<PAGE>
As filed with the Securities and Exchange Commission
on December 15, 2000
Securities Act File No.
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
-----
Pre-Effective Amendment No. /_____/ Post-Effective Amendment No. /____/
VALUE EQUITY TRUST
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, Massachusetts 02110-4103
(Address of Principal Executive Offices) (Zip Code)
John Millette
Scudder Kemper Investments, Inc.
Two International Place
Boston, MA 02110-4103
(Name and Address of Agent for Service)
(617) 295-1000
(Registrant's Area Code and Telephone Number)
with copies to:
Caroline Pearson, Esq. Joseph R. Fleming, Esq.
Scudder Kemper Investments, Inc. Dechert
Two International Place Ten Post Office Square - South
Boston, MA 02110-4103 Boston, MA 02109-4603
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement is declared effective.
Title of Securities Being Registered:
Shares of Beneficial Interest ($.01 par value)
of Scudder Large Company Value Fund, a series of the Registrant
________________________________________________________________________________
It is proposed that this filing will become effective on January 14, 2001
pursuant to Rule 488
under the Securities Act of 1933.
________________________________________________________________________________
No filing fee is required because the Registrant has previously registered an
indefinite number of its shares under the Securities Act of 1933, as amended,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
<PAGE>
PART A
INFORMATION REQUIRED IN THE PROXY STATEMENT/PROSPECTUS
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
VALUE FUND
Please take notice that a Special Meeting of Shareholders (the "Meeting")
of Value Fund (the "Fund"), a series of Value Equity Trust, will be held at the
offices of Scudder Kemper Investments, Inc., 13/th/ Floor, Two International
Place, Boston, MA 02110-4103, on May 24, 2001, at 3:00 p.m., Eastern time, for
the following purpose:
Proposal: To approve an Agreement and Plan of Reorganization for the Fund
(the "Plan"). Under the Plan, (i) all or substantially all of
the assets and all of the liabilities of the Fund would be
transferred to Scudder Large Company Value Fund, (ii) each
shareholder of the Fund would receive shares of Scudder Large
Company Value Fund of a corresponding class to those held by
the shareholder in the Fund in an amount equal to the value of
their holdings in the Fund, and (iii) the Fund would then be
terminated.
The persons named as proxies will vote in their discretion on any other
business that may properly come before the Meeting or any adjournments or
postponements thereof.
Holders of record of shares of the Fund at the close of business on March
5, 2001 are entitled to vote at the Meeting and at any adjournments or
postponements thereof.
In the event that the necessary quorum to transact business or the vote
required to approve the Proposal is not obtained at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies. Any
such adjournment as to a matter will require the affirmative vote of the holders
of a majority of the Fund's shares present in person or by proxy at the Meeting.
The persons named as proxies will vote FOR any such adjournment those proxies
which they are entitled to vote in favor of the Proposal and will vote AGAINST
any such adjournment those proxies to be voted against the Proposal.
By Order of the Board,
/s/ John Millette
John Millette
Secretary
March 6, 2001
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN
IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE (OR TO TAKE ADVANTAGE OF
THE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE PROXY CARD(S)).
YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) (OR YOUR VOTING BY OTHER
AVAILABLE MEANS) MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS.
IF YOU WISH TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON AT THAT TIME,
YOU WILL STILL BE ABLE TO DO SO.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION
PROPOSAL: APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION................ __
SYNOPSIS........................................................ __
PRINCIPAL RISK FACTORS.......................................... __
THE PROPOSED TRANSACTION........................................ __
ADDITIONAL INFORMATION.................................................... __
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
March [ ], 2001
Relating to the acquisition of the assets of
VALUE FUND,
a separate series of
VALUE EQUITY TRUST (the "Trust")
Two International Place
Boston, Massachusetts 02110-4103
(800) [ ]
---------------------------
by and in exchange for shares of beneficial interest of
SCUDDER LARGE COMPANY VALUE FUND,
a separate series of the Trust
Two International Place
Boston, Massachusetts 02110-4103
(800) [ ]
--------------------------
INTRODUCTION
This Proxy Statement/Prospectus is being furnished in connection with
the solicitation of proxies by the Board of Trustees of the Trust in connection
with the Special Meeting of Shareholders of Value Fund (the "Fund") to be held
on May 24, 2001, at the offices of Scudder Kemper Investments, Inc. ("Scudder
Kemper" or the "Investment Manager"), 13/th/ Floor, Two International Place,
Boston, MA 02110-4103 at 3:00 p.m. (Eastern time), or at such later time made
necessary by all adjournments or postponements thereof (the "Meeting"). This
Proxy Statement/Prospectus, the Notice of Special Meeting and the proxy card(s)
are first being mailed to shareholders on or about March 6, 2001 or as soon as
practicable thereafter.
At the meeting, shareholders of the Fund will be asked to approve an
Agreement and Plan of Reorganization (the "Plan") pursuant to which all or
substantially all of the assets of the Fund would be acquired by Scudder Large
Company Value Fund, a fund with similar investment characteristics and managed
by the same investment manager as the Fund, in exchange for shares of beneficial
interest of Scudder Large Company Value Fund and the assumption by Scudder Large
Company Value Fund of all of the liabilities of the Fund, as described more
fully below (the "Reorganization"). Shares of Scudder Large Company Value Fund
received would then be distributed to the shareholders of the Fund in complete
liquidation of the Fund. As a result of the Reorganization, shareholders of the
Fund will become shareholders of Scudder Large Company Value Fund and will
receive shares of Scudder Large Company Value Fund in an amount equal to the
value of their holdings in the Fund as of the close of business on the business
day preceding the closing of the Reorganization (the "Valuation Date"). The
closing of the Reorganization (the "Closing") is contingent upon shareholder
approval of the Plan. A copy of the Plan is attached as Exhibit A. The
Reorganization is expected to occur on or about June 25, 2001.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE>
In the descriptions of the Proposal below, the word "fund" is
sometimes used to mean an investment company or series thereof in general, and
not the Fund whose proxy statement this is. In addition, for
simplicity, actions are described in this Proxy Statement/Prospectus as being
taken by either the Fund or Scudder Large Company Value Fund (which are
collectively referred to as the "Funds" and each referred to as a "Fund"),
although all actions are actually taken by the Trust, on behalf of the
applicable Fund.
This Proxy Statement/Prospectus sets forth concisely the information
about Scudder Large Company Value Fund that a prospective investor should know
before investing and should be retained for future reference. For a more
detailed discussion of the investment objective, policies, restrictions and
risks of Scudder Large Company Value Fund, see Scudder Large Company Value
Fund's prospectus relating to the class of shares that you will receive in the
Reorganization as each is supplemented from time to time, which is included in
the materials you received with this document and incorporated herein by
reference (meaning that it is legally part of this document). For a more
detailed discussion of the investment objective, policies, restrictions and
risks of the Fund, see the Fund's prospectus dated February 1, 2001, as
supplemented from time to time, which is also incorporated herein by reference
and a copy of which may be obtained upon request and without charge by calling
or writing the Fund at the telephone number or address listed above.
Also incorporated herein by reference is Scudder Large Company Value
Fund's statement of additional information relating to the class of shares that
you will receive in the Reorganization, as each is supplemented from time
to time, which may be obtained upon request and without charge by calling or
writing Scudder Large Company Value Fund at the telephone number or address
listed above. A Statement of Additional Information, dated March [ ], 2001,
containing additional information about the Reorganization has been filed with
the Securities and Exchange Commission (the "SEC" or the "Commission") and is
incorporated by reference into this Proxy Statement/Prospectus. A copy of this
Statement of Additional Information is available upon request and without charge
by calling or writing Scudder Large Company Value Fund at the telephone number
or address listed above. Shareholder inquiries regarding Scudder Large Company
Value Fund may be made by calling (800) [ ] and shareholder inquiries
regarding the Fund may be made by calling (800) [ ]. The information
contained in this document concerning each Fund has been provided by, and is
included herein in reliance upon, that Fund.
Scudder Large Company Value Fund and the Fund are diversified series
of shares of beneficial interest of the Trust, an open-end management investment
company organized as a Massachusetts business trust.
The Board of Trustees of the Trust unanimously recommends that
shareholders vote FOR the Proposal.
