order to save your Fund the expense of a subsequent meeting, a vote is
also being sought for a revision of your Fund's fundamental lending policy
to give the Board of your Fund discretionary authority to permit your Fund
to enter into interfund lending arrangements, subject to Securities and
Exchange Commission approval.
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 the Proposals on the enclosed proxy card(s).
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 1-800-248-2681.
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INVESTMENT TRUST
VALUE EQUITY TRUST
Two International Place
Boston, Massachusetts 02110
GLOBAL/INTERNATIONAL FUND, INC.
345 Park Avenue
New York, New York 10154
October , 1998
Dear Shareholders:
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, we are asking the shareholders of each of the
funds for which Scudder Kemper acts as investment manager, including your Fund,
to approve a new investment management agreement with Scudder Kemper.
The Zurich-B.A.T transaction should not affect you as a Fund shareholder.
Your Fund shares will not change, the advisory fee rates and expenses paid by
your Fund will not increase and the investment objectives of your Fund will
remain the same.
Shareholders 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.
Because all of the funds for which Scudder Kemper acts as investment
manager are holding shareholder meetings, if you own shares of more than one
fund, you will receive more than one proxy card. Please sign and return each
proxy card you receive.
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Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your executed proxy card(s) after a reasonable amount of time, you may receive a
telephone call from our proxy solicitor, Shareholder Communications Corporation,
reminding you to vote.
Respectfully,
/s/ Daniel Pierce
Daniel Pierce
President
Investment Trust
Value Equity Trust
Chairman
Global/International Fund, Inc.
WE URGE YOU TO SIGN AND RETURN YOUR PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID
ENVELOPE TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT REGARDLESS OF
THE NUMBER OF SHARES YOU OWN.
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GLOBAL/INTERNATIONAL FUND, INC.
INVESTMENT TRUST
VALUE EQUITY TRUST
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each a "Special
Meeting") of each of Classic Growth Fund, Global Discovery Fund and Value Fund
(each a "Fund" and, collectively, the "Funds"), each a series of Investment
Trust (a "Trust"), Global/International Fund, Inc. (the "Corporation") and Value
Equity Trust (a "Trust" and, together with Investment Trust, the "Trusts"),
respectively, will be held jointly at the offices of Scudder Kemper Investments,
Inc., 13th Floor, Two International Place, Boston, Massachusetts 02110, on
December 17, 1998, at 10:00 a.m., Eastern time, for the following purposes:
PROPOSAL 1: To approve a new investment management agreement for each
Fund with Scudder Kemper Investments, Inc.; and
PROPOSAL 2: To approve the revision of each Fund's fundamental
lending policy.
The appointed proxies will vote in their discretion on any other business
as may properly come before a Special Meeting or any adjournments thereof.
Holders of record of shares of each Fund at the close of business on
October 19, 1998 are entitled to vote at the Special Meeting and at any
adjournments thereof.
In the event that the necessary quorum to transact business or the vote
required to approve a Proposal is not obtained at the Special Meeting with
respect to one or more Funds, the persons named as proxies may propose one or
more adjournments of the Special Meeting in accordance with applicable law, to
permit further solicitation of proxies. Any such adjournment as to a matter will
require the affirmative vote of the holders of a majority of the concerned
Fund's shares present in person or by proxy at the Special Meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are
<PAGE> 7
entitled to vote in favor of the Proposals and will vote against any such
adjournment those proxies to be voted against the Proposals.
By Order of the Boards of Trustees/Directors,
/s/ Thomas F. McDonough
Thomas F. McDonough
Secretary
October , 1998
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) 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(S) MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE SPECIAL
MEETINGS. IF YOU CAN ATTEND THE SPECIAL MEETINGS AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
<PAGE> 8
INVESTMENT TRUST
VALUE EQUITY TRUST
Two International Place
Boston, Massachusetts 02110
GLOBAL/INTERNATIONAL FUND, INC.
345 Park Avenue
New York, New York 10154
JOINT PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees/Directors (the "Board") of each of the Trusts/
Corporation listed above (each Trust is a "Trust," collectively, the "Trusts"
and the Corporation is the "Corporation") for use at the Special Meetings of
Shareholders of the following series of the Trusts/Corporation: Classic Growth
Fund of Investment Trust, Global Discovery Fund of Global/International Fund,
Inc. and Value Fund of Value Equity Trust (each such series is referred to
herein as a "Fund" and, collectively, the "Funds"), to be held jointly at the
offices of Scudder Kemper Investments, Inc. ("Scudder Kemper"), 13th Floor, Two
International Place, Boston, Massachusetts 02110, on December 17, 1998 at 10:00
a.m., Eastern time, and at any and all adjournments thereof (the "Special
Meeting").
In the descriptions of the Proposals below, the word "fund" is sometimes
used to mean investment companies or series thereof in general, and not the
Funds whose proxy statement this is. In addition, in this Proxy Statement, for
simplicity, actions are described as being taken by a Fund that is a series of a
Trust or the Corporation, although all actions are actually taken by the
respective Trust or Corporation on behalf of the applicable series.
This Proxy Statement, the Notice of Special Meetings and the proxy cards
are first being mailed to shareholders on or about October 19, 1998 or as soon
as practicable thereafter. Any shareholder giving a proxy has the power to
revoke it by mail (addressed to the Secretary at the principal executive office
of the Funds, c/o Scudder Kemper Investments, Inc., at the address for each Fund
shown at the beginning of this Proxy Statement) or in person at the Special
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
Special 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 shareholders' meeting, in person or by proxy, of the
holders of a majority, in the case of Classic Growth Fund and Value Fund, and
one-third, in the case of Global Discovery Fund, of the shares of a Fund
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
<PAGE> 9
business or the vote required to approve any Proposal is not obtained at the
Special Meeting with respect to one or more Funds, the persons named as proxies
may propose one or more adjournments of the Special Meeting in accordance with
applicable law to permit further solicitation of proxies with respect to the
Proposal that did not receive the vote necessary for its passage or to obtain a
quorum. Any such adjournment as to a matter will require the affirmative vote of
the holders of a majority of the concerned Fund's shares present in person or by
proxy at the Special Meeting. The persons named as proxies will vote in favor of
such adjournment those proxies which they are entitled to vote in favor of that
Proposal and will vote against any such adjournment those proxies to be voted
against that Proposal. For purposes of determining the presence of a quorum for
transacting business at a Special 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 a 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, shareholders are urged to forward their voting
instructions promptly.
Each Proposal requires the affirmative vote of a "majority of the
outstanding voting securities" of a Fund. The term "majority of the outstanding
voting securities," as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), and as used in this Proxy Statement, means: the affirmative
vote of the lesser of (1) 67% of the voting securities of each Fund present at
the meeting if more than 50% of the outstanding voting securities of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding voting
securities of each Fund.
Abstentions will have the effect of a "no" vote on each Proposal. Broker
non-votes will have the effect of a "no" vote on each Proposal, each of which
requires the approval of a specified percentage of the outstanding shares of
each Fund, if such vote is determined on the basis of obtaining the affirmative
vote of more than 50% of the outstanding voting securities 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 Special Meeting with respect to each Proposal.
Shareholders of each Fund will vote separately with respect to each
Proposal.
Holders of record of the shares of each Fund at the close of business on
October 19, 1998 (the "Record Date"), as to any matter on which they are
entitled to vote, will be entitled to one vote per share on all business of the
Special Meeting. As of June 30, 1998, there were 6,072,786 shares of Classic
Growth Fund outstanding, 17,117,704 shares of Global Discovery Fund outstanding
and 22,741,712 shares of Value Fund outstanding.
2
<PAGE> 10
Appendix 1 sets forth the beneficial owners of at least 5% of a Fund's
shares. To the best of each Trust's/Corporation's knowledge, as of June 30,
1998, no person owned beneficially more than 5% of any Fund's outstanding
shares, except as stated in Appendix 1.
Appendix 2 hereto sets forth the number of shares of each Fund owned
directly or beneficially by the Trustees/Directors of the relevant Board and the
number of shares of Global Discovery Fund owned directly or beneficially by the
Chief Executive Officer of Global/International Fund, Inc.
Each Fund provides periodic reports to all of its shareholders 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 each Fund and a copy of any more recent semi-annual report, without
charge, by calling 800-225-2470 or writing the Fund, c/o Scudder Kemper
Investments, Inc., at the address for each Fund shown at the beginning of this
Proxy Statement.
PROPOSAL 1: APPROVAL OF NEW
INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder Kemper acts as the investment manager to each Fund pursuant to an
investment management agreement entered into by each Fund and Scudder Kemper.
The investment management agreement in effect between each 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"), which is described below, is referred to in
this Proxy Statement as a "Former Investment Management Agreement,"
collectively, the "Former Investment Management Agreements." The investment
management agreement currently in effect between each Fund and Scudder Kemper,
which is also described below, was executed as of the consummation of the
Zurich-B.A.T Transaction and is referred to in this Proxy Statement as a "New
Investment Management Agreement," collectively, the "New Investment Management
Agreements" and, together with the Former Investment Management Agreements, the
"Investment Management Agreements." (Scudder Kemper is sometimes referred to in
this Proxy Statement as the "Investment Manager.")
The information set forth in this Proxy Statement and the accompanying
materials concerning the Transaction, Scudder Kemper, Zurich, B.A.T and their
respective affiliates has been provided to the Funds by Scudder Kemper based
upon information that Scudder Kemper received from Zurich and its affiliates.
On June 26, 1997, 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 subsidi-
3
<PAGE> 11
ary, 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 each Fund's investment
management agreement with Scudder. Consequently, the Former Investment
Management Agreement between each Fund and Scudder Kemper was approved by each
Trust's/Corporation's Board and by each Fund's shareholders.
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 shareholders became Zurich Allied AG
shareholders. At the same time, B.A.T separated its financial services business
from its tobacco-related businesses by spinning off to its shareholders a new
British company, Allied Zurich p.l.c., 22 Arlington Street, London, England SW1A
1RW, United Kingdom, 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 ("Zurich Financial Services"), in each case
in exchange for shares of Zurich Financial Services. These transactions were
completed on September 7, 1998. As a result, upon the completion of the
Transaction, the former Zurich shareholders became the owners (through Zurich
Allied AG) of 57% of the voting stock of Zurich Financial Services, and former
B.A.T shareholders 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.
4
<PAGE> 12
Below is a simplified chart showing the corporate structure of Zurich
Financial Services after these transactions:
[ZURICH FINANCIAL SERVICES CHART]
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 Chairman and Chief Executive Officer, became Chairman and
Chief Executive Officer of Zurich Financial Services. In addition to his vote by
virtue of
5
<PAGE> 13
his position on the Board of Directors, 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 were 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 were B.A.T executives.
The Board of Directors of Zurich Allied AG initially consists of 11
members, eight of whom were 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 were 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. shareholders 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; Eagle Star Reinsurance Company Ltd., UK ("Eagle Star")
(which Zurich Financial Services has agreed to sell to GE Capital); 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.
6
<PAGE> 14
Governance arrangements that were put in place at the time of the
acquisition of Zurich's 70% interest in Scudder Kemper (which are discussed
below under "Investment Manager") remain unaffected by the Transaction. These
arrangements preclude the making of certain major decisions affecting Scudder
Kemper without the approval of Scudder Kemper directors elected by the
non-Zurich shareholders of Scudder Kemper.