PROPOSAL: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. SYNOPSIS
Introduction
The Board of Trustees of the Trust, including all of the Independent
Trustees, approved the Plan at a meeting held on November 13, 2000. Subject to
its approval by the shareholders of the Fund, the Plan provides for (a) the
transfer of all or substantially all of the assets and all of the liabilities of
the Fund to Scudder Large Company Value Fund in exchange for Class S, Class A,
Class B and Class C shares of Scudder Large Company Value Fund; (b) the
distribution of such shares to the shareholders of the Fund in complete
liquidation of the Fund; and (c) the termination of the Fund. As a result of
the
2
<PAGE>
Reorganization, each shareholder of the Fund will become a shareholder of
Scudder Large Company Value Fund and will hold, immediately after the
Reorganization, shares of the class of shares of Scudder Large Company Value
Fund that corresponds to the class of shares of the Fund held by that
shareholder on the Valuation Date, having an aggregate net asset value equal to
the aggregate net asset value of such shareholder's shares of the Fund on the
Valuation Date.
Scudder Kemper is the investment manager of both Funds. If the
Reorganization is completed, the Fund's shareholders will continue to enjoy all
of the same shareholder privileges as they currently enjoy, such as access to
professional service representatives, exchange privileges and automatic dividend
reinvestment. Services provided to the Class S, Class A, Class B and Class C
shareholders of Scudder Large Company Value Fund following the Reorganization
will be identical to those currently provided to shareholders of the
corresponding class of the Fund. See "Purchases, Exchanges and Redemptions"
below.
Background of the Reorganization
The Reorganization is part of a broader Scudder Kemper restructuring
program to respond to changing industry conditions and investor needs. The
mutual fund industry has grown dramatically over the last ten years. During
this period of rapid growth, investment managers expanded the range of fund
offerings that are available to investors in an effort to meet the growing and
changing needs and desires of an increasingly large and dynamic group of
investors. With this expansion has come increased complexity and competition
among mutual funds, as well as the potential for increased confusion among
investors. The group of funds advised by Scudder Kemper has followed this
pattern.
As a result, Scudder Kemper has sought ways to restructure and
streamline the management and operations of the funds it advises by
consolidating all of the retail mutual funds that it currently sponsors into a
single product line offered under the "Scudder" name. Scudder Kemper believes,
and has advised the boards, that reducing the number of funds it advises and
adding the classes of shares currently offered on all Kemper Funds to the
Scudder Funds will benefit fund shareholders. In addition, Scudder Kemper
anticipates changing its name to "Zurich Scudder Investments, Inc." Scudder
Kemper believes that the combination of its open-end, directly-distributed funds
and classes (the "Scudder Funds") with the funds in the Kemper Family of Funds
(the "Kemper Funds") will permit it to streamline its administrative
infrastructure and focus its distribution efforts. Scudder Kemper has,
therefore, proposed the combination of many Scudder Funds and Kemper Funds that
have similar or compatible investment objectives and policies. Scudder Kemper
believes that the larger funds, along with the fewer number of funds, that
result from these combinations may help to enhance investment performance and
increase efficiency of operations. The restructuring program will not result in
any changes in the shareholder services currently offered to shareholders of the
Scudder Funds.
The fund consolidations are expected to have a positive impact on
Scudder Kemper, as well. These consolidations are likely to result in reduced
costs (and the potential for increased profitability) for Scudder Kemper in
advising or servicing funds.
Reasons for the Proposed Reorganization; Board Approval
Since receiving Scudder Kemper's proposal on June 5, 2000, the
Trustees have conducted a thorough review of all aspects of the proposed
Reorganization. See "The Proposed Transaction - Board Approval of the Proposed
Transaction" below.
3
<PAGE>
The Trustees believe that the Reorganization will provide shareholders
of the Fund with the following benefits:
. LOWER FUND EXPENSES. If the Reorganization is approved, the Fund's
shareholders are expected to benefit from lower Total Fund
Operating expenses. Please refer to "Comparison of Expenses" below.
. GREATER PREDICTABILITY OF EXPENSES. Scudder Large Company Value
Fund and Scudder Kemper have entered into an administrative
services agreement pursuant to which Scudder Kemper provides or
pays others to provide substantially all of the administrative
services required by Scudder Large Company Value Fund in return for
payment by each class of shares of Scudder Large Company Value Fund
of an annual administrative services fee. This agreement, which has
an initial three year term, protects Scudder Large Company Value
Fund's shareholders from increases in Scudder Large Company Value
Fund's expense ratio attributed to any increases in the costs of
providing these services.
. SIMILAR INVESTMENT OBJECTIVES AND POLICIES. Although some
differences do exist, Scudder Kemper has advised the Trustees that
the Funds have compatible investment objectives and policies.
Scudder Kemper has also advised the Trustees that both Funds have
the same portfolio management team and follow a substantially
similar investment process. Please refer to "Investment Objectives,
Policies and Restrictions of the Funds" below.
. TAX-FREE REORGANIZATION. It is a condition of the Reorganization
that the Fund receives an opinion of tax counsel that the
transaction would be a TAX-FREE transaction.
For these reasons, as more fully described below under "The Proposed
Transaction -- Board Approval of the Proposed Transaction," the Board of
Trustees, including the Independent Trustees, has concluded that:
. the Reorganization is in the best interests of the Fund and its
shareholders; and
. the interests of the existing shareholders of the Fund will not be
diluted as a result of the Reorganization.
Accordingly, the Trustees unanimously recommend approval of the Plan
effecting the Reorganization. If the Plan is not approved, the Fund will
continue in existence unless other action is taken by the Trustees.
4
<PAGE>
Investment Objectives, Policies and Restrictions of the Funds
This section will help you compare the investment objectives and
policies of the Fund and Scudder Large Company Value Fund. Please be aware that
this is only a summary. More complete information may be found in the Funds'
prospectuses.
The investment objectives, policies and restrictions of the Fund and
Scudder Large Company Value Fund are similar. Some differences do exist. The
investment objective of the Fund is to seek long-term growth of capital through
investment in undervalued equity securities. The investment objective of
Scudder Large Company Value Fund is to seek maximum long-term capital
appreciation through a value-oriented investment approach. There can be no
assurance that either Fund will achieve its investment objective.
Both Funds have the same portfolio management teams and are managed in
a substantially similar manner. Scudder Large Company Value Fund invests at
least 65% of its net assets in common stocks and other equities of large U.S.
companies (those with a market value of $1 billion or more). Similarly, the Fund
invests at least 80% of its net assets in equity securities, primarily common
stocks of larger, established U.S. companies with similar market values.
In selecting stocks for each Fund, the managers begin by using a
computer model that examines companies in the Russell 1000 Index. For Scudder
Large Company Value Fund, the model seeks those companies whose market values,
when compared to such factors as earnings, book value and sales, place them in
the most undervalued 40% of companies in the index. For the Fund, the model
ranks the stocks in the index by comparing a company's stock price to earnings,
book value, cash flow and other quantitative measures.
The managers of Scudder Large Company Value Fund then further narrow
the pool of potential stock by using bottom-up analysis to look for companies
that seem poised for business improvement. Scudder Large Company Value Fund
managers also draw on fundamental investment research to assemble Scudder Large
Company Value Fund's portfolio and assess the economic outlooks for various
industries and the risk characteristics and potential volatility of each stock.
For the Fund, the managers then analyze those companies that the model
indicates are most undervalued, seeking to identify those whose stock prices
appear likely to rebound due to a particular factor, and consider the impact on
the Fund of each stock's potential risk factors and expected volatility.
Lastly, the managers of the Fund identify the 60 to 90 most attractive stocks,
drawing on an analysis of economic outlooks for various sectors and industries.
Scudder Large Company Value Fund will normally sell a stock when it
reaches a target price, when the managers believe other investments offer better
opportunities or in the course of adjusting its exposure to a given industry.
The Fund will normally sell a stock when the managers believe it is fairly
valued, it may not benefit from the current market, its fundamental factors have
changed or it has performed below expectations.
Both Funds may invest up to 20% of their net assets in certain
investment-grade debt securities. Each Fund may also purchase debt securities
that are rated Baa or below ("high yield" or "junk" bonds), but Scudder Large
Company Value Fund may invest a greater percentage of its assets in debt
securities rated B or lower, including those rated C or D. Unlike the Fund,
Scudder Large Company Value Fund may invest in foreign securities. Each Fund
also is permitted to use various types of derivatives (contracts whose value is
based on, for example, indices, commodities or securities), but the Investment
Manager does not intend to use them as principal investments, and might not use
them at all, for either Fund. As a
5
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temporary defensive measure, each Fund may shift up to 100% of its assets into
investments such as money market securities. This could prevent losses, but
would mean that each Fund would not be pursuing its objective.
The Funds' investment restrictions are identical, as such restrictions
are set forth under "Investment Restrictions" in each Fund's statement of
additional information. Investment restrictions of each Fund that are
fundamental policies may not be changed without the approval of Fund
shareholders, while non-fundamental policies may be changed by the particular
Fund's Board without shareholder approval. Investors should refer to the
respective statements of additional information of the Funds for a fuller
description of each Fund's investment policies and restrictions.
Portfolio Turnover
The portfolio turnover rate for Scudder Large Company Value Fund,
i.e., the ratio of the lesser of annual sales or purchases to the monthly
average value of the portfolio (excluding from both the numerator and the
denominator securities with maturities at the time of acquisition of one year or
less), for the fiscal year ended July 31, 2000 was 46%. The portfolio turnover
rate for the Fund for the fiscal year ended September 30, 2000 was 51%.
Performance
The following table shows how the returns of the Fund and Scudder
Large Company Value Fund over different periods average out. For context, the
table also includes a broad-based market index (which, unlike the Funds, does
not have any fees or expenses). The performances of both Funds and the index
vary over time, and past performance is not necessarily indicative of future
results. All figures assume reinvestment of dividends and distributions.
Average Annual Total Return
for the Periods Ended December 31, 2000
[Insert Table]
For management's discussion of Scudder Large Company Value Fund's
performance for the fiscal year ended July 31, 2000, please refer to Exhibit B.
Investment Manager; Fees and Expenses
Each Fund retains the investment management firm of Scudder Kemper,
pursuant to separate contracts, to manage its daily investment and business
affairs, subject to the policies established by each Fund's Trustees. The same
individuals serve as the portfolio management team for each Fund. Scudder Kemper
is a Delaware corporation located at Two International Place, Boston,
Massachusetts 02110-4103.
Pursuant to separate contracts, both Funds pay the Investment Manager
a graduated investment management fee, although the fee rates and breakpoints
differ. The fee is graduated so that increases in a Fund's net assets may result
in a lower annual fee rate and decreases in its net assets may result in a
higher annual fee rate. As of July 31, 2000, Scudder Large Company Value Fund
had total net assets of $2,077,971,638. For the fiscal year ended July 31, 2000,
Scudder Large Company Value Fund paid the Investment Manager a fee of 0.62% of
its average daily net assets. As of September 30, 2000, the Fund had total net
assets of $419,862,688. For the fiscal year ended September 30, 2000, the Fund
paid the Investment Manager a fee of 0.70% of its average daily net assets.
6
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The investment management fee schedule for the combined Fund after the
Reorganization will be identical to the current fee schedule for Scudder Large
Company Value Fund. Currently the fee schedules for the Fund and Scudder Large
Company Value Fund are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Fund Scudder Large Company Value Fund
-------------------------------------------------------------------------------------------------------------
Average Daily Net Assets Fee Rate Average Daily Net Assets Fee Rate
------------------------------------- ------------- ------------------------------------- -------------
<S> <C> <C> <C>
First $500 million 0.70% First $1.5 billion 0.600%
Over $500 million 0.65% Next $500 million 0.575%
Next $1 billion 0.550%
Next $1 billion 0.525%
Next $1 billion 0.500%
Over $5 billion 0.475%
-------------------------------------------------------------------------------------------------------------
</TABLE>
Based upon the Fund's average net assets for the twelve-month period
ended September 30, 2000, the effective advisory fee rate for the Fund was
0.70%. Based upon each Fund's average net assets for the twelve-month period
ended September 30, 2000, the effective advisory fee rate for Scudder Large
Company Value Fund after the Reorganization would be 0.58% of average daily net
assets.
Administrative Fee
Scudder Large Company Value Fund has entered into an administration
agreement with Scudder Kemper (the "Administration Agreement"), pursuant to
which Scudder Kemper provides or pays others to provide substantially all of the
administrative services required by Scudder Large Company Value Fund (other than
those provided by Scudder Kemper under its investment management agreement with
that Fund) in exchange for the payment by Scudder Large Company Value Fund of an
annual administrative services fee (the "Administrative Fee") equal to 0.300%,
0.325%, 0.375% and 0.350% of average daily net assets attributable to the Class
S, Class A, Class B and Class C shares, respectively. The fees for the services
provided by Kemper Distributors, Inc. ("KDI") under its services agreement and
underwriting and distribution agreement with Scudder Large Company Value Fund
applicable to the Class A, Class B and Class C shares are not covered by, and
are in addition to, the Administrative Fee. One effect of this arrangement is to
make Scudder Large Company Value Fund's future expense ratio more predictable.
On the other hand, the administrative fee rate does not decrease with economies
of scale from increases in asset size or decreased operating expenses. The
details of this arrangement (including expenses that are not covered) are set
out below.
Various service providers (the "Service Providers"), some of which are
affiliated with Scudder Kemper, provide certain services to Scudder Large
Company Value Fund pursuant to separate agreements. Some of these Service
Providers may differ from current Service Providers of the Fund. Scudder Fund
Accounting Corporation, a subsidiary of Scudder Kemper, computes net asset value
for Scudder Large Company Value Fund and maintains its accounting records.
Scudder Service Corporation, also a subsidiary of Scudder Kemper, is the
transfer, shareholder servicing and dividend-paying agent for the shares of
Scudder Large Company Value Fund. By contract with Scudder Service Corporation,
Kemper Service Company, also a subsidiary of Scudder Kemper, will serve as
shareholder servicing agent for the Class A, Class B and Class C shares
following the Reorganization. Scudder Trust Company, an affiliate of Scudder
Kemper, provides subaccounting and recordkeeping services for shareholder
accounts in certain retirement and employee benefit plans. Scudder Investor
Services, Inc. ("SIS"), also a wholly-owned subsidiary of Scudder Kemper, acts
as the principal underwriter and distributor for the Class S shares of Scudder
Large Company Value Fund and acts as agent of such Fund
7
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in the continuous offering of its Class S shares. KDI, an affiliate of Scudder
Kemper, acts as the principal underwriter and distributor for the Class A, Class
B and Class C shares of Scudder Large Company Value Fund and acts as agent of
such Fund in the continuous offering of its Class A, Class B and Class C shares.
As custodian, State Street Bank and Trust Company holds the portfolio securities
of Scudder Large Company Value Fund, pursuant to a custodian agreement. Other
Service Providers include the independent public accountants and legal counsel
for Scudder Large Company Value Fund.
Under the Administration Agreement, each Service Provider provides the
services to Scudder Large Company Value Fund described above, except that
Scudder Kemper pays these entities for the provision of their services to
Scudder Large Company Value Fund and pays most other fund expenses, including
insurance, registration, printing and postage fees. In return, Scudder Large
Company Value Fund pays Scudder Kemper the Administrative Fee.
The Administration Agreement will remain in effect for an initial term
ending September 30, 2003, subject to earlier termination by the trustees that
oversee Scudder Large Company Value Fund. The fee payable by Scudder Large
Company Value Fund to Scudder Kemper pursuant to the Administration Agreement is
reduced by the amount of any credit received from Scudder Large Company Value
Fund's custodian for cash balances.
Certain expenses of Scudder Large Company Value Fund are not borne by
Scudder Kemper under the Administration Agreement, such as taxes, brokerage,
interest and extraordinary expenses, and the fees and expenses of the
Independent Trustees (including the fees and expenses of their independent
counsel). Scudder Large Company Value Fund continues to pay the fees required by
its investment management agreement with Scudder Kemper. In addition, Class A,
Class B and Class C shares of Scudder Large Company Value Fund pay the fees
under the services agreement and underwriting and distribution services
agreement with KDI, as described in "Distribution and Service Fees - Class A,
Class B and Class C Shares" below.
Comparison of Expenses
The tables and examples below are designed to assist you in
understanding the various costs and expenses that you will bear directly or
indirectly as an investor in the Class S, Class A, Class B and Class C shares of
Scudder Large Company Value Fund, and compares these with the expenses of the
Fund. As indicated below, it is expected that the total expense ratio of each
class of Scudder Large Company Value Fund following the Reorganization will be
substantially lower than the current expense ratio of the corresponding classes
of the Fund. Unless otherwise noted, the information is based on each Fund's
expenses and average daily net assets during the twelve months ended September
30, 2000 (prior to the creation of Class A, Class B and Class C shares of
Scudder Large Company Value Fund) and on a pro forma basis as of that date and
for the twelve month period then ended, assuming the Reorganization had been in
effect for the period.