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 each
Fund's Former Investment Management Agreement with Scudder Kemper. As required
by the 1940 Act, each of the Former Investment Management Agreements provided
for its automatic termination in the event of its assignment. Accordingly, a New
Investment Management Agreement between each Fund and Scudder Kemper was
approved by the Board members of each Fund and is now being proposed for
approval by shareholders of each Fund. Scudder Kemper has received an exemptive
order from the Securities and Exchange Commission (the "SEC" or the
"Commission") permitting each Fund to obtain shareholder approval of its New
Investment Management Agreement within 150 days after the consummation of the
Transaction, which occurred on September 7, 1998 (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, each Fund's investment management fees are being held in escrow until the
earlier of shareholder approval of the Fund's New Investment Management
Agreement or the expiration of the 150 day period. A copy of the master form of
New Investment Management Agreement is attached hereto as Exhibit A. THE NEW
INVESTMENT MANAGEMENT AGREEMENT FOR EACH FUND IS SUBSTANTIALLY IDENTICAL TO THE
CORRESPONDING FORMER INVESTMENT MANAGEMENT AGREEMENT, EXCEPT FOR THE DATES OF
EXECUTION AND TERMINATION AND, IN THE CASE OF VALUE FUND, THE ADDITION OF A
BREAKPOINT IN THE FEE STRUCTURE. In addition, the portfolio managers for each
Fund will not change as a result of the Transaction. The material terms of the
Investment Management Agreements are described under " Description of the
Investment Management Agreements" below.
BOARD'S RECOMMENDATION
On August 6, 1998 for Global/International Fund, Inc. and Value Equity
Trust and on August 12, 1998 for Investment Trust, the Board of each Trust/
Corporation met and the Board members of each Trust/Corporation, including the
Board members who are not parties to such agreement or "interested persons" (as
defined in the 1940 Act) (the "Non-Interested Trustees/Directors" or
"Non-Interested Board members") of any such party, voted to approve the New
Investment Management Agreements and to recommend approval to the shareholders
of each applicable Fund. On September 15, 1998, the Board members of Value
Equity Trust approved an amendment adding a breakpoint to
7
<PAGE> 15
the New Investment Management Agreement applicable to Value Fund, effective
September 30, 1998 (also described below).
For information about the Boards' deliberations and the reasons for their
recommendation, please see "Board's Evaluation" below.
BOARD'S EVALUATION
The Non-Interested Board members of each Trust/Corporation 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 each Trust/Corporation
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.
In the course of the annual review by the Non-Interested Board members of
the continuance of the investment management agreements between each Fund and
Scudder Kemper, Scudder Kemper furnished the Board members with detailed
information regarding the proposed Transaction, including information provided
to the shareholders 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 Board members that the proposed Transaction would not have a
material effect on the operations of the Funds or on their shareholders.
During the course of their deliberations, the Non-Interested Trustees/
Directors considered a variety of factors, including the nature, quality and
extent of the services furnished by Scudder Kemper to the Funds; the necessity
of Scudder Kemper's maintaining and enhancing its ability to retain and attract
capable personnel to serve the Funds; the increased complexity of the domestic
and international securities markets; the investment record of Scudder Kemper in
managing the Funds; Scudder Kemper's profitability with respect to the Funds 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 Funds; improvements in the quality and scope of the shareholder services
provided to the Funds' shareholders; the possible benefits to the Funds and
their shareholders from payments made under the Administrative Services
Agreements and Rule 12b-1 Plans and the risks assumed by Scudder Kemper; the
advantages and possible disadvantages to the Funds of having an adviser of the
Funds which also serves other investment companies as
8
<PAGE> 16
well as other accounts; possible benefits to Scudder Kemper from serving as
adviser and from affiliates of Scudder Kemper serving as principal underwriter,
transfer agent, fund accounting agent and administrative services agent of the
Funds; 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 Funds; and various other factors. The
Non-Interested Board members of each Trust/Corporation considered the foregoing
factors with respect to each of the applicable Funds.
The Board of each Trust/Corporation 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 in the 1940 Act) to receive any amount
or benefit in connection with a change in control of the investment adviser so
long as two conditions are met. First, for a period of three years after the
transaction, at least 75% of the board members of the investment company must
not be "interested persons" of the investment company's investment adviser or
its predecessor adviser. On or prior to the consummation of the Transaction,
each of the Boards 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 company or its shareholders (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 meetings of, the Funds' shareholders as well as other fees
and expenses in connection with the Transaction, including the fees and expenses
of legal counsel and consultants to the Funds and the Non-Interested
Trustees/Directors.
In addition to the foregoing factors, the Non-Interested Trustees/Directors
gave careful consideration to the likely impact of the Transaction on the
Scudder Kemper organization. In this regard, the Non-Interested
Trustees/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
9
<PAGE> 17
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 Trustees/Directors concluded that the
Transaction should cause no reduction in the quality of services provided to the
Funds and believe that the Transaction should enhance Scudder Kemper's
capabilities and strengths.
DESCRIPTION OF THE INVESTMENT MANAGEMENT AGREEMENTS
Except as disclosed below, all Former and New Investment Management
Agreements are substantially identical. Under the Investment Management
Agreements, Scudder Kemper provides each Fund with continuing investment
management services. The Investment Manager also determines which securities
should be purchased, held, or sold, and what portion of each Fund's assets
should be held uninvested, subject to each Trust's/Corporation's Charter, By-
Laws, investment policies and restrictions, the provisions of the 1940 Act, and
such policies and instructions as the Trustees/Directors may have determined.
Each Investment Management Agreement provides that the Investment Manager
will provide portfolio management services, place portfolio transactions in
accordance with policies expressed in each Fund's registration statement, pay
each Fund's office rent, and render significant administrative services on
behalf of each Fund (not otherwise provided by third parties) necessary for each
Fund's operating as an open-end investment company, including, but not limited
to, preparing reports to and meeting materials for each Trust's/Corporation's
Board and reports and notices to Fund shareholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of various third-party and affiliated service providers to each Fund
(such as each Fund's transfer and pricing agents, fund accounting agent,
custodian, accountants and others) and other persons in any capacity deemed
necessary or desirable to Fund operations; preparing and making filings with the
SEC and other regulatory and self-regulatory organizations, including but not
limited to, preliminary and definitive proxy materials, post-effective
amendments to the Registration Statement, semi-annual reports on Form N-SAR and
notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by each Fund's transfer agent; assisting in the preparation and filing
of each Fund's federal, state and local tax returns; preparing and filing each
Fund's federal excise tax returns pursuant to Section 4982 of the Internal
Revenue Code of 1986, as amended; providing assistance with investor and public
relations matters; monitoring the valuation of portfolio securities and the
calculation of net asset value; monitoring the registration of shares of each
Fund under applicable federal and state securities laws; maintaining or causing
to be maintained for each Fund all books, records and reports and any other
information required under the 1940 Act, to the extent such books, records and
reports and other information are not maintained by each Fund's custodian or
other agents of each Fund; assisting in establishing accounting policies of each
Fund; assisting in the resolution of accounting issues that may arise with
respect to each Fund's operations and consulting with each Fund's
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<PAGE> 18
independent accountants, legal counsel and other agents as necessary in
connection therewith; establishing and monitoring each Fund's operating expense
budgets; reviewing each Fund's bills; processing the payment of bills that have
been approved by an authorized person; assisting each Fund in determining the
amount of dividends and distributions available to be paid by each Fund to its
shareholders, preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is required for
such parties to effect the payment of dividends and distributions; and otherwise
assisting each Fund in the conduct of its business, subject to the direction and
control of each Trust's/Corporation's Board.
Each Investment Management Agreement also provides that the Investment
Manager is not required to pay any expenses of any activity primarily intended
to result in the sale of Fund securities if and to the extent that (i) the
expenses are to be borne by a principal underwriter acting as the distributor;
or (ii) the Fund has adopted a Rule 12b-1 Plan providing for the assumption of
some or all of those expenses. Under each Investment Management Agreement, each
Fund is responsible for other expenses, including organizational expenses
(including out-of-pocket expenses, but not including the Investment Manager's
overhead or employee costs); brokers' commissions or other costs of acquiring or
disposing of any portfolio securities of each Fund; legal, auditing and
accounting expenses; payment for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any; taxes and
governmental fees; the fees and expenses of each Fund's transfer agent; expenses
of preparing share certificates and any other expenses, including clerical
expenses, of issuance, offering, distribution, sale, redemption or repurchase of
shares; the expenses of and fees for registering or qualifying securities for
sale; the fees and expenses of Non-Interested Trustees/Directors; the cost of
printing and distributing reports, notices and dividends to current
shareholders; and the fees and expenses of each Fund's custodians,
subcustodians, accounting agent, dividend disbursing agents and registrars. Each
Fund may arrange to have third parties assume all or part of the expenses of
sale, underwriting and distribution of shares of each Fund. Each Fund is also
responsible for expenses of shareholders' and other meetings and its expenses
incurred in connection with litigation and the legal obligation it may have to
indemnify officers and Trustees/Directors of each Trust/Corporation with respect
thereto. Each Fund is also responsible for the maintenance of books and records
which are required to be maintained by each Fund's custodian or other agents of
each Trust/Corporation; telephone, telex, facsimile, postage and other
communications expenses; any fees, dues and expenses incurred by each Fund in
connection with membership in investment company trade organizations; expenses
of printing and mailing prospectuses and statements of additional information of
each Fund and supplements thereto to current shareholders; costs of stationery;
fees payable to the Investment Manager and to any other Fund advisors or
consultants; expenses relating to investor and public relations; interest
charges, bond premiums and other insurance
11
<PAGE> 19
expense; freight, insurance and other charges in connection with the shipment of
each Fund's portfolio securities; and other expenses.
The Investment Manager is responsible for the payment of the compensation
and expenses of all Trustees/Directors, officers and executive employees of each
Fund (including each Fund's share of payroll taxes) affiliated with the
Investment Manager and making available, without expense to each Fund, the
services of such Trustees/Directors, officers and employees as may duly be
elected officers of each Trust/Corporation, subject to their individual consent
to serve and to any limitations imposed by law. Each Fund is responsible for the
fees and expenses (specifically including travel expenses relating to Fund
business) of Trustees/Directors not affiliated with the Investment Manager.
Under each Investment Management Agreement, the Investment Manager also pays
each Fund's share of payroll taxes, as well as expenses, such as travel expenses
(or an appropriate portion thereof), of Trustees/Directors and officers of each
Trust/Corporation who are directors, officers or employees of the Investment
Manager, except to the extent that such expenses relate to attendance at
meetings of the Board of each Trust/Corporation, or any committees thereof or
advisers thereto, held outside Boston, Massachusetts or New York, New York.
During each Fund's most recent fiscal year, no compensation, direct or otherwise
(other than through fees paid to the Investment Manager), was paid or became
payable by each Trust/Corporation to any of its officers or Trustees/Directors
who were affiliated with the Investment Manager.
In return for the services provided by the Investment Manager as investment
manager and the expenses it assumes under each Investment Management Agreement,
each Fund pays the Investment Manager a management fee which is accrued daily
and payable monthly. The management fee rate for each Fund under the Investment
Management Agreements is set forth in Appendix 3 hereto. As of the end of each
Fund's last fiscal year, each Fund had net assets and paid an aggregate
management fee to the Investment Manager during such period as also set forth in
Appendix 3 hereto.
Each Investment Management Agreement further provides that the Investment
Manager shall not be liable for any error of judgment or mistake of law or for
any loss suffered by any Fund in connection with matters to which such agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Manager in the performance of its
duties or from reckless disregard by the Investment Manager of its obligations
and duties under such agreement. Each Investment Management Agreement also
provides that purchase and sale opportunities, which are suitable for more than
one client of the Investment Manager, will be allocated by the Investment
Manager in an equitable manner. In addition, each 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, each Trust/Corporation, with respect to each of its Funds, if any, has
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<PAGE> 20
the non-exclusive right to use and sublicense the Scudder name and marks as part
of its name, and to use the Scudder Marks in the Trust's/Corporation's
investment products and services. This license continues only as long as the
Investment Management Agreement or any other investment advisory agreement is in
place, and only as long as Scudder Kemper continued 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, each Trust/ Corporation, on behalf
of each of its Funds, if any, undertakes certain responsibilities and agrees to
certain restrictions, such as agreeing not to challenge the validity of the
Scudder Marks or ownership by Scudder Trust Company and the obligation to use
the name within commercially reasonable standards of quality. In the event the
agreement is terminated, each Trust/Corporation, on behalf of each of its Funds,
if any, must not use a name likely to be confused with those associated with the
Scudder Marks. Lastly, each Investment Management Agreement contains a provision
stating that it supersedes all prior agreements.
Each Investment Management Agreement may be terminated without penalty upon
sixty (60) days' written notice by either party. Each Fund may agree to
terminate its Investment Management Agreement either by the vote of a majority
of the outstanding voting securities of the Fund, or by a vote of the Board. As
stated above, each Investment Management Agreement automatically terminates in
the event of its assignment.
Scudder Kemper or one of its predecessors has acted as the Investment
Manager for each Fund since each Fund commenced operations as shown in Appendix
4 hereto. Also shown in Appendix 4 is the date of each Former Investment
Management Agreement, the date when each Former Investment Management Agreement
was last approved by the shareholders of each Fund, the date when each New
Investment Management Agreement was last approved by the Trustees/Directors of
each Fund and the date to which each New Investment Management Agreement was
last continued. Each Former Investment Management Agreement was last submitted
to shareholders prior to its becoming effective, as required by the 1940 Act, in
connection with the Scudder-Zurich Transaction.
THE NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreement for each Fund, which is currently
in effect, is dated the date of the consummation of the Transaction, which
occurred on September 7, 1998. Each New Investment Management Agreement will be
in effect for an initial term ending on 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 each Fund, or
by the Board and, in either event, the vote of a majority of the Non-Interested
Trustees/Directors, cast in person at a meeting called for such purpose. In the
event that shareholders of a Fund do not approve the New Investment Management
Agreement, it will terminate. In such event, each Board will take such action as
it deems to be in the best interests of the Fund and its shareholders.
13
<PAGE> 21
DIFFERENCES BETWEEN THE FORMER AND NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreements are substantially identical to the
Former Investment Management Agreements, except for the dates of execution and
termination. In addition, the New Investment Management Agreement of Value Fund
has been amended to add a breakpoint in the Fund's fee structure. The New
Investment Management Agreement, as amended, of Value Fund provides for an
additional breakpoint, which reduces fees payable to the Investment Manager as
assets increase, effective as of September 30, 1998. The new breakpoint has been
added at the $500 million level, reducing the fee on assets over $500 million
from 0.70% to 0.65%.
INVESTMENT MANAGER
Scudder Kemper, an indirect subsidiary of Zurich which resulted from the
combination of the businesses of Scudder and Kemper 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 August 31, 1998, Scudder Kemper has more than
$241.1 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 (and the home offices of Zurich
Financial Services and Zurich Allied AG) 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
- ------------------------------
* Mythenquai 2, Zurich, Switzerland
(#) 345 Park Avenue, New York, New York
14
<PAGE> 22
Director, Cornelia M. Small(#) is a Corporate Vice President and Director,
Laurence Cheng* is a Director and, effective November 1, 1998, each of Gunther
Gose* and William H. Bolinder(+) 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 Rolf Huppi 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
principal occupation of Gunther Gose is serving as the Chief Financial Officer
of Zurich Financial Services; the principal occupation of William H. Bolinder is
serving as a member of the Group Executive Board of Zurich Financial Services.
Appendix 5 includes information regarding each Trustee/ Director of each
Trust/Corporation who is associated with Scudder Kemper.
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. ("ZKIH"), 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 "Plan Trust"); and 9.66% by the
Plan 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 Trustee/Director of each
Trust/Corporation, 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
- ------------------------------
(#) 345 Park Avenue, New York, New York
* Mythenquai 2, Zurich, Switzerland
(+ )1400 American Lane, Schaumburg, Illinois
15
<PAGE> 23
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 each 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.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder
Kemper, computes net asset value for each Fund. Scudder Service Corporation
("SSC"), also a subsidiary of Scudder Kemper, is the transfer, shareholder
servicing and dividend-paying agent for the Scudder Shares class (the "Scudder
Shares") of each Fund. Kemper Service Company ("KSC"), an affiliate of Scudder
Kemper, serves as transfer agent and dividend-paying agent for the Kemper Class
A, B and C Shares (the "Kemper Shares") of each Fund. Scudder Trust Company
("STC"), an affiliate of Scudder Kemper, provides subaccounting and
recordkeeping services for shareholder accounts in certain retirement and
employee benefit plans. Kemper Distributors, Inc. ("KDI"), 222 South Riverside
Plaza, Chicago, Illinois 60606, a subsidiary of Scudder Kemper, provides
information and administrative services for Kemper Share shareholders of each
Fund. KDI is also the principal underwriter and distributor of each Fund's
Kemper Shares and acts as agent of each Fund in the sale of its Kemper Shares.
For the Kemper Class B Shares and Kemper Class C Shares of each Fund, KDI
receives a Rule 12b-1 distribution fee of 0.75% of average daily net assets of
each such class. The table provided in Appendix 6 sets forth for each Fund (or
class, where appropriate) the respective fees paid to SFAC, SSC, KSC, STC and
KDI (including administration fees and Rule 12b-1 fees) during the last fiscal
year of each Fund. Also set forth in Appendix 6 as to each Fund during its most
recent fiscal year is information regarding the commissions retained by KDI and
allowed by KDI as commissions to financial services firms affiliated with KDI.
SFAC, SSC, KSC, STC and KDI will continue to provide fund accounting,
transfer agency (with respect to SSC and KSC), subaccounting and recordkeeping,
and underwriting, administrative and distribution services, respectively, to the
Funds, as described above, under the current arrangements if the New Investment
Management Agreements are approved.
Exhibit B sets forth (as of each fund's last fiscal year end, unless
otherwise noted) the fees and other information regarding investment companies
advised
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<PAGE> 24
by Scudder Kemper that have similar investment objectives to any of the Funds.
(See Appendix 3 for information regarding the management fee rate, net assets
and aggregate management fee paid for each Fund.)
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
Funds with issuers, underwriters or other brokers and dealers. SIS is a
corporation registered as a broker/dealer and a subsidiary of Scudder Kemper.
SIS does not receive any commissions, fees or other remuneration from the Funds
for this service. In selecting brokers and dealers with which to place portfolio
transactions for a Fund, Scudder Kemper may consider sales of shares of the
Funds and of Kemper funds advised by Scudder Kemper. When it can be done
consistently with the policy of obtaining the most favorable net results,
Scudder Kemper may place such orders with brokers and dealers who supply
research, market and statistical information to a Fund or to Scudder Kemper.
Scudder Kemper is authorized when placing portfolio transactions for equity
securities to pay a brokerage commission (to the extent applicable) in excess of
that which another broker might charge for executing the same transaction on
account of the receipt of research, market or statistical information.
Allocation of portfolio transactions is supervised by Scudder Kemper.
THE BOARD MEMBERS OF EACH TRUST/CORPORATION RECOMMEND THAT THE
SHAREHOLDERS OF EACH FUND VOTE IN FAVOR OF THIS PROPOSAL 1.
PROPOSAL 2: APPROVAL OF THE REVISION OF EACH FUND'S
FUNDAMENTAL LENDING POLICY
This Proposal seeks shareholder approval of a change to each Fund's
fundamental lending policy. The 1940 Act requires an investment company to adopt
policies with respect to certain activities, including the making of loans by
the fund, which can be changed only by a shareholder vote (i.e., "fundamental"
policies). The proposed change would permit each Fund to engage in lending in a
manner and to the extent permitted by applicable law. The proposed change would,
therefore, permit each Fund, subject to the receipt of any necessary regulatory
approval and Board authorization, to enter into lending arrangements, including
lending agreements under which the funds advised by Scudder Kemper could for
temporary purposes lend money directly to and borrow money directly from each
other through a credit facility ("Interfund Lending Arrangements"). The Boards
have no present intention to engage in lending other than that permitted under
each Fund's current fundamental lending policy. Each of the Funds believes that
the flexibility provided by this policy change could possibly reduce
substantially the Fund's borrowing costs and enhance its ability to earn higher
rates of interest on short-term lendings in the event that the Board determines
that such arrangements are warranted in light of
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<PAGE> 25
the Fund's circumstances. Certain other fund groups have obtained the exemptive
relief necessary to permit the funds to engage in lending and borrowing among
the funds advised by the same adviser. Approval of the revision to each Fund's
lending policy requires the affirmative vote of a majority of the outstanding
voting securities, as defined above, of that Fund. If the shareholders of any
Fund fail to approve the proposed fundamental policy, that Fund's current policy
will remain in effect. The Board members of each Trust/Corporation recommend
that the shareholders of each Fund vote in favor of the Proposal. The proposed
change to each Fund's fundamental lending policy is discussed in detail below.
LENDING POLICY
The current policy of each Fund prohibits the making of loans, except loans
of portfolio securities and to the extent the entry into repurchase agreements
and the purchase of debt securities or interests in indebtedness in accordance
with the Fund's investment objectives and policies are deemed to be loans. The
proposed policy, unlike the current policy, does not specify the particular
types of lending in which each Fund is permitted to engage; instead, the
proposed policy permits each Fund to lend only in a manner and to an extent in
accordance with applicable law. Accordingly, each Fund's fundamental lending
policy would be revised as follows (with additions to the policy underscored and
deletions to the policy struck through):
As a matter of fundamental policy, the Fund may not make loans except
as permitted under the Investment Company Act of 1940, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time. to other persons, except (i) loans of portfolio securities,
and (ii) to the extent that entry into repurchase agreements and the
purchase of debt instruments or interests in indebtedness in accordance
with the Fund's investment objectives and policies may be deemed to be
loans.
DISCUSSION
Management believes that there may be advantages to these Interfund Lending
Arrangements as compared with other arrangements currently in place for some of
the Funds. Currently, some of the Funds, in effect, lend money to banks and
broker-dealers by entering into repurchase agreements or purchasing other
short-term instruments. Other Funds borrow money from the same or other banks
for temporary purposes to satisfy redemption requests or to cover other
unanticipated cash shortfalls. Many of the Funds have entered into uncommitted
lines of credit with banks under which the banks may, but are not required to,
lend money to the Funds to meet the Funds' temporary cash needs. If a Fund were
to borrow money from a bank under its current line of credit agreement, the Fund
would pay interest on the borrowed cash at a rate that would be significantly
higher than the rate that would be earned by other (non-
18
<PAGE> 26
borrowing) Funds on investments in repurchase agreements and other short-term
instruments of the same maturity as the bank loan. The Funds believe this
differential represents the bank's profit for serving as "middleman" between
borrower and lender. Other bank loan arrangements, such as committed lines of
credit into which certain Funds have entered, require the Funds to pay
substantial commitment fees in addition to the interest rate to be paid by the
borrowing Fund.
The 1940 Act generally prohibits one fund from lending money or other
property to or borrowing money or other property from another fund having the
same investment adviser (currently, in order to be able to participate in these
lending or borrowing arrangements, a fund must first receive an exemptive order
from the SEC). If the revised policy is adopted, each Board would have
discretion to request an order from the SEC to permit the Funds to enter into
Interfund Lending Arrangements consistent with their respective investment
objectives and policies.