8
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Expense Comparison Table
Class S Shares
<TABLE>
<CAPTION>
Scudder
Large Company Pro Forma
Fund Value Fund (Combined)(1)
---- ------------- -------------
<S> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Deferred Sales Charge (Load) (as % of None None None
purchase price or redemption proceeds)
Maximum Deferred Sales Charge (Load) imposed None None None
on reinvested dividends
Redemption Fee (as a percentage of amount None None* None*
redeemed, if applicable)
Annual Fund Operating Expenses (Unaudited)
------------------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.70% 0.59%(2) 0.58%
Distribution and/or service (12b-1) fees None None None
Other Expenses 0.77% 0.30%(3) 0.30%
------ ------ ------
Total Annual Fund Operating Expenses 1.47% 0.89% 0.88%
Expense Example of Total Operating Expenses
-------------------------------------------
at the End of the Period(4)
------------------------
One Year $ 149 $ 91 $ 90
Three Years $ 465 $ 284 $ 281
Five Years $ 803 $ 493 $ 488
Ten Years $1,757 $1,096 $1,084
</TABLE>
________________
* There is a $5 wire service fee for receiving redemption proceeds via wire.
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization.
(2) Restated to reflect the implementation of Scudder Large Company Value
Fund's new investment management agreement.
(3) Restated to relfect the implementation of Scudder Large Company Value
Fund's Administration Agreement.
(4) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
9
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Expense Comparison Table
Class A Shares
<TABLE>
<CAPTION>
Scudder
Large Company Pro Forma
Fund Value Fund (Combined)(1)
---- ------------- -------------
<S> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on 5.75% 5.75% 5.75%
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge None None None
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed None None None
on reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses (Unaudited)
------------------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.70% 0.59%(3) 0.58%
Distribution and/or service (12b-1) fees None 0.25% 0.25%
Other Expenses 0.98% 0.33%(4) 0.33%
------ ------ ------
Total Annual Fund Operating Expenses 1.68% 1.17% 1.16%
Expense Example of Total Operating Expenses
-------------------------------------------
at the End of the Period(5)
------------------------
One Year $ 736 $ 687 $ 686
Three Years $1,074 $ 925 $ 922
Five Years $1,435 $1,182 $1,177
Ten Years $2,448 $1,914 $1,903
</TABLE>
________________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization.
(2) Class A shares purchased under the Large Order NAV Purchase Privilege have
a 1% contingent deferred sales charge for shares sold during the first year
after purchase and .50% for shares sold during the second year.
(3) Restated to reflect the implementation of Scudder Large Company Value
Fund's new investment management agreement.
(4) Restated to reflect the implementation of Scudder Large Company Value
Fund's Administration Agreement.
(5) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
10
<PAGE>
Expense Comparison Table
Class B Shares
<TABLE>
<CAPTION>
Scudder
Large Company Pro Forma
Fund Value Fund (Combined)(1)
---- ------------- -------------
<S> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge 4.00% 4.00% 4.00%
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed None None None
on reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses (Unaudited)
------------------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.70% 0.59%(3) 0.58%
Distribution and/or service (12b-1) fees 0.75% 1.00% 1.00%
Other Expenses 0.84% 0.38%(4) 0.38%
------ ------ ------
Total Annual Fund Operating Expenses 2.29% 1.97% 1.96%
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming Redemption at the End of the
-------------------------------------
Period(5)
---------
One Year $ 632 $ 600 $ 599
Three Years $1,015 $ 918 $ 915
Five Years $1,425 $1,262 $1,257
Ten Years $2,333 $1,899 $1,888
</TABLE>
11
<PAGE>
Example of Total Operating Expenses
-----------------------------------
Assuming No Redemption at the End of the
----------------------------------------
Period(5)
------
<TABLE>
<S> <C> <C> <C>
One Year $ 232 $ 200 $ 199
Three Years $ 715 $ 618 $ 615
Five Years $1,225 $1,062 $1,057
Ten Years $2,333 $1,899 $1,888
</TABLE>
________________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization.
(2) Contingent deferred sales charges on Class B shares sold within the first
six years of ownership are 4% in the first year, 3% in the second and third
year, 2% in the fourth and fifth year, and 1% in the sixth year.
(3) Restated to reflect the implementation of Scudder Large Company Value
Fund's new investment management agreement.
(4) Restated to relfect the implementation of Scudder Large Company Value
Fund's Administration Agreement.
(5) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same. Assumes conversion to Class
A shares six years after purchase.
Expense Comparison Table
Class C Shares
<TABLE>
<CAPTION>
Scudder
Large Company Pro Forma
Fund Value Fund (Combined)(1)
---- ------------- -------------
<S> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge 1.00% 1.00% 1.00%
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed None None None
on reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses (Unaudited)
------------------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.70% 0.59%(3) 0.58%
Distribution and/or service (12b-1) fees 0.75% 1.00% 1.00%
Other Expenses 1.09% 0.35%(4) 0.35%
------ ------ ------
Total Annual Fund Operating Expenses 2.54% 1.94% 1.93%
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming Redemption at the End of the
-------------------------------------
Period(5)
------
<S> <C> <C> <C>
One Year $ 357 $ 297 $ 296
Three Years $ 791 $ 609 $ 606
Five Years $1,350 $1,047 $1,042
Ten Years $2,875 $2,264 $2,254
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming No Redemption at the End of the
----------------------------------------
Period(5)
------
One Year $ 257 $ 197 $ 196
Three Years $ 791 $ 609 $ 606
Five Years $1,350 $1,047 $1,042
Ten Years $2,875 $2,264 $2,254
</TABLE>
________________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization.
(2) Contingent deferred sales charges on Class C shares is 1% for shares sold
during the first year after purchase.
(3) Restated to reflect the implementation of Scudder Large Company Value
Fund's new investment management agreement.
(4) Restated to reflect the implementation of Scudder Large Company Value
Fund's Administration Agreement.
(5) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
Financial Highlights
The financial highlights table for Scudder Large Company Value Fund
prior to the creation of Class A, Class B and Class C shares, which is intended
to help you understand Scudder Large Company Value Fund's financial performance
for the past five years, is included in Scudder Large Company Value Fund's
prospectus that relates to Class S shares which is included in the materials
provided to Class S shareholders of the Fund with this document.
13
<PAGE>
Distribution of Class S Shares
SIS, Two International Place, Boston, Massachusetts 02110, a
subsidiary of the Investment Manager, is the principal underwriter of the
Class S shares of the Fund and will serve as the principal underwriter of the
Class S shares of Scudder Large Company Value Fund. SIS charges no direct fees
in connection with the distribution of Class S shares of the Fund or the Class S
shares of Scudder Large Company Value Fund. Following the Reorganization,
shareholders of Class S shares of Scudder Large Company Value Fund will continue
to be able to purchase shares of the funds in the Scudder Family of Funds on a
no-load basis.
Distribution and Services Fees - Class A, Class B and Class C Shares
Pursuant to an underwriting and distribution services agreement with
Scudder Large Company Value Fund, KDI, 222 South Riverside Plaza, Chicago,
Illinois 60606, an affiliate of the Investment Manager, will act as the
principal underwriter and distributor of the Class A, Class B and Class C shares
of Scudder Large Company Value Fund and will act as agent of that Fund in the
continuing offer of such shares. Prior to the Closing, Scudder Large Company
Value Fund will also adopt distribution plans in accordance with Rule 12b-1
under the 1940 Act that are substantially identical to the existing distribution
plans adopted by the Fund, with one exception. As under the current
distribution plans for the Fund, Scudder Large Company Value Fund will pay KDI
an asset-based fee at an annual rate of 0.75% of Class B and Class C shares.
The distribution plans for Scudder Large Company Value Fund, however, unlike the
distribution plans for the Fund, will also authorize the payment to KDI of the
0.25% services fee with respect to the Class A, Class B and Class C shares
pursuant to the services agreement described below. Neither KDI nor the
Trustees of the Fund believe that the services performed by KDI under the
services agreement have been primarily intended to result in sales of fund
shares (i.e., "distribution" services) as defined in Rule 12b-1, but rather are
post-sale administrative and other services provided to existing shareholders.
Nonetheless, to avoid legal uncertainties due to the ambiguity of the language
contained in Rule 12b-1 and eliminate any doubt that may arise in the future
regarding whether the services performed by KDI under the services agreement are
"distribution" services, the distribution plans for Scudder Large Company Value
Fund will authorize the payment of the services fee. The fact that the services
fee will be authorized by Scudder Large Company Value Fund's distribution plans
will not change the fee rate nor will it affect the nature or quality of the
services provided by KDI.