Each Fund's current borrowing policy would permit the Fund to engage in the
contemplated Interfund Lending Arrangements; thus no corresponding revision of
that policy is being sought. Each Fund currently has a non-fundamental policy,
which may be changed without a shareholder vote, limiting borrowings in certain
circumstances that, unless changed by Board action, restrict a Fund's ability to
borrow through Interfund Lending Arrangements. The Funds anticipate that the
Interfund Lending Arrangements may provide a borrowing Fund with savings when
the Fund's cash position is insufficient to meet temporary cash requirements
arising, for example, when redemptions exceed anticipated volumes. When a Fund
is forced to liquidate portfolio securities to meet redemption requests, the
proceeds of which are normally paid the next day after receipt of the request
immediately, the Fund often does not receive payment in settlement on a sale of
portfolio securities for up to three days (or longer, when a Fund sells foreign
securities). The Interfund Lending Arrangements would provide a source of
immediate, short-term liquidity pending settlement of the sale of portfolio
securities. In addition, Funds making short-term cash loans directly to other
Funds would earn interest at a higher rate than they otherwise could obtain from
investing their cash through repurchase agreements or otherwise. Although
Interfund Lending Arrangements may reduce the Funds' borrowing costs, enhance
their ability to earn higher rates of interest on short-term lendings, and
substantially reduce the Funds' need to borrow from banks, the Funds may also
continue to maintain uncommitted or committed lines of credit or other borrowing
arrangements with banks as an added measure of safety and liquidity.
THE BOARD MEMBERS OF EACH TRUST/CORPORATION RECOMMEND THAT THE SHAREHOLDERS OF
EACH FUND VOTE IN FAVOR OF THIS PROPOSAL 2.
19
<PAGE> 27
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy card 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 each Trust/Corporation,
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 Special Meeting date approaches, certain
shareholders of each Fund may receive a telephone call from a representative of
SCC if their votes have not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of each Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Trustees/Directors believe that these procedures are reasonably
designed to ensure that the identity of the shareholder casting the vote is
accurately determined and that the voting instructions of the shareholder are
accurately determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security or
employer identification number, title (if the shareholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned,
and to confirm that the shareholder has received the proxy materials in the
mail. If the information solicited agrees with the information provided to SCC,
then the SCC representative has the responsibility to explain the process, read
the Proposals on the proxy card, and ask for the shareholder's instructions on
the Proposals. The SCC representative, although he or she is permitted to answer
questions about the process, is not permitted to recommend to the shareholder
how to vote, other than to read any recommendation set forth in the Proxy
Statement. SCC will record the shareholder's instructions on the card. Within 72
hours, the shareholder will be sent a letter or mailgram to confirm his or her
vote and asking the shareholder to call SCC immediately if his or her
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Special Meeting, but does not
wish to give a proxy by telephone, the shareholder may still submit the proxy
card originally sent with the Proxy Statement or attend in person. Should
shareholders require additional information regarding the proxy or replacement
proxy cards, they may contact SCC toll-free at 1-800-248-2681. Any proxy given
by a shareholder, whether in writing or by telephone, is revocable until voted
at the Special Meeting.
20
<PAGE> 28
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Trust/Corporation, c/o Scudder
Kemper Investments, Inc., at the address for each Trust/Corporation shown at the
beginning of this Proxy Statement, within a reasonable time before the
solicitation of proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No Board member is aware of any matters that will be presented for action
at a Special Meeting other than the matters set forth herein. Should any other
matters requiring a vote of shareholders 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
each Trust/Corporation and/or Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards of Trustees/Directors,
/s/ Thomas F. McDonough
Thomas F. McDonough
Secretary
21
<PAGE> 29
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 30
EXHIBIT A
MASTER FORM OF
NEW INVESTMENT MANAGEMENT AGREEMENT
(Underscored items in brackets are applicable to Investment Trust and Value
Equity Trust only)
(Items in brackets that are not underscored are applicable to Global/
International Fund, Inc. only.)
(INVESTMENT TRUST/VALUE EQUITY TRUST)(GLOBAL/INTERNATIONAL FUND, INC.)
(TWO INTERNATIONAL PLACE)(345 PARK AVENUE)
(BOSTON, MASSACHUSETTS 02110)(NEW YORK, NEW YORK 10154)
September 7, 1998
Scudder Kemper Investments, Inc.
(Two International Place)(345 Park Avenue)
(Boston, Massachusetts 02110))New York, New York 01054)
INVESTMENT MANAGEMENT AGREEMENT
[CLASSIC GROWTH FUND/GLOBAL DISCOVERY FUND/VALUE FUND]
Ladies and Gentlemen:
[(Investment Trust/Value Equity Trust)(Global/International Fund, Inc.)]
(the ("Trust")("Corporation")) has been established as a (Massachusetts business
trust)IMaryland corporation) to engage in the business of an investment company.
Pursuant to the (Trust's)(Corporation's)(Declaration of Trust)(Articles of
Incorporation), as amended from time-to-time (the ("Declaration")("Articles")),
the Board of (Trustees)(Directors) has divided (may divide) the
(Trust's)(Corporation's) shares of (beneficial interest)(capital stock), par
value $0.01 per share, (the "Shares") into separate series, or funds, including
[Classic Growth Fund/Global Discovery Fund/Value Fund] (the "Fund"). Series may
be abolished and dissolved, and additional series established, from time to time
by action of the (Trustees)(Directors).
The (Trust)(Corporation), on behalf of the Fund, has selected you to act as
the sole investment manager of the Fund and to provide certain other services,
as more fully set forth below, and you have indicated that you are willing to
act as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the (Trust)(Corporation) on
behalf of the Fund agrees with you as follows:
1. Delivery of Documents. The (Trust)(Corporation) engages in the
business of investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and restrictions
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<PAGE> 31
specified in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information (the "SAI") relating to the Fund
included in the (Trust's)(Corporation's) Registration Statement on Form
N-1A, as amended from time to time, (the "Registration Statement") filed by
the (Trust)(Corporation) under the Investment Company Act of 1940, as
amended, (the "1940 Act") and the Securities Act of 1933, as amended.
Copies of the documents referred to in the preceding sentence have been
furnished to you by the (Trust)(Corporation). The (Trust)(Corporation) has
also furnished you with copies properly certified or authenticated of each
of the following additional documents related to the (Trust)(Corporation)
and the Fund:
(a) The (Declaration)(Articles) dated ________ , as amended to
date.
(b) By-Laws of the (Trust)(Corporation) as in effect on the date
hereof (the "By-Laws").
(c) Resolutions of the (Trustees)(Directors) of the (Trust)
(Corporation) and the shareholders of the Fund selecting you as
investment manager and approving the form of this Agreement.
((d) Establishment and Designation of Series of Shares of
Beneficial Interest dated relating to the Fund.)
The (Trust)(Corporation) will furnish you from time to time with
copies, properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus, the SAI
and the Registration Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee
of the rights to use and sublicense the use of the "Scudder," "Scudder
Kemper Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks
(together, the "Scudder Marks"), you hereby grant the (Trust)(Corporation)
a nonexclusive right and sublicense to use (i) the "Scudder" name and mark
as part of (the Trust's)(the Corporation's) name (the "Fund Name"), and
(ii) the Scudder Marks in connection with (the Trust's) (Corporation's)
investment products and services, in each case only for so long as this
Agreement, any other investment management agreement between you (and the
Trust)((or any organization which shall have succeeded to your business as
investment manager ("your Successor")) and the Corporation), or any
extension, renewal or amendment hereof or thereof remains in effect, and
only for so long as you are a licensee of the Scudder Marks, provided
however, that you agree to use your best efforts to maintain your license
to use and sublicense the Scudder Marks. The (Trust)(Corporation) agrees
that it shall have no right to sublicense or assign rights to use the
Scudder Marks, shall acquire no interest in the Scudder Marks other than
the rights granted herein, that all of the (Trust's)(Corporation's) uses of
the Scudder Marks shall inure to the
A-2
<PAGE> 32
benefit of Scudder Trust Company as owner and licensor of the Scudder Marks
(the "Trademark Owner"), and that the (Trust)(Corporation) shall not
challenge the validity of the Scudder Marks or the Trademark Owner's
ownership thereof. The (Trust)(Corporation) 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
you or the Trademark Owner from time to time, provided that you acknowledge
that the services and products the (Trust)(Corporation) rendered during the
one-year period preceding the date of this Agreement are acceptable. At
your reasonable request, the (Trust)(Corporation) shall cooperate with you
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 (Trust)(Corporation) as a registered user thereof. At such time
as this Agreement or any other investment management agreement shall no
longer be in effect between you (or your successor) and the
(Trust)(Corporation), or you no longer are a licensee of the Scudder Marks,
the (Trust)(Corporation) 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 you (or (any
organization which shall have succeeded to your business as investment
manager)(your Successor)) or the Trademark Owner. In no event shall the
(Trust)(Corporation) 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 you (or your successor) and the Fund
is terminated.
3. Portfolio Management Services. As manager of the assets of the
Fund, you shall provide continuing investment management of the assets of
the Fund in accordance with the investment objectives, policies and
restrictions set forth in the Prospectus and SAI; the applicable provisions
of the 1940 Act and the Internal Revenue Code of 1986, as amended, (the
"Code") relating to regulated investment companies and all rules and
regulations thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to policies and
instructions adopted by the (Trust's)(Corporation's) Board of (Trustees)
(Directors). In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company
under Subchapter M of the Code and regulations issued thereunder. The Fund
shall have the benefit of the investment analysis and research, the review
of current economic conditions and trends and the consideration of
long-range investment policy generally available to your investment
advisory clients. In managing the Fund in accordance with the requirements
set forth in this section 3, you shall be entitled to receive and act upon
advice of counsel to the (Trust)(Corporation) or counsel to you. You shall
also
A-3
<PAGE> 33
make available to the (Trust)(Corporation) promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist the
(Trust)(Corporation) in complying with the requirements of the 1940 Act and
other applicable laws. To the extent required by law, you shall furnish to
regulatory authorities having the requisite authority any information or
reports in connection with the services provided pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the
(Trust)(Corporation) are being conducted in a manner consistent with
applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts
relating to investments to be purchased, sold or entered into by the Fund
and place orders with broker-dealers, foreign currency dealers, futures
commission merchants or others pursuant to your determinations and all in
accordance with Fund policies as expressed in the Registration Statement.
You shall determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should be held
uninvested.
You shall furnish to the (Trust's)(Corporation's) Board of (Trustees)
(Directors) periodic reports on the investment performance of the Fund and
on the performance of your obligations pursuant to this Agreement, and you
shall supply such additional reports and information as the (Trust's)
(Corporation's) officers or Board of (Trustees)(Directors) shall reasonably
request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense
for the use of the Fund such office space and facilities in the United
States as the Fund may require for its reasonable needs, and you (or one or
more of your affiliates designated by you) shall render to the
(Trust)(Corporation) administrative services on behalf of the Fund
necessary for operating as an open-end investment company and not provided
by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the (Trust's)(Corporation's)
Board of (Trustees) (Directors) and reports and notices to Fund
shareholders; supervising, negotiating contractual arrangements with, to
the extent appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers,
insurers and other persons in any capacity deemed to be necessary or
desirable to Fund operations; preparing and making filings with the SEC and
other regulatory and self-regulatory organizations, including, but not
limited to, preliminary and definitive proxy materials, post-effective
amendments to the Registration Statement, semi-annual reports on Form N-SAR
and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local
A-4
<PAGE> 34
tax returns; preparing and filing the Fund's federal excise tax return
pursuant to Section 4982 of the Code; providing assistance with investor
and public relations matters; monitoring the valuation of portfolio
securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state
securities laws; maintaining or causing to be maintained for the Fund all
books, records and reports and any other information required under the
1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of
the Fund; assisting in establishing the accounting policies of the Fund;
assisting in the resolution of accounting issues that may arise with
respect to the Fund's operations and consulting with the Fund's independent
accountants, legal counsel and the Fund's other agents as necessary in
connection therewith; establishing and monitoring the Fund's operating
expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund
in determining the amount of dividends and distributions available to be
paid by the Fund to its shareholders, preparing and arranging for the
printing of dividend notices to shareholders, and providing the transfer
and dividend paying agent, the custodian, and the accounting agent with
such information as is required for such parties to effect the payment of
dividends and distributions; and otherwise assisting the
(Trust)(Corporation) as it may reasonably request in the conduct of the
Fund's business, subject to the direction and control of the (Trust's)
(Corporation's) Board of (Trustees)(Directors). Nothing in this Agreement
shall be deemed to shift to you or to diminish the obligations of any agent
of the Fund or any other person not a party to this Agreement which is
obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 5, you shall pay the compensation and
expenses of all (Trustees)(Directors), officers and executive employees of
the (Trust)(Corporation) (including the Fund's share of payroll taxes) who
are affiliated persons of you, and you shall make available, without
expense to the Fund, the services of such of your directors, officers and
employees as may duly be elected officers of the (Trust)(Corporation),
subject to their individual consent to serve and to any limitations imposed
by law. You shall provide at your expense the portfolio management services
described in section 3 hereof and the administrative services described in
section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be
responsible, except to the extent of the reasonable compensation of such of
the Fund's (Trustees)(Directors) and officers as are directors, officers or
employees of you whose services may be involved, for the following expenses
of the Fund: organization expenses of the Fund (including out-of-pocket ex-
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<PAGE> 35
penses, but not including your overhead or employee costs); fees payable to
you and to any other Fund advisors or consultants; legal expenses; auditing
and accounting expenses; maintenance of books and records which are
required to be maintained by the Fund's custodian or other agents of the
(Trust)(Corporation); telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental 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 accounting
agent, custodians, subcustodians, transfer agents, dividend disbursing
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, except as provided below in
this section 5, other expenses in connection with the issuance, offering,
distribution, sale, redemption or repurchase of securities issued by the
Fund; expenses relating to investor and public relations; expenses and fees
of registering or qualifying Shares of the Fund for sale; interest charges,
bond premiums and other insurance expense; freight, insurance and other
charges in connection with the shipment of the Fund's portfolio securities;
the compensation and all expenses (specifically including travel expenses
relating to (Trust)(Corporation) business) of (Trustees)(Directors),
officers and employees of the (Trust)(Corporation) who are not affiliated
persons of you; brokerage commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; expenses of printing and
distributing reports, notices and dividends to shareholders; expenses of
printing and mailing Prospectuses and SAIs of the Fund and supplements
thereto; costs of stationery; any litigation expenses; indemnification of
(Trustees)(Directors) and officers of the (Trust)(Corporation); costs of
shareholders' and other meetings; and travel expenses (or an appropriate
portion thereof) of (Trustees)(Directors) and officers of the
(Trust)(Corporation) who are directors, officers or employees of you to the
extent that such expenses relate to attendance at meetings of the Board of
(Trustees)(Directors) of the (Trust)(Corporation) or any committees thereof
or advisors thereto held outside of Boston, Massachusetts or New York, New
York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the
extent that (i) such expenses are required to be borne by a principal
underwriter which acts as the distributor of the Fund's Shares pursuant to
an underwriting agreement which provides that the underwriter shall assume
some or all of such expenses, or (ii) the (Trust)(Corporation) on behalf of
the Fund shall have adopted a plan in conformity with Rule 12b-1 under the
1940 Act providing that the Fund (or some other party) shall assume some or
all of such expenses. You shall be required to pay such of the foregoing
sales expenses as are not required to be paid by the principal underwriter
A-6
<PAGE> 36
pursuant to the underwriting agreement or are not permitted to be paid by
the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be
made and costs to be assumed by you as provided in sections 3, 4 and 5
hereof, the (Trust)(Corporation) on behalf of the Fund shall pay you in
United States Dollars on the last day of each month the unpaid balance of a
fee equal to the excess of 1/12 of ___ of 1 percent of the average daily
net assets as defined below of the Fund for such month over any
compensation waived by you from time to time (as more fully described
below). You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided that no such
payment shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time)
on each day on which the net asset value of the Fund is determined
consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the
Fund lawfully determines the value of its net assets as of some other time
on each business day, as of such time. The value of the net assets of the
Fund shall always be determined pursuant to the applicable provisions of
the (Declaration)(Articles) and the Registration Statement. If the
determination of net asset value does not take place for any particular
day, then for the purposes of this section 6, the value of the net assets
of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the
value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its
portfolio more than once on any day, then the last such determination
thereof on that day shall be deemed to be the sole determination thereof on
that day for the purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your
services. You shall be contractually bound hereunder by the terms of any
publicly announced waiver of your fee, or any limitation of the Fund's
expenses, as if such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other
investments for the account of the Fund, neither you nor any of your
directors, officers or employees shall act as a principal or agent or
receive any commission. You or your agent shall arrange for the placing of
all orders for the purchase and sale of portfolio securities and other
investments for the Fund's account with brokers or dealers selected by you
in accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the
A-7
<PAGE> 37
Fund, you shall act solely as investment counsel for such clients and not
in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement,
you shall be an independent contractor and not an agent of the
(Trust)(Corporation). 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.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the (Trust)
(Corporation) agrees that you shall not be liable under this Agreement for
any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the matters to which this Agreement relates,
provided that nothing in this Agreement shall be deemed to protect or
purport to protect you against any liability to the (Trust)(Corporation),
the Fund or its shareholders to which you would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties, or by reason of your reckless disregard of your
obligations and duties hereunder. Any person, even though also employed by
you, who may be or become an employee of and paid by the Fund shall be
deemed, when acting within the scope of his or her employment by the Fund,
to be acting in such employment solely for the Fund and not as your
employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until __________ , and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the
(Trustees)(Directors) who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting called
for the purpose of voting on such approval, and (b) by the
(Trustees)(Directors) of the (Trust) (Corporation), or, by the vote of a
majority of the outstanding voting securities of the Fund. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder and any applicable SEC exemptive
order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Fund or by the
(Trust's)(Corporation's) Board of (Trustees)(Directors) on 60 days' written
notice to you, or by you
A-8
<PAGE> 38
on 60 days' written notice to the (Trust)(Corporation). This Agreement
shall terminate automatically in the event of its assignment.
10. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved in a manner consistent
with the 1940 Act and rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
(11. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of
the Secretary of the Commonwealth of Massachusetts, provides that the name
"Investment Trust/Value Equity Trust" refers to the Trustees under the
Declaration collectively as Trustees and not as individuals or personally,
and that no shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations of the
Trust or of the Fund to any extent whatsoever, but that the Trust estate
only shall be liable.
You are hereby expressly put on notice of the limitation of liability
as set forth in the Declaration and you agree that the obligations assumed
by the Trust on behalf of the Fund pursuant to this Agreement shall be
limited in all cases to the Fund and its assets, and you shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Fund or any other series of the Trust, or from any
Trustee, officer, employee or agent of the Trust. You understand that the
rights and obligations of each Fund, or series, under the Declaration are
separate and distinct from those of any and all other series.
(12.)(11.) Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
(Commonwealth)(State) of (Massachusetts)(Maryland), provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or in a manner
which would cause the Fund to fail to comply with the requirements of Subchapter
M of the Code.
A-9
<PAGE> 39
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the (Trust)(Corporation) on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the (Trust)(Corporation), whereupon this letter shall become a
binding contract effective as of the date of this Agreement.
Yours very truly,
[GLOBAL/INTERNATIONAL FUND, INC./INVESTMENT
TRUST/VALUE EQUITY TRUST], on behalf of
[GLOBAL DISCOVERY FUND/CLASSIC GROWTH FUND/
VALUE FUND]
By:
--------------------------------------------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
--------------------------------------------------------------
Managing Director
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<PAGE> 40
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS NOT INCLUDED IN THIS PROXY STATEMENT AND
ADVISED BY SCUDDER KEMPER INVESTMENTS, INC.
SCUDDER FUNDS+
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
ASSET ALLOCATION FUNDS
Scudder Pathway Growth Long term growth of capital by There will be no fee as $ 49,574,256
Portfolio investing predominantly in the Manager will receive
Scudder equity mutual funds a fee from the
designed to provide long term underlying funds.
growth.
Scudder Pathway International Maximize total return, There will be no fee as $ 11,728,045
Portfolio consisting of capital the Manager will receive
appreciation plus dividend a fee from the
income and interest by underlying funds.
investing in a select mix of
established international and
global Scudder Funds.
U.S. GROWTH FUNDS
Scudder 21st Century Growth Long term growth of capital by 1.000% of net assets++ $ 23,296,176
Fund investing primarily in the
securities of emerging growth
companies poised to be leaders
in the 21st century.
Scudder Development Fund Long term growth of capital by 1.000% to $500 million $ 845,405,075
investing primarily in 0.950% next $500 million
securities of small and medium 0.900% thereafter
size growth companies.
Scudder Financial Services Long term growth of capital by 0.750% of net assets++ $ 36,926,469@
Fund investing primarily in common
stocks and other equity
securities of companies in a
group of related industries.
Scudder Health Care Fund Long term growth of capital by 0.850% of next assets++ $ 40,923,873@
investing primarily in common
stocks and other equity
securities of companies in a
group of related industries.
Scudder Large Company Growth Long term growth of capital 0.700% of net assets $ 288,064,975
Fund (formerly Scudder through investment primarily
Quality Growth Fund) in the equity securities of
seasoned, financially strong
U.S. growth companies.
Scudder Large Company Value Maximize long term capital 0.750% to $500 million $2,212,733,138
Fund (formerly Scudder appreciation through a value 0.650% next $500 million
Capital Growth Fund) driven investment program. 0.600% next $500 million
0.550% next $500 million
0.500% next $1.0 billion*
Scudder Micro Cap Fund Long term growth of capital by 0.750% of net assets $ 91,627,404
investing primarily in a
diversified portfolio of U.S.
micro-cap common stocks.
</TABLE>
B-1
<PAGE> 41
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Scudder Real Estate Long term capital growth and 0.800% of net assets++ $ 20,435,489
Investment Fund current income by investing
primarily in equity securities
of companies in the real
estate industry.
Scudder S&P 500 Index Fund Investment results that, 0.100% of net assets++ $ 16,912,276
before expenses, correspond to
the total return of common
stocks publicly traded in the
United States, as represented
by the Standard & Poor's 500
Composite Stock Price Index.
Scudder Small Company Value Long term growth of capital by 0.750% of net assets $ 123,398,822
Fund investing primarily in
undervalued stocks of small
U.S. companies.
Scudder Technology Fund Long term growth of capital by 0.850% of net assets++ $ 37,159,344@
investing primarily in common
stocks and other equity
securities of companies in a
group of related industries.
GLOBAL GROWTH FUNDS
Scudder Emerging Markets Long term growth of capital 1.25% of net assets++ $ 219,624,481
Growth Fund primarily through equity
investment in emerging markets
around the globe.
Scudder Global Fund Long term growth of capital 1.000% to $500 million $1,766,207,742
through a diversified 0.950% next $500 million
portfolio of marketable 0.900% next $500 million
securities, primarily equity 0.850% over $1.5 billion
securities, including common
stock, preferred stocks and
debt securities convertible
into common stocks.
Scudder Gold Fund Maximum return (principal 1.000% of net assets $ 132,131,545
change and income) consistent
with investing in a portfolio
of gold-related equity
securities and gold.
Scudder Greater Europe Growth Long term growth of capital 1.00% to $1 billion $ 195,514,335
Fund through investments primarily 0.90% thereafter*
in the equity securities of
European companies.