Pursuant to the services agreement with Scudder Large Company Value
Fund, which is substantially identical to the current services agreement with
the Fund, KDI will receive a services fee of up to 0.25% per year with respect
to the Class A, Class B and Class C shares of Scudder Large Company Value Fund.
KDI will use the services fee to compensate financial services firms ("firms")
for providing personal services and maintenance of accounts for their customers
that hold those classes of shares of Scudder Large Company Value Fund, and may
retain any portion of the fee not paid to firms to compensate itself for
administrative functions performed for the Class A, Class B and Class C shares
of the Fund. All fee amounts are payable monthly and are based on the average
daily net assets of each Fund attributable to the relevant class of shares.
Purchases, Exchanges and Redemptions - General
Both Funds are part of the Scudder Kemper complex of mutual funds. At
the time of the Closing, the procedures for purchases, exchanges and redemptions
of Class S, Class A, Class B and Class C shares of Scudder Large Company Value
Fund will be identical to those of the Fund. Shares of Scudder Large Company
Value Fund will be exchangeable for shares of the same class of most other open-
end funds advised by Scudder Kemper offering such shares.
14
<PAGE>
Services available to shareholders of Class S, Class A, Class B and
Class C shares of Scudder Large Company Value Fund will be identical to those
available to shareholders of the corresponding classes of the Fund and include
the purchase and redemption of shares through an automated telephone system and
over the Internet, telephone redemptions, exchanges by telephone to most other
Scudder Kemper funds that offer Class S, Class A, Class B and Class C shares,
and reinvestment privileges. Please see the prospectus of Scudder Large Company
Value Fund for additional information.
Purchases, Exchanges and Redemptions - Class A, Class B and Class C Shares
At the time of the Closing, corresponding classes of shares of Scudder
Large Company Value Fund will have identical sales charges to those of the Class
A, Class B and Class C shares of the Fund. Scudder Large Company Value Fund will
have a maximum initial sales charge of 5.75% on Class A shares. Shareholders who
purchase $1 million or more of Class A shares will pay no initial sales charge
but may have to pay a contingent deferred sales charge (a "CDSC") of up to 1% if
the shares are sold within 2 years of the date on which they were purchased.
Class B shares will be sold without a front-end sales charge, but may be subject
to a CDSC upon redemption, depending on the length of time the shares are held.
The CDSC will begin at 4% for shares sold in the first year, will decline to 1%
in the sixth year and is eliminated after the sixth year. After six years, Class
B shares automatically convert to Class A shares. Class C shares will be sold
without a front-end sales charge, but may be subject to a CDSC of up to 1% if
the shares are sold within one year of purchase.
Class A, Class B and Class C shares of Scudder Large Company Value
Fund received in the Reorganization will be issued at net asset value, without a
sales charge, and no CDSC will be imposed on any shares of the Fund exchanged
for shares of Scudder Large Company Value Fund as a result of the
Reorganization. However, following the Reorganization, any CDSC that applies to
shares of the Fund will continue to apply to shares of Scudder Large Company
Value Fund received in the Reorganization, using the original purchase date for
such shares to calculate the holding period, rather than the date such shares
are received in the Reorganization.
Dividends and Other Distributions
Each Fund intends to distribute dividends from its net investment
income and net realized capital gains after utilization of capital loss
carryforwards, if any, in December of each year. An additional distribution may
be made if necessary. Dividends and distributions of each Fund will be invested
in additional shares of the same class of that Fund at net asset value and
credited to the shareholder's account on the payment date or, at the
shareholder's election, paid in cash.
If the Plan is approved by the Fund's shareholders, the Fund will pay
its shareholders a distribution of all undistributed net investment income and
undistributed realized net capital gains immediately prior to the Closing.
Tax Consequences
As a condition to the Reorganization, each Fund will have received an
opinion of Willkie Farr & Gallagher in connection with the Reorganization, to
the effect that, based upon certain facts, assumptions and representations, the
Reorganization will constitute a tax-free reorganization within the meaning of
section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
If the Reorganization constitutes a tax-free reorganization, no gain or loss
will be recognized by the Fund or its shareholders as a direct result of the
Reorganization. See "The Proposed Transaction -- Federal Income Tax
Consequences."
* * *
15
<PAGE>
The preceding is only a summary of certain information contained in
this Proxy Statement/Prospectus relating to the Reorganization. This summary is
qualified by reference to the more complete information contained elsewhere in
this Proxy Statement/Prospectus, the prospectuses and statements of additional
information of the Funds, and the Plan. Shareholders should read this entire
Proxy Statement/Prospectus carefully.
II. PRINCIPAL RISK FACTORS
Because of their similar investment objectives, policies and
strategies, the principal risks presented by the Funds are similar. The main
risks applicable to each Fund include, among others, market risk and management
risk (i.e., securities selection by the Investment Manager). In addition,
because each Fund generally invests a large portion of its asset in "value"
stocks, the value of an investment in each Fund is subject to a higher degree of
the risk that value stocks may be out of favor relative to other types of
securities for certain periods. To the extent that a Fund invests in debt
securities, it may be subject to the risks associated with interest rates and
credit quality. Credit risk is greater for junk bonds than for investment grade
bonds. Investments in junk bonds entail relatively greater loss of income and
principal than investments in higher rated securities, and may fluctuate more in
value. Because Scudder Large Company Value Fund may invest a greater percentage
of its assets in junk bonds than may the Fund, Scudder Large Company Value Fund
may be subject to this risk to a greater extent than the Fund. Lastly, to the
extent that Scudder Large Company Value Fund invests in foreign securities, it
may be subject to the risks associated with such investments and foreign
currency risk. Foreign investments tend to be more volatile than their U.S.
counterparts, for various reasons including political and economic uncertainties
and difficulty in obtaining accurate information. Lastly, the Funds are not
insured or guaranteed by the FDIC or any other government agency. Share prices
will go up and down, so be aware that you could lose money.
For a further discussion of the investment techniques and risk factors
applicable to the Funds, see "Investment Objectives, Policies and Restrictions
of the Funds" herein, and the prospectuses and statements of additional
information for the Funds.
III. THE PROPOSED TRANSACTION
Description of the Plan
As stated above, the Plan provides for the transfer of all or
substantially all of the assets of the Fund to Scudder Large Company Value Fund
in exchange for that number of full and fractional Class S, Class A, Class B and
Class C shares having an aggregate net asset value equal to the aggregate net
asset value of the shares of the corresponding classes of the Fund as of the
close of business on the Valuation Date. Scudder Large Company Value Fund will
assume all of the liabilities of the Fund. The Fund will distribute the Class S,
Class A, Class B and Class C shares received in the exchange to the shareholders
of the corresponding classes of the Fund in complete liquidation of the Fund.
The Fund will then be terminated.
Upon completion of the Reorganization, each shareholder of the Fund
will own that number of full and fractional Class S, Class A, Class B or Class C
shares having an aggregate net asset value equal to the aggregate net asset
value of such shareholder's shares of the corresponding class held in the Fund
as of the close of business on the Valuation Date. Such shares will be held in
an account with Scudder Large Company Value Fund identical in all material
respects to the account currently maintained by the Fund for such shareholder.
In the interest of economy and convenience, Class S, Class A, Class B and Class
C shares issued to the Fund's shareholders in the Reorganization will be in
uncertificated form. If Class S, Class A, Class B or Class C shares of the Fund
are represented by certificates prior to the
16
<PAGE>
Closing, such certificates should be returned to the Fund's shareholder
servicing agent. Any Class S, Class A, Class B or Class C shares of Scudder
Large Company Value Fund distributed in the Reorganization to shareholders in
exchange for certificated shares of the Fund may not be transferred, exchanged
or redeemed without delivery of such certificates.
Until the Closing, shareholders of the Fund will continue to be able
to redeem their shares at the net asset value next determined after receipt by
the Fund's transfer agent of a redemption request in proper form. Redemption and
purchase requests received on or after the Valuation Date by the transfer agent
will be treated as requests received for the redemption or purchase of Class S,
Class A, Class B or Class C shares of Scudder Large Company Value Fund received
by the shareholder in connection with the Reorganization.
The obligations of the Trust, on behalf of Scudder Large Company Value
Fund and the Fund, respectively, under the Plan are subject to various
conditions, as stated therein. The Plan also requires that all filings be made
with, and all authority be received from, the SEC and state securities
commissions as may be necessary in the opinion of counsel to permit the parties
to carry out the transactions contemplated by the Plan. Each Fund is in the
process of making the necessary filings. To provide for unforeseen events, the
Plan may be terminated: (i) by the mutual agreement of the parties; (ii) by
either party if the Closing has not occurred by _____ __, 2001, unless such date
is extended by mutual agreement of the parties; or (iii) by either party if the
other party has materially breached its obligations under the Plan or made a
material misrepresentation in the Plan or in connection with the Reorganization.