Scudder International Fund Long term growth of capital 0.900% to $500 million $2,884,919,345
primarily from foreign equity 0.850% next $500 million
securities. 0.800% next $1 billion
0.750% next $1 billion
0.700% thereafter
Scudder International Growth Long term growth of capital 1.000% of net assets++ $ 48,880,164
and Income Fund and current income primarily
from foreign equity
securities.
Scudder International Growth Long term capital appreciation 1.000% of net assets N/A**
Fund through investment primarily
in the equity securities of
foreign companies with high
growth potential.
</TABLE>
B-2
<PAGE> 42
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Scudder International Value Long term capital appreciation 1.000% of net assets N/A**
Fund 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 1.150% thereafter
in the securities of Latin
American issuers.
Scudder Pacific Opportunities Long term growth of capital 1.100% of net assets $ 147,276,692
Fund primarily 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 0.750% next $200 million
in equity securities, 0.700% next $300 million
(including American Depository 0.650% thereafter
Receipts of Japanese
companies).
CLOSED-END FUNDS
The Argentina Fund, Inc. Long term capital appreciation Adviser: $ 135,327,320
through investment primarily 1.100% of net assets
in equity securities of Sub-Adviser:
Argentine issuers. 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 1.050% next $150 million
in equity securities of 1.000% next $200 million
Brazilian issuers. 0.900% thereafter
Administrator: Receives
an annual fee of $50,000
The Korea Fund, Inc. Long term capital appreciation Adviser: $ 406,244,000
through investment primarily 1.150% to $50 million
in equity securities of Korean 1.100% next $50 million
companies. 1.000% next $250 million
0.950% next $400 million
0.900% thereafter
Sub-Adviser--Daewoo:
Paid by Adviser.
0.2875% to $50 million
0.275% next $50 million
0.250% next $250 million
0.2375% next $400
million
0.225% thereafter
Montgomery Street Income High level of current income 0.500% to $150 million $ 207,315,702
Securities, Inc. consistent with prudent 0.450% next $50 million
investment risks through a 0.400% thereafter
diversified portfolio
primarily of debt securities.
Scudder Global High Income High level of current income 1.200% of net assets $ 80,721,844
Fund, Inc. (formerly The and, secondarily, capital
Latin America Dollar Income appreciation through
Fund, Inc.) investment principally in
dollar-denominated Latin
American debt instruments.
</TABLE>
B-3
<PAGE> 43
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Scudder New Asia Fund, Inc. Long term capital appreciation 1.250% to $75 million $ 98,866,168
through investment primarily 1.150% next $125 million
in equity securities of Asian 1.100% thereafter
companies.
Scudder New Europe Fund, Inc. Long term capital appreciation 1.250% to $75 million $ 320,293,393
through investment primarily 1.150% next $125 million
in equity securities of 1.100% thereafter
companies traded on smaller or
emerging European markets and
companies Inc. that are viewed
as likely to benefit from
changes and developments
throughout Europe.
Scudder Spain and Portugal Long term capital appreciation Adviser: $ 112,909,567
Fund, Inc. through investment primarily 1.000% of net assets
in equity securities of Administrator:
Spanish & Portuguese issuers. 0.200% of net assets
INSURANCE PRODUCTS
Scudder Variable Life Maximize long term capital 0.475% to $500 million $ 676,317,582
Investment Fund Capital growth from a portfolio 0.450% next $500 million
Growth Portfolio consisting primarily of equity 0.425% on assets over
securities. $1.0 billion
Scudder Variable Life Above-average capital 0.975% of net assets++ $ 20,115,141
Investment Fund Global appreciation over the long
Discovery Portfolio term by investing primarily in
the equity securities of small
companies located throughout
the world.
Scudder Variable Life Long term growth of capital, 0.475% of net assets $ 163,603,606
Investment Fund Growth and current income and growth of
Income Portfolio income from a portfolio
consisting primarily of common
stocks and securities
convertible into common
stocks.
Scudder Variable Life Long term growth of capital 0.875% to $500 million $ 427,237,880
Investment Fund principally from a diversified 0.725% thereafter
International Portfolio portfolio of foreign equity
securities.
AARP FUNDS
AARP Capital Growth Fund Long term capital growth, 0.350% to $2 billion $1,228,379,954
consistent with a share price 0.330% next $2 billion
more stable than other growth 0.280% next $2 billion
funds, through investment in a 0.260% next $3 billion
combination of common stocks 0.250% next $3 billion
and securities convertible 0.240% thereafter
into common stocks. INDIVIDUAL FUND FEE
0.320% of net assets
AARP Diversified Growth Long term growth of capital There will be no fee as $ 61,796,818
Portfolio through investment primarily the manager will receive
in AARP stock mutual funds. a fee
</TABLE>
B-4
<PAGE> 44
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
AARP Global Growth Fund Long term capital growth, 0.350% to $2 billion $ 148,029,373
consistent with a share price 0.330% next $2 billion
more stable than other global 0.300% next $2 billion
funds, through investment 0.280% next $2 billion
primarily in common stocks of 0.260% next $3 billion
established corporations in a 0.250% next $3 billion
wide variety of developed 0.240% thereafter
countries. INDIVIDUAL FUND FEE
0.550% of net assets
AARP Growth and Income Fund Long term capital growth and 0.350% to $2 billion $6,606,012,897
income, consistent with a 0.330% next $2 billion
share price more stable than 0.300% next $2 billion
other growth and income mutual 0.280% next $2 billion
funds, through investment 0.260% next $3 billion
primarily in common stocks 0.250% next $3 billion
with above-average dividend 0.240% thereafter
yields and securities INDIVIDUAL FUND FEE
convertible into common 0.190% of net assets
stocks.
AARP International Growth and Long term capital growth, 0.350% to $2 billion $ 20,259,062
Income Fund consistent with a share price 0.330% next $2 billion
more stable than other 0.300% next $2 billion
international mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in a diversified portfolio of 0.250% next $3 billion
foreign common stocks with 0.240% thereafter++
above-average dividend yields INDIVIDUAL FUND FEE
and foreign securities 0.600% of net assets
convertible into common
stocks.
AARP Small Company Stock Fund Long term growth of capital, 0.350% to $2 billion $ 50,271,473
consistent with a share price 0.330% next $2 billion
more stable than other small 0.300% next $2 billion
company stock mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in common stocks of small U.S. 0.250% next $3 billion
companies. 0.240% thereafter++
INDIVIDUAL FUND FEE
0.550% of net assets
AARP U.S. Stock Index Fund Long term capital growth and 0.350% to $2 billion $ 38,085,073
income, consistent with 0.330% next $2 billion
greater share price stability 0.300% next $2 billion
than an S&P 500 Index mutual 0.280% next $2 billion
fund, by taking an indexing 0.260% next $3 billion
approach to investing in 0.250% next $3 billion
common stocks, emphasizing 0.240% thereafter++
higher dividend stocks while INDIVIDUAL FUND FEE
maintaining investment 0.000% of net assets
characteristics otherwise
similar to the S&P 500 Index.
</TABLE>
- ------------------------------
+ The information provided below is shown as of the end of each Fund's last
fiscal year, unless otherwise noted.
++ Subject to waivers and/or expense limitations.
* The addition of this breakpoint is effective 9/30/98.
** Fee information is not available for Scudder International Growth Fund and
Scudder International Value Fund, each of which commenced operations on
September 1, 1998.
@ Net asset information is provided for the semi-annual period ended May 31,
1998.
B-5
<PAGE> 45
KEMPER FUNDS(+)
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE NET ASSETS
---------- --------- -------- ----------
<S> <C> <C> <C>
EQUITY/GROWTH STYLE FUNDS
Kemper Aggressive Growth Capital appreciation through 0.650% of net assets $ 11,609,000
Fund the use of aggressive plus or minus an
investment techniques. incentive fee based on
the performance of the
Standard & Poor's 500
Stock Index, which may
result in a fee ranging
from 0.450 of 1.000% to
0.850 of 1.000% of net
assets
Kemper Blue Chip Fund Growth of capital and income. 0.580% to $250 million $ 446,891,000
0.550% next $750 million
0.530% next $1.5 billion
0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Growth Fund Growth of capital through 0.580% to $250 million $2,827,565,000
professional management and 0.550% next $750 million
diversification of investment 0.530% next $1.5 billion
securities having potential 0.510% next $2.5 billion
for capital appreciation. 0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Quantitative Equity Growth of capital and 0.580% to $250 million $ 11,217,000
Fund reduction of risk through 0.550% next $750 million
professional management of a 0.530% next $1.5 billion
diversified portfolio of 0.510% next $2.5 billion
equity securities. 0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Small Capitalization Maximum capital appreciation. 0.650% of net assets $1,095,478,000
Equity Fund plus or minus an
incentive fee based on
the performance of the
Standard & Poor's 500
Stock Index, which may
result in a fee ranging
from 0.350 of 1.000% to
0.950 of 1.000% of net
assets
Kemper Technology Fund Growth of capital. 0.580% to $250 million $1,209,723,000
0.550% next $750 million
0.530% next $1.5 billion
0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
</TABLE>
B-6
<PAGE> 46
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE NET ASSETS
---------- --------- -------- ----------
<S> <C> <C> <C>
Kemper Total Return Fund The highest total return, a 0.580% to $250 million $3,241,383,000
combination of income and 0.550% next $750 million
capital gain, consistent with 0.530% next $1.5 billion
reasonable risk. 0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Value + Growth Fund Growth of capital through 0.720% to $250 million $ 97,741,000
professional management of 0.690% next $750 million
growth and value stocks. 0.660% next $1.5 billion
0.640% next $2.5 billion
0.600% next $2.5 billion
0.580% next $2.5 billion
0.560% next $2.5 billion
0.540% thereafter
EQUITY/VALUE STYLE FUNDS
Kemper Contrarian Fund Long-term capital 0.750% to $250 million $ 178,115,000
appreciation and, 0.720% next $750 million
secondarily, current income. 0.700% next $1.5 billion
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
Kemper Small Cap Relative Long-term capital 0.750% to $250 million N/A*
Value Fund appreciation. 0.720% next $750 million
0.700% next $1.5 billion
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**
Kemper Small Cap Value Fund Long-term capital 0.750% to $250 million $1,263,144,000
appreciation 0.720% next $750 million
0.700% next $1.5 billion
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
Kemper U.S. Growth and Long-term growth of capital, 0.600% to $250 million $ 3,864,000***
Income Fund current income and growth of 0.570% next $750 million
income. 0.550% next $1.5 billion
0.530% thereafter
Kemper-Dreman Financial Long-term capital 0.750% to $250 million N/A*
Services Fund appreciation by investing 0.720% next $750 million
primarily in common stocks 0.700% next $1.5 billion
and other equity securities 0.680% next $2.5 billion
of companies in the financial 0.650% next $2.5 billion
services industry believed by 0.640% next $2.5 billion
the Fund's investment manager 0.630% next $2.5 billion
to be undervalued. 0.620% thereafter**
</TABLE>
B-7
<PAGE> 47
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE NET ASSETS
---------- --------- -------- ----------
<S> <C> <C> <C>
Kemper-Dreman High Return High total rate of return. 0.750% to $250 million N/A*
Equity Fund 0.720% next $750 million
0.700% next $1.5 billion
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
GLOBAL AND INTERNATIONAL FUNDS
Kemper Asian Growth Fund Long-term capital growth by 0.850% to $250 million $ 6,398,000
investing in a diversified 0.820% next $750 million
portfolio of Asian equity 0.800% next $1.5 billion
securities. 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 Emerging Markets Long-term growth of capital 1.250% of net assets** $ 1,147,000@
Growth Fund primarily through equity
investment in emerging
markets around the globe.
Kemper Emerging Markets High current income and, 1.000% of net assets** $ 5,616,000@
Income Fund secondarily, long-term
capital appreciation.
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
Kemper Global Blue Chip Fund Long-term growth of capital 1.000% to $250 million $ 3,663,000@
through a diversified 0.950% next $750 million
worldwide portfolio of 0.900% thereafter**
marketable securities,
primarily equity securities.
Kemper Global Income Fund High current income 0.750% to $250 million $ 99,054,000
consistent with prudent total 0.720% next $750 million
return asset management by 0.700% next $1.5 billion
investing in a portfolio of 0.680% next $2.5 billion
investment grade foreign and 0.650% next $2.5 billion
domestic fixed income 0.640% next $2.5 billion
securities. 0.630% next $2.5 billion
0.620% thereafter
Kemper International Fund Total return, a combination 0.750% to $250 million $ 588,069,000
of 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 0.650% next $2.5 billion
securities. 0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
Kemper International Growth Long-term growth of capital 1.000% of net assets** $ 1,556,000@
and Income Fund and income, primarily from
foreign equity securities.
</TABLE>
B-8
<PAGE> 48
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE NET ASSETS
---------- --------- -------- ----------
<S> <C> <C> <C>
Kemper Latin America Fund Long-term capital 1.250% to $250 million $ 1,441,000@
appreciation through 1.200% next $750 million
investment primarily in the 1.150% thereafter**
securities of Latin American
issuers.
ASSET ALLOCATION FUNDS
Kemper Horizon 10+ Portfolio A balance between growth of 0.580% to $250 million $ 106,339,000
capital and income, 0.550% next $750 million
consistent with moderate 0.530% next $1.5 billion
risk. 0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Horizon 20+ Portfolio Growth of capital and, 0.580% to $250 million $ 110,076,000
secondarily, income. 0.550% next $750 million
0.530% next $1.5 billion
0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Horizon 5 Portfolio Income consistent with 0.580% to $250 million $ 55,335,000
preservation of capital and, 0.550% next $750 million
secondarily, growth of 0.530% next $1.5 billion
capital. 0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
CLOSED-END FUNDS
The Growth Fund of Spain, Long-term capital 1.000% of net assets(1) $ 315,059,000
Inc. appreciation by investing
primarily in equity
securities of Spanish
companies.
ANNUITY PRODUCTS
Kemper Blue Chip Portfolio Growth of capital and income. 0.650% of net assets $ 18,421,000
Kemper Contrarian Value High rate of return. 0.750% of net assets $ 162,380,000
Portfolio
Kemper Global Blue Chip Long-term growth of capital 1.000% to $250 million N/A*
Portfolio through diversified worldwide 0.950% next $750 million
portfolio of marketable 0.900% thereafter
securities, primarily equity
securities.
Kemper Growth Portfolio Maximum appreciation of 0.600% of net assets $ 563,016,000
capital.
Kemper Horizon 10+ Portfolio A balance between growth of 0.600% of net assets $ 22,553,000
capital and income consistent
with moderate risk.
Kemper Horizon 20+ Portfolio Growth of capital and, 0.600% of net assets $ 16,659,000
secondarily, income.
Kemper Horizon 5 Portfolio Income consistent with 0.600% of net assets $ 14,258,000
preservation of capital, and
secondarily, growth.
</TABLE>
B-9
<PAGE> 49
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE NET ASSETS
---------- --------- -------- ----------
<S> <C> <C> <C>
Kemper International Growth Long-term growth of capital 1.000% of net assets N/A*
and Income Portfolio and current income, primarily
from foreign equity
securities.
Kemper International Total return, a combination 0.750% of net assets $ 200,046,000
Portfolio of capital growth and income,
principally through an
internationally diversified
portfolio of equity
securities.
Kemper Small Cap Growth Maximum capital appreciation 0.650% of net assets $ 137,415,000
Portfolio from a portfolio primarily
consisting of growth stocks
of small companies.
Kemper Small Cap Value Long-term capital 0.750% of net assets $ 76,108,000
Portfolio appreciation from a portfolio
primarily of value stocks of
smaller companies.
Kemper Total Return High total return through a 0.550% of net assets $ 786,996,000
Portfolio combination of income and
capital appreciation.
Kemper Value+Growth Growth of capital through 0.750% of net assets $ 69,094,000
Portfolio professional management of a
portfolio of growth and value
stocks.
Kemper-Dreman Financial Long-term capital 0.750% to $250 million N/A*
Services Portfolio appreciation by investing 0.720% next $750 million
primarily in common stocks 0.700% next $1.5 billion
and other equity securities 0.680% next $2.5 billion
of companies in the financial 0.650% next $2.5 billion
services industry believed by 0.640% next $2.5 billion
the investment manger to be 0.630% next $2.5 billion
undervalued. 0.620% thereafter
Kemper-Dreman High Return High rate of total return. 0.750% to $250 million N/A*
Equity Portfolio 0.720% next $750 million
0.700% next $1.5 billion
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
</TABLE>
- ------------------------------
(+) The information provided below is shown as of the end of each Fund's last
fiscal year, unless otherwise noted.
* Fee information is not available for Kemper-Dreman Financial Services Fund,
which commenced operations on March 9, 1998; Kemper-Dreman High Return
Equity Portfolio, which commenced operations on May 1, 1998; Kemper-Dreman
Financial Services Portfolio, which commenced operations on May 4, 1998;
Kemper Global Blue Chip Portfolio and Kemper International Growth and Income
Portfolio, each of which commenced operations on May 5, 1998; or Kemper
Small Cap Relative Value Fund, which commenced operations on May 6, 1998.
** Subject to waivers and/or reimbursements.
*** Net asset information is provided as of semi-annual period ended April 30,
1998.
@ Net asset information is provided as of semi-annual period ended March 31,
1998.
(1) Based on average weekly net assets.
B-10
<PAGE> 50
APPENDIX 1
BENEFICIAL OWNERS OF 5% OR MORE OF FUND SHARES
As of June 30, 1998, 2,067,044 shares in the aggregate, 35.57% of the
outstanding shares of CLASSIC GROWTH FUND--SCUDDER SHARES were held in the name
of State Street Bank and Trust Company, One Heritage Drive, Quincy, MA 02171,
who may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
As of June 30, 1998, 9,803 shares in the aggregate, 8.11% of the
outstanding shares of CLASSIC GROWTH FUND--CLASS A KEMPER SHARES were held in
the name of Mary Ellen Zakoff, Trustee, FBO Joseph Mihula Revocable Trust, U/A
10/21/1994, 1040 N. Delphia Ave, Park Ridge, IL 60068, who may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 9,682 shares in the aggregate, 8.86% of the
outstanding shares of CLASSIC GROWTH FUND--CLASS B KEMPER SHARES were held in
the name of James R. Fiedel and Joan A. Friedel, P.O. Box 4, Wild Rose, WI
54984.
As of June 30, 1998, 14,274 shares in the aggregate, 13.06% of the
outstanding shares of CLASSIC GROWTH FUND--CLASS B KEMPER SHARES were held in
the name of Donaldson Lufkin Jenrette Securities Corp, Inc., P.O. Box 2052,
Jersey City, NJ 07303, who may be deemed to be the beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 998 shares in the aggregate, 8.71% of the outstanding
shares of CLASSIC GROWTH FUND--CLASS C KEMPER SHARES were held in the name of
Urology Associates 401k, Robert M. Segaul & Others, Trustees, FBO Robert Segaul,
351 W. Tropical Way, Plantation, FL 33317, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 722 shares in the aggregate, 6.30% of the outstanding
shares of CLASSIC GROWTH FUND--CLASS C KEMPER SHARES were held in the name of
Donaldson Lufkin Jenrette Securities Corp, Inc., P.O. Box 2052, Jersey City, NJ
07303, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of June 30, 1998, 1,217 shares in the aggregate, 10.62% of the
outstanding shares of CLASSIC GROWTH FUND--CLASS C KEMPER SHARES were held in
the name of T&W Forge, Inc. 401k, J. Edminister and J. Vandygriff, Trustees, FBO
Karl F. Schenk, 9260 Seacrist Road, Salem, OH 44460, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
<PAGE> 51
As of June 30, 1998, 1,525 shares in the aggregate, 13.30% of the
outstanding shares of CLASSIC GROWTH FUND--CLASS C KEMPER SHARES were held in
the name of Hayes Industrial Brake, Inc., Curt Steckel, Trustee, 401k FBO Curt
Steckel, 1516 Jefferson Street, West Bend, WI 53090, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 1,587 shares in the aggregate, 13.85% of the
outstanding shares of CLASSIC GROWTH FUND--CLASS C KEMPER SHARES were held in
the name of Marjorie Mostert, 5732 Oliva Avenue, Lakewood, CA 90712.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,742,902 shares in the aggregate, or 10.34% of the outstanding
shares of GLOBAL DISCOVERY FUND--SCUDDER SHARES on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 1,303,135 shares in the aggregate, 7.73% of the
outstanding shares of GLOBAL DISCOVERY FUND--SCUDDER SHARES were held in the
name of Charles Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who
may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
As of June 30, 1998, 7,940 shares in the aggregate, 6.04% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS A KEMPER SHARES were held in
the name of Colette Pomper and Arthur Pomper, 5429 Davis Street, Skokie, IL
60077, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of June 30, 1998, 8,489 shares in the aggregate, 6.46% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS A KEMPER SHARES were held in
the name of U.S. Clearing Corp., FBO 663-33362-16, 26 Broadway, New York, NY
10004, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of June 30, 1998, 6,704 shares in the aggregate, 5.10% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS A KEMPER SHARES were held in
the name of Everen Clearing Corp., A/C 6286-3891, Eldon Pluemer, 111 East
Kilbourn Avenue, Milwaukee, WI 53202, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1998, 7,584 shares in the aggregate, 5.77% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS A KEMPER SHARES were held in
the name of Olde Discount FBO 16214435, 751 Griswold Street, Detroit, MI 48226,
who may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
<PAGE> 52
As of June 30, 1998, 7,199 shares in the aggregate, 7.74% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS B KEMPER SHARES were held in
the name of NFSC FBO #AC3-085316, NFSC/FMTC IRA, 559 Los Altos Circle, Mesquite,
NV 89027, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 11,289 shares in the aggregate, 12.14% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS B KEMPER SHARES were held in
the name of Donaldson Lufkin Jenrette Securities Corp, Inc., P.O. Box 2052,
Jersey City, NJ 07303, who may be deemed to be the beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 2,087 shares in the aggregate, 14.26% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS C KEMPER SHARES were held in
the name of NFSC FBO #APX-262153, Frances B. Downs, Trustee, Braswell Family
Trust, U/A 2/7/94, 878 Highway 442, Shaw, MS 38773, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 1,420 shares in the aggregate, 9.70% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS C KEMPER SHARES were held in
the name of Donaldson Lufkin Jenrette Securities Corp, Inc., P.O. Box 2052,
Jersey City, NJ 07303, who may be deemed to be the beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 938 shares in the aggregate, 6.41% of the outstanding
shares of GLOBAL DISCOVERY FUND--CLASS C KEMPER SHARES were held in the name of
Merrill, Lynch, Pierce, Fenner & Smith for the Sole Benefit of Its Customers,
Attn: Fund Administration, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville,
FL 32246, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 1,297 shares in the aggregate, 8.86% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS C KEMPER SHARES were held in
the name of IFTC, Trustee Custodian FBO, Douglas R. Munro IRA, 2026 Dumont Road,
Timonium, MD 21093, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 1,330 shares in the aggregate, 9.09% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS C KEMPER SHARES were held in
the name of Attn: Mutual Funds Department, BHC Securities Inc., FAO 32919742,
One Commerce Square, 2005 Market Street, Suite 1200, Philadelphia, PA 19103, who
may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
As of June 30, 1998, 1,143 shares in the aggregate, 7.80% of the
outstanding shares of GLOBAL DISCOVERY FUND--CLASS C KEMPER SHARES were held in
the name of Everen Clearing Corp., A/C 5654-9916, Arthur Paul Moser, 111 E.