The Plan may also be amended by mutual agreement in writing. However, no
amendment may be made following the shareholder meeting if such amendment would
have the effect of changing the provisions for determining the number of shares
of Scudder Large Company Value Fund to be issued to the Fund in the Plan to the
detriment of the Fund's shareholders without their approval. For a complete
description of the terms and conditions of the Reorganization, please refer to
the Plan at Exhibit A.
Scudder Kemper will pay Scudder Large Company Value Fund's allocable
share of expenses associated with the Reorganization. Each class of the Fund
will pay its allocable share of expenses associated with the Reorganization
(approximately $23,240 for Class A, $25,750 for Class B, $6,108 for Class C and
$305,896 for Class S, or $[ ], $[ ], $[ ] and $[ ] per share, respectively,
based on [ ], 2000 net assets for the Fund).
Board Approval of the Proposed Transaction
Scudder Kemper first proposed the Reorganization to the Independent
Trustees of the Fund at a meeting held on June 5, 2000. The Reorganization was
presented to the Trustees and considered by them as part of a broader initiative
by Scudder Kemper to consolidate its mutual fund lineup and to offer all of the
open-end mutual funds it advises under the "Scudder" brand name (see "Synopsis -
Background of the Reorganization" above). This initiative includes five major
components:
(i) A change in branding to offer virtually all funds advised by
Scudder Kemper under the Scudder name, with a concentration on
distribution through financial intermediaries and the AARP
Investment Program;
17
<PAGE>
(ii) The combination of funds with similar investment
objectives and policies, including in particular the combination
of similar Scudder Funds and Kemper Funds currently offered to
the general public;
(iii) The liquidation of certain small funds which have not
achieved market acceptance and which are unlikely to reach an
efficient operating size;
(iv) The creation of new classes of shares of each continuing
Scudder Fund to facilitate future distribution of such funds
through the "intermediary" or broker-sold distribution channel,
and the creation of new classes of shares of each Fund into which
a Scudder Fund is merging (including Scudder Large Company Value
Fund) in order to allow current Scudder Fund Class S and Class
AARP shareholders to continue holding a class of shares with
similar rights, privileges and expense structures as they
currently possess; and
(v) The implementation by each acquiring fund of an
Administration Agreement similar in scope and structure to the
Administration Agreements recently adopted by many of the Scudder
Funds.
The Independent Trustees of the Fund reviewed the potential
implications of these proposals for the Fund as well as the various other funds
for which they serve as trustees or directors. They were assisted in this
review by their independent legal counsel and by independent consultants with
special expertise in financial and mutual fund industry matters. Following the
June 5th meeting, the Independent Trustees met on several occasions to review
and discuss these proposals, both among themselves and with representatives of
Scudder Kemper. In the course of their review, the Independent Trustees
requested and received substantial additional information and suggested numerous
changes to Scudder Kemper's proposals, many of which were accepted.
Following the conclusion of this process, the Independent Trustees of
the Fund, the independent trustees/directors of other funds involved and Scudder
Kemper reached general agreement on the elements of a restructuring plan as it
affects shareholders of various funds and, where required, agreed to submit
elements of the plan for approval to shareholders of those funds.
On November 13, 2000, the Board of the Fund, including the Independent
Trustees of the Fund, approved the terms of the Reorganization and certain
related proposals. The Independent Trustees have also unanimously agreed to
recommend that the Reorganization be approved by the Fund's shareholders.
In determining to recommend that the shareholders of the Fund approve
the Reorganization, the Board considered, among other factors: (a) the fees and
expense ratios of the Funds, including comparisons between the expenses of the
Fund and the estimated operating expenses of Scudder Large Company Value Fund,
and between the estimated operating expenses of Scudder Large Company Value Fund
and other mutual funds with similar investment objectives; (b) the terms and
conditions of the Reorganization and whether the Reorganization would result in
the dilution of shareholder interests; (c) the compatibility of the Fund's and
Scudder Large Company Value Fund's investment objectives, policies, restrictions
and portfolios; (d) the agreement by Scudder Kemper to provide services to
Scudder Large Company Value Fund for a fixed fee rate under the Administration
Agreement with an initial three year term; (e) the service features available to
shareholders of the Fund and Scudder Large Company Value Fund; (f) the costs to
be borne by the Fund, Scudder Large Company Value Fund and Scudder Kemper as a
result of the Reorganization; (g) prospects for Scudder Large Company Value Fund
to attract additional assets; (h) the tax consequences of the Reorganization on
the Fund, Scudder Large Company
18
<PAGE>
Value Fund and their respective shareholders; and (i) the investment performance
of the Fund and Scudder Large Company Value Fund.
The Trustees also gave extensive consideration to possible economies
of scale that might be realized by Scudder Kemper in connection with the
Reorganization, as well as the other fund combinations included in Scudder
Kemper's restructuring proposal. The Trustees concluded that these economies
were appropriately reflected in the fee and expense arrangements of Scudder
Large Company Value Fund, as proposed to be revised upon completion of the
Reorganization. In particular, the Trustees considered the benefits to
shareholders resulting from locking in the rate of Scudder Large Company Value
Fund's Administrative Fee for an initial three-year period, and the resulting
protection this would afford shareholders if Scudder Large Company Value Fund's
net assets declined as a result of market fluctuations or net redemptions.
The Trustees also considered the impact of the Reorganization on the
total expenses to be borne by shareholders of the Fund. As noted above under
"Comparison of Expenses," the pro forma expense ratio (reflecting the
Administrative Fee) for the combined Fund following the Reorganization is
substantially lower than the current expense ratio for the Fund. The Board also
considered that the Reorganization would permit the shareholders of the Fund to
pursue similar investment goals in a larger fund.
Based on all of the foregoing, the Board concluded that the Fund's
participation in the Reorganization would be in the best interests of the Fund
and would not dilute the interests of the Fund's shareholders. The Board of
Trustees, including the Independent Trustees, unanimously recommends that
shareholders of the Fund approve the Reorganization.
Description of the Securities to Be Issued
Scudder Large Company Value Fund is a series of the Trust, a
Massachusetts business trust established under a Declaration of Trust dated
October 16, 1985, as amended. The Trust's authorized capital consists of an
unlimited number of shares of beneficial interest, par value $0.01 per share.
The Trustees of the Trust are authorized to divide the Trust's shares into
separate series. Scudder Large Company Value Fund is one of four series of the
Trust that the board has created to date. The Trustees of the Trust are also
authorized to further divide the shares of the series of the Trust into classes.
The shares of Scudder Large Company Value Fund are currently divided into six
classes, Class S, Class AARP, Class A, Class B, Class C and Class I. Although
shareholders of different classes of a series have an interest in the same
portfolio of assets, shareholders of different classes bear different expense
levels because distribution costs and certain other expenses approved by the
Trustees of the Trust are borne by the class incurring such expenses.
Each share of each class of Scudder Large Company Value Fund
represents an interest in Scudder Large Company Value Fund that is equal to and
proportionate with each other share of that class of Scudder Large Company Value
Fund. Scudder Large Company Value Fund shareholders are entitled to one vote
per share held on matters on which they are entitled to vote. In the areas of
shareholder voting and the powers and conduct of the Trustees, there are no
differences between the rights of shareholders of the Fund and the rights of
shareholders of Scudder Large Company Value Fund.
Federal Income Tax Consequences
The Reorganization is conditioned upon the receipt by each Fund of an
opinion from Willkie Farr & Gallagher substantially to the effect that, based
upon certain facts, assumptions and representations of the parties, for federal
income tax purposes: (i) the transfer to Scudder Large Company Value Fund of all
19
<PAGE>
or substantially all of the assets of the Fund in exchange solely for Class S,
Class A, Class B and Class C shares and the assumption by Scudder Large Company
Value Fund of all of the liabilities of the Fund, followed by the distribution
of such shares to the Fund's shareholders in exchange for their shares of the
Fund in complete liquidation of the Fund, will constitute a "reorganization"
within the meaning of Section 368(a)(1) of the Code, and Scudder Large Company
Value Fund and the Fund will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code; (ii) no gain or loss will be recognized
by the Fund upon the transfer of all or substantially all of its assets to
Scudder Large Company Value Fund in exchange solely for Class S, Class A, Class
B and Class C shares and the assumption by Scudder Large Company Value Fund of
all of the liabilities of the Fund or upon the distribution of the Class S,
Class A, Class B and Class C shares to shareholders of the Fund in exchange for
their shares of the Fund; (iii) the basis of the assets of the Fund in the hands
of Scudder Large Company Value Fund will be the same as the basis of such assets
of the Fund immediately prior to the transfer; (iv) the holding period of the
assets of the Fund in the hands of Scudder Large Company Value Fund will include
the period during which such assets were held by the Fund; (v) no gain or loss
will be recognized by Scudder Large Company Value Fund upon the receipt of the
assets of the Fund in exchange for Class S, Class A, Class B and Class C shares
and the assumption by Scudder Large Company Value Fund of all of the liabilities
of the Fund; (vi) no gain or loss will be recognized by the shareholders of the
Fund upon the receipt of the Class S, Class A, Class B and Class C shares solely
in exchange for their shares of the Fund as part of the transaction; (vii) the
basis of the Class S, Class A, Class B and Class C shares received by each
shareholder of the Fund will be the same as the basis of the shares of the Fund
exchanged therefor; and (viii) the holding period of Class S, Class A, Class B
and Class C shares received by each shareholder of the Fund will include the
holding period during which the shares of the Fund exchanged therefor were held,
provided that at the time of the exchange the shares of the Fund were held as
capital assets in the hands of such shareholder of the Fund.
After the Closing, Scudder Large Company Value Fund may dispose of
certain securities received by it from the Fund in connection with the
Reorganization, which may result in transaction costs and capital gains.
While the Fund is not aware of any adverse state or local tax
consequences of the proposed Reorganization, it has not requested any ruling or
opinion with respect to such consequences and shareholders may wish to consult
their own tax adviser with respect to such matters.
Legal Matters
Certain legal matters concerning the federal income tax consequences
of the Reorganization will be passed on by Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, New York 10019. Certain legal matters concerning the issuance
of shares of Scudder Large Company Value Fund will be passed on by Dechert, Ten
Post Office Square, South, Boston, Massachusetts 02109.
Capitalization
The following table shows on an unaudited basis the capitalization of
Scudder Large Company Value Fund and the Fund as of September 30, 2000 and on a
pro forma basis as of that date, giving effect to the Reorganization(1):
20
<PAGE>
<TABLE>
<CAPTION>
Scudder Large
Company Pro Forma Pro Forma
Fund Value Fund Adjustments (Combined)
---- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net Assets
Class S shares $331,123,448 $2,237,600,169 (3) $ 2,568,723,617
Class A shares $ 50,693,642 (4) $ 50,693,642
Class B shares $ 30,573,600 (4) $ 30,573,600
Class C shares $ 7,471,998 (4) $ 7,471,998
----------------
Total Net Assets $ 2,657,462,857(2)
================
Shares Outstanding
Class S shares 12,846,172 77,496,256 (1,376,707) 88,965,721
Class A shares 1,968,732 (212,804) 1,755,928
Class B shares 1,195,742 (136,733) 1,059,009
Class C shares 292,512 (33,697) 258,815
Net Asset Value
per Share
Class S shares $ 25.78 $ 28.87 $ 28.87
Class A shares $ 25.75 $ 28.87
Class B shares $ 25.57 $ 28.87
Class C shares $ 25.54 $ 28.87
</TABLE>
____________________
(1) Assumes the Reorganization had been consummated on September 30, 2000, and
is for informational purposes only. No assurance can be given as to how many
shares of Scudder Large Company Value Fund will be received by the shareholders
of the Fund on the date the Reorganization takes place, and the foregoing should
not be relied upon to reflect the number of shares of Scudder Large Company
Value Fund that actually will be received on or after such date.
(2) Pro forma combined net assets do not reflect expense reductions that would
result from the implementation of an administrative fee for Scudder Large
Company Value Fund.
(3) Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $XXXX and $XXXX to be borne by the Class S shares of Scudder
Large Company Value Fund and the Fund, respectively.
(4) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by the Fund.
The Board of Trustees unanimously recommends that the shareholders of the
Fund vote in favor of this Proposal.
ADDITIONAL INFORMATION
Information about the Funds
Additional information about the Trust, the Funds and the
Reorganization has been filed with the SEC and may be obtained without charge by
writing to Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103, or by calling 1-800-[ ].
The Trust is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the 1940 Act, and in accordance
therewith, file reports, proxy material and other information about each of the
Funds with the SEC. Such reports, proxy material and other information filed by
the Trust can be inspected and copied at the Public Reference Room maintained by
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following
SEC Regional Offices: Northeast Regional Office, 7 World Trade Center, Suite
1300, New York, NY 10048; Southeast Regional Office, 1401 Brickell Avenue, Suite
200, Miami, FL 33131; Midwest Regional Office, Citicorp Center, 500 W. Madison
Street, Chicago, IL 60661-2511; Central Regional Office, 1801 California Street,
Suite 4800, Denver, CO 80202-2648; and Pacific Regional Office, 5670 Wilshire
Boulevard, 11th Floor, Los Angeles, CA 90036-3648. Copies of such material can
also be obtained from the Public Reference
-21-
<PAGE>
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The SEC maintains an Internet World Wide Web site (at
http://www.sec.gov) which contains the prospectuses and statements of additional
information for the Funds, materials that are incorporated by reference into the
prospectuses and statements of additional information, and other information
about the Trusts and the Funds.
General
Proxy Solicitation. Proxy solicitation costs will be considered
Reorganization expenses and will be allocated accordingly. See "The Proposed
Transaction - Description of the Plan." In addition to solicitation by mail,
certain officers and representatives of the Trust, 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.
Any shareholder of the Fund giving a proxy has the power to revoke it
by mail (addressed to the Secretary at the principal executive office of the
Fund, c/o Scudder Kemper Investments, Inc., at the address for the Fund shown at
the beginning of this Proxy Statement/Prospectus) or in person at the Meeting,
by executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the Meeting will be
voted as specified in the proxy or, if no specification is made, in favor of the
Proposal.
The presence at any shareholders' meeting, in person or by proxy, of
the holders of at least one-third of the shares of the 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 business or the
vote required to approve the Proposal is not obtained at the Meeting, the
persons named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies with
respect to the Proposal. Any such adjournment as to a matter will require the
affirmative vote of the holders of a majority of the Fund's shares present in
person or by proxy at the Meeting. The persons named as proxies will vote in
favor of any such adjournment those proxies which they are entitled to vote in
favor of the Proposal and will vote against any such adjournment those proxies
to be voted against the Proposal. For purposes of determining the presence of a
quorum for transacting business at the Meeting, abstentions and broker "non-
votes" will be treated as shares that are present but which have not been voted.
Broker non-votes are proxies received by the Fund from brokers or nominees when
the broker or nominee has neither received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter. Accordingly, shareholders are urged to forward their voting
instructions promptly.
Approval of the Proposal requires the affirmative vote of the holders
of a majority of the Fund's shares outstanding and entitled to vote thereon.
Abstentions and broker non-votes and will have the effect of a "no" vote on the
Proposal.
Holders of record of the shares of the Fund at the close of business
on March 5, 2001 will be entitled to one vote per share on all business of the
Meeting. As of February 5, 2001, there were [ ] Class S shares, [
] Class A shares, [ ] Class B shares and [ ] Class C
shares of the Fund outstanding.
[As of December 31, 2000, the officers and Trustees of the Trust as a
group owned beneficially less than 1% of the outstanding shares of Scudder Large
Company Value Fund.] The Appendix hereto sets forth the beneficial owners of
more than 5% of each class of each Fund's shares, as well as the beneficial
owners of more than 5% of the shares of each class of each other series of the
Trust. To the best of the Trust's knowledge, as of December 31, 2000, no person
owned beneficially more than 5% of
-22-
<PAGE>
any class of either Fund's outstanding shares or the shares of any other series
of the Trust, except as stated on the Appendix.
Shareholder Communications Corporation ("SCC") has been engaged to
assist in the solicitation of proxies, at an estimated cost of $[ ]. As
the Meeting date approaches, certain shareholders of the 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 the
Fund. Proxies that are obtained telephonically will be recorded in accordance
with the procedures described below. The Trustees believe that these procedures
are reasonably designed to ensure that both the identity of the shareholder
casting the vote and 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 and address,
or the last four digits of the shareholder's social security or employer
identification number, or both, and to confirm that the shareholder has received
the proxy materials in the mail. If the shareholder is a corporation or other
entity, the SCC representative is required to ask for the person's title and
confirmation that the person is authorized to direct the voting of the shares.
If the information solicited agrees with the information provided to SCC, then
the SCC representative has the responsibility to explain the process, read the
Proposal on the proxy card(s), and ask for the shareholder's instructions on the
Proposal. Although the SCC representative is permitted to answer questions
about the process, he or she is not permitted to recommend to the shareholder
how to vote, other than to read any recommendation set forth in the Proxy
Statement/Prospectus. 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.
Shareholders may also provide their voting instructions through
telephone touch-tone voting or Internet voting. These options require
shareholders to input a control number which is located on each voting
instruction card. After inputting this number, shareholders will be prompted to
provide their voting instructions on the Proposal. Shareholders will have an
opportunity to review their voting instructions and make any necessary changes
before submitting their voting instructions and terminating their telephone call
or Internet link. Shareholders who vote via the Internet, in addition to
confirming their voting instructions prior to submission, will also receive an
e-mail confirming their instructions.
If a shareholder wishes to participate in the Meeting, but does not
wish to give a proxy by telephone or electronically, the shareholder may still
submit the proxy card(s) originally sent with the Proxy Statement/Prospectus or
attend in person. Should shareholders require additional information regarding
the proxy or replacement proxy card(s), they may contact SCC toll-free at 1-800-
[ ]. Any proxy given by a shareholder is revocable until voted at the
Meeting.
Shareholder Proposals for Subsequent Meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a shareholder meeting
subsequent to the Meeting, if any, should send their written proposals to the
Secretary of the Trust, c/o Scudder Kemper Investments, Inc., Two International
Place, Boston, Massachusetts 02110-4103, 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 Meeting. The Board is not aware of
any matters that will be presented for action at the Meeting other than the
matters described in this material. 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
-23-
<PAGE>
the shares as to any such other matters in accordance with their best judgment
in the interest of the Trust and/or the Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE ADVANTAGE
OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
/s/ John Millette
John Millette
Secretary
-24-
<PAGE>
INDEX OF EXHIBITS AND APPENDIX
EXHIBIT A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION......................
EXHIBIT B: MANAGEMENT'S DISCUSSION OF SCUDDER LARGE COMPANY VALUE FUND'S
PERFORMANCE.......................................................
APPENDIX: BENEFICIAL OWNERS OF FUND SHARES..................................
-25-
<PAGE>
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this [ ] day of [ ], 2001, by and among Value Equity Trust (the
"Trust"), a Massachusetts business trust, on behalf of each of Scudder Large
Company Value Fund (the "Acquiring Fund") and Value Fund (the "Acquired Fund"
and, together with the Acquiring Fund, each a "Fund" and collectively the
"Funds"), and Scudder Kemper Investments, Inc. ("Scudder Kemper"), investment
adviser to the Funds (for purposes of Paragraph 10.2 of the Agreement only).
Each of the Acquiring Fund and the Acquired Fund is a separate series of the
Trust. The principal place of business of the Trust is Two International Place,
Boston, Massachusetts 02110-4103.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all or substantially all of
the assets of the Acquired Fund to the Acquiring Fund in exchange solely for
Class S, Class A, Class B and Class C voting shares of beneficial interest ($.01
par value per share) of the Acquiring Fund (the "Acquiring Fund Shares"), the
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund
and the distribution of the Acquiring Fund Shares to the Class S, Class A, Class
B and Class C shareholders of the Acquired Fund in complete liquidation of the
Acquired Fund as provided herein, all upon the terms and conditions hereinafter
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund agrees
to transfer to the Acquiring Fund all or substantially all of the Acquired
Fund's assets as set forth in section 1.2, and the Acquiring Fund agrees in
exchange therefor (i) to deliver to the Acquired Fund that number of full and
fractional Class S, Class A, Class B and Class C Acquiring Fund Shares
determined by dividing the value of the Acquired Fund's assets net of any
liabilities of the Acquired Fund with respect to the Class S, Class A, Class B
and Class C shares of the Acquired Fund, computed in the manner and as of the
time and date set forth in section 2.1, by the net asset value of one Acquiring
Fund Share of the corresponding class, computed in the manner and as of the time
and date set forth in section 2.2; and (ii) to assume all of the liabilities of
the Acquired Fund, including, but not limited to, any deferred compensation to
Acquired Fund board members. All Acquiring Fund Shares delivered to the Acquired
Fund shall be delivered at net asset value without sales load, commission or
other similar fee being imposed. Such transactions shall take place at the
closing provided for in section 3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the Acquiring Fund
(the "Assets") shall consist of all assets, including, without limitation, all
cash, cash equivalents, securities, commodities and futures interests and
dividends or interest or other receivables that are owned by the Acquired Fund
and any deferred or prepaid expenses shown on the unaudited statement of assets
and liabilities of the Acquired Fund prepared as of the effective time of the
Closing in accordance with generally accepted
<PAGE>
accounting principles ("GAAP") applied consistently with those of the Acquired
Fund's most recent audited balance sheet. The Assets shall constitute at least
90% of the fair market value of the net assets, and at least 70% of the fair
market value of the gross assets, held by the Acquired Fund immediately before
the Closing (excluding for these purposes assets used to pay the dividends and
other distributions paid pursuant to section 1.4).
1.3. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in section 3.6.
1.4. On or as soon as practicable prior to the Closing Date as defined in
section 3.1, the Acquired Fund will declare and pay to its shareholders of
record one or more dividends and/or other distributions so that it will have
distributed substantially all of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in section 1.1,
the Acquired Fund will distribute to the Acquired Fund's shareholders of record
with respect to each class of its shares (the "Acquired Fund Shareholders"),
determined as of the Valuation Time (as defined in section 2.1), on a pro rata
basis within that class, the Acquiring Fund Shares of the same class received by
the Acquired Fund pursuant to section 1.1 and will completely liquidate. Such
distribution and liquidation will be accomplished with respect to each class of
the Acquired Fund by the transfer of the Acquiring Fund Shares then credited to
the account of the Acquired Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the names of the Acquired
Fund Shareholders. The Acquiring Fund shall have no obligation to inquire as to
the validity, propriety or correctness of such records, but shall assume that
such transaction is valid, proper and correct. The aggregate net asset value of
Class S, Class A, Class B and Class C Acquiring Fund Shares to be so credited to
the Class S, Class A, Class B and Class C Acquired Fund Shareholders shall, with
respect to each class, be equal to the aggregate net asset value of the Acquired
Fund shares of the same class owned by such shareholders as of the Valuation
Time. All issued and outstanding shares of the Acquired Fund will simultaneously
be cancelled on the books of the Acquired Fund, although share certificates
representing interests in Class S, Class A, Class B and Class C shares of the
Acquired Fund will represent a number of Acquiring Fund Shares after the Closing
Date as determined in accordance with section 2.3. The Acquiring Fund will not
issue certificates representing Acquiring Fund Shares in connection with such
exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of the Acquired Fund including, without
limitation, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Fund.
1.8. All books and records of the Acquired Fund, including all books and
records required to be maintained under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations thereunder, shall be
available to the Acquiring Fund from and after the Closing Date and shall be
turned over to the Acquiring Fund as soon as practicable following the Closing
Date.
<PAGE>
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of regular
trading on The New York Stock Exchange, Inc. (the "NYSE") on the business day
immediately preceding the Closing Date, as defined in section 3.1 (the
"Valuation Time") after the declaration and payment of any dividends and/or
other distributions on that date, using the valuation procedures set forth in
the Trust's Declaration of Trust, as amended, and then-current prospectus or
statement of additional information, copies of which have been delivered to the
Acquired Fund.
2.2. The net asset value of a Class S, Class A, Class B or Class C
Acquiring Fund Share shall be the net asset value per share computed with
respect to that class as of the Valuation Time using the valuation procedures
referred to in section 2.1. Notwithstanding anything to the contrary contained
in this Agreement, in the event that, as of the Valuation Time, there are no
Class A, Class B and/or Class C Acquiring Fund Shares issued and outstanding,
then, for purposes of this Agreement, the per share net asset value of a Class
A, Class B and/or Class C share, as applicable, shall be equal to the net asset
value of one Class S Acquiring Fund Share.
2.3. The number of the Class S, Class A, Class B and Class C Acquiring Fund
Shares to be issued (including fractional shares, if any) in exchange for the
Assets shall be determined with respect to each such class by dividing the value
of the Assets with respect to Class S, Class A, Class B and Class C shares of
the