Kilbourn Avenue, Milwaukee, WI 53202, who may be deemed to be the
<PAGE> 53
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,104,796 shares in the aggregate, or 5.01% of the outstanding
shares of VALUE FUND--SCUDDER SHARES on June 30, 1998. The Investment Manager
may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 2,813,785 shares in the aggregate, 12.77% of the
outstanding shares of VALUE FUND--SCUDDER SHARES were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 28,846 shares in the aggregate, 10.97% of the
outstanding shares of VALUE FUND--CLASS B KEMPER SHARES were held in the name of
MFSC FBO #E81-045390, Mina J. Slusher, Trustee, Mina J. Slucher Revocable Living
Trust, 22853 S. Hoch Road, Osage City, KS 66523, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 33,558 shares in the aggregate, 12.76% of the
outstanding shares of VALUE FUND--CLASS B KEMPER SHARES were held in the name of
Donaldson Lufkin Jenrette Securities Corp, Inc., P.O. Box 2052, Jersey City, NJ
07303, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of June 30, 1998, 21,231 shares in the aggregate, 8.07% of the
outstanding shares of VALUE FUND--CLASS B KEMPER SHARES were held in the name of
Southwest Securities Inc. FBO, James A. Santiago and Melissa J. Santiago JTWROS,
Acount 71648132, P.O. Box 509002, Dallas TX 75250, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 4,958 shares in the aggregate, 16.30% of the
outstanding shares of VALUE FUND--CLASS C KEMPER SHARES were held in the name of
Donaldson Lufkin Jenrette Securities Corp, Inc., P.O. Box 2052, Jersey City, NJ
07303, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of June 30, 1998, 5,543 shares in the aggregate, 18.22% of the
outstanding shares of VALUE FUND--CLASS C KEMPER SHARES were held in the name of
NFSC FBO #APX-262153, Frances B. Downs, Trustee, Braswell Family Trust, U/A
2/7/94, 878 Highway 442, Shaw, MS 38773, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1998, 1,589 shares in the aggregate, 5.22% of the
outstanding shares of VALUE FUND--CLASS C KEMPER SHARES were held in the name of
<PAGE> 54
Investors Fiduciary Trust Co. Custodian, IRA A/C John G. Rowell, 15 Warren
Street, #B, Hackensack, NJ 07601, who may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 1,981 shares in the aggregate, 6.51% of the
outstanding shares of VALUE FUND--CLASS C KEMPER SHARES were held in the name of
US Bancorp Investments, Inc., FBO 190246521, 100 S. 5th Street, Suite 1400,
Minneapolis, MN 55402, who may be deemed to be the beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
<PAGE> 55
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<PAGE> 56
APPENDIX 2
FUND SHARES OWNED BY TRUSTEES/DIRECTORS+
<TABLE>
<CAPTION>
ALL CURRENT
TRUSTEES
AND OFFICERS
FUND NAME(1) BECTON DRISCOLL FREEMAN LOVEJOY MARPLE PIERCE QUIRK TEMPEL AS A GROUP
------------ ------ -------- ------- ------- ------ ------ ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Trust
Classic Growth Fund 289 1,395 600* 564 87 -- -- 261* 2,336
</TABLE>
- ---------------
* Shares acquired after 6/30/98
+ The information as to beneficial ownership is based on statements furnished to
each Trust/Corporation by each Trustee/Director.
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Each Trustee's individual shareholdings of a Fund
constitutes less than 1/4 of 1% of the shares outstanding of such Fund.
Unless otherwise noted below, as a group, the Trustees and officers own less
than 1/4 of 1% of the shares of each Fund.
<TABLE>
<CAPTION>
FUND NAME(1) BANCROFT BOLTON BURGIN DEVINE FOX LUERS NOLEN PIERCE QUIRK SPERO
------------ -------- ------ ------ ------ --- ----- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Value Equity Trust
Value Fund 7,835 218* -- 5,960(2) 565 -- -- -- -- --
<CAPTION>
ALL CURRENT
TRUSTEES
AND OFFICERS
FUND NAME(1) AS A GROUP
------------ ------------
<S> <C>
Value Equity Trust
Value Fund 31,831(3)
</TABLE>
- ---------------
* Shares acquired after June 30, 1998.
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Each Trustee's individual shareholdings of any Fund
constitutes less than 1/4 of 1% of the shares outstanding of such Fund.
(2) Mr. Devine's shares in Value Fund are held with shared investment and voting
power.
(3) As a group, on June 30, 1998, the Trustees and officers of Value Fund held
8,492 shares with sole investment and voting power, 16,696 shares with
shared investment and voting power, and 6,641 shares with sole investment
but no voting power. Shares held with sole investment but no voting power
are shares held in profit sharing and 401(k) plans for which Scudder Kemper
Investments, Inc. serves as Trustee.
<PAGE> 57
<TABLE>
<CAPTION>
FUND NAME(1) BANCROFT BOLTON BRATT++ DEVINE FOX GLEYSTEEN LUERS PIERCE QUIRK
------------ -------- ------ ------- ------ --- --------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Global/International Fund, Inc.
Global Discovery Fund -- 541 2,183 -- -- 1,651 -- 24,077(2) --
<CAPTION>
ALL CURRENT
DIRECTORS
AND OFFICERS
FUND NAME(1) SPERO AS A GROUP
------------ ----- ------------
<S> <C> <C>
Global/International Fund, Inc.
Global Discovery Fund -- 16,547(3)
</TABLE>
- ---------------
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Each Director's individual shareholdings of any Fund
constitutes less than 1/4 of 1% of the shares outstanding of such Fund.
(2) Mr. Pierce's total in Global Discovery Fund includes 896 shares held by
members of his family, 6,401 shares held with shared investment and voting
power and 18,067 shares held with sole investment and no voting power.
Shares held with sole investment but no voting power are shares held in
profit sharing and 401(k) plans for Scudder Kemper Investments, Inc. serves
as Trustee.
(3) As a group, on June 30, 1998, the Directors and officers of Global Discovery
Fund held 5,487 shares with sole investment and voting power, 11,060 shares
with shared investment and voting power and 54,868 shares with sole
investment and no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for Scudder
Kemper Investments, Inc. serves as Trustee.
++ Mr. Bratt's serves as President of Global/International Fund, Inc.
<PAGE> 58
APPENDIX 3
INVESTMENT MANAGEMENT FEE RATES, NET ASSETS
AND AGGREGATE MANAGEMENT FEES OF EACH FUND
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Classic Growth Fund 8/31/97 $ 53,225,783 0.70% of average daily net assets $ 0++
Global Discovery Fund 10/31/97 $349,121,954 1.10% of average daily net assets $3,960,949
Value Fund 9/30/97 $297,979,779 0.70% of average daily net assets $1,073,855
</TABLE>
- ------------------------------
+ The management fee rates shown are for each Fund's most recently completed
fiscal year.
++ After waivers and/or expense limitations.
<PAGE> 59
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<PAGE> 60
APPENDIX 4
DATES RELATING TO
INVESTMENT MANAGEMENT AGREEMENTS
<TABLE>
<CAPTION>
NEW TERMINATION
FORMER INVESTMENT DATE
INVESTMENT MANAGEMENT (UNLESS
DATE OF MANAGEMENT AGREEMENT CONTINUED)
FORMER AGREEMENT LAST FOR NEW
COMMENCEMENT INVESTMENT LAST APPROVED BY INVESTMENT
OF MANAGEMENT APPROVED BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT SHAREHOLDERS DIRECTORS AGREEMENT
---- ------------ ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Classic Growth Fund 9/9/96 12/31/97 10/24/97 8/10/98 9/30/99
Global Discovery Fund 9/10/91 12/31/97 10/27/97 8/6/98 9/30/99
Value Fund 12/31/92 12/31/97 10/27/97 8/6/98 9/30/99
</TABLE>
<PAGE> 61
APPENDIX 5
TRUSTEES/DIRECTORS AND OFFICERS ASSOCIATED
WITH SCUDDER KEMPER
<TABLE>
<CAPTION>
NAME POSITION WITH TRUSTS/CORPORATION ASSOCIATION WITH SCUDDER KEMPER
- ---- -------------------------------- -------------------------------
<S> <C> <C>
Daniel Pierce Chairman of the Board, Director Managing Director
& Vice President of
Global/International Fund, Inc.;
President & Trustee of
Investment Trust and Value
Equity Trust
Thomas W. Joseph Vice President Senior Vice President
Thomas F. McDonough Vice President & Secretary Senior Vice President
John R. Hebble Treasurer Senior Vice President
Kathryn L. Quirk Director, Vice President & Managing Director
Assistant Secretary of Global/
International Fund, Inc.;
Trustee, Vice President &
Assistant Secretary of
Investment Trust and Value
Equity Trust
Caroline Pearson Assistant Secretary Senior Vice President
Valerie F. Malter Vice President of Investment Senior Vice President
Trust
Bruce F. Beaty Vice President of Investment Senior Vice President
Trust
Philip S. Fortuna Vice President of Investment Managing Director
Trust
William F. Gadsden Vice President of Investment Managing Director
Trust
Robert T. Hoffman Vice President of Investment Managing Director
Trust
Nicholas Bratt President of Managing Director
Global/International Fund, Inc.
Susan E. Dahl Vice President of Global/ Managing Director
International Fund, Inc.
Gary P. Johnson Vice President of Global/ Managing Director
International Funds, Inc.
Gerald J. Moran Vice President of Global/ Senior Vice President
International Fund, Inc.
M. Isabel Saltzman Vice President of Global/ Managing Director
International Fund, Inc.
Donald E. Hall Vice President of Value Equity Managing Director
Trust
Kathleen Millard Vice President of Value Equity Managing Director
Trust
</TABLE>
<PAGE> 62
APPENDIX 6
FEES TO SFAC, SSC AND STC
<TABLE>
<CAPTION>
FISCAL AGGREGATE FEE AGGREGATE FEE AGGREGATE FEE
FUND YEAR TO SFAC TO SSC TO STC
---- ------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Classic Growth Fund 8/31/97 $ 8,333 $ 10,012 $ 484
Global Discovery Fund 10/31/97 $207,838 $851,578 $186,872
Value Fund 9/30/97 $ 50,128 $445,397 $ 80,120
</TABLE>
<PAGE> 63
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<PAGE> 64
[BACK COVER]
For more information, please call Shareholder Communications Corporation,
your Fund's information agent, at 1-800-248-2681.
SD CONV.
<PAGE> 65
PROXY MONTGOMERY STREET INCOME SECURITIES, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS--DECEMBER 11, 1998
The undersigned hereby appoints Bruce H. Goldfarb, Kathryn L. Quirk, Thomas
F. McDonough and Daniel Pierce and each of them, the proxies of the undersigned,
with the power of substitution to each of them, to vote all shares of Montgomery
Street Income Securities, Inc. (the "Fund") which the undersigned is entitled to
vote at the Special Meeting of Stockholders of the Fund to be held at the
offices of Scudder Kemper Investments, Inc., 101 California Street, Suite 4100,
San Francisco, California 94111, on Friday, December 11, 1998 at 9:00 a.m.,
Pacific time, and at any adjournments thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR THE ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder Kemper Investments, Inc., recommend that you vote FOR the
item.
To approve the new Investment Management, Advisory and Administration Agreement
between the Fund and Scudder Kemper Investments, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[CONTINUED ON OTHER SIDE]
<PAGE> 66
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.
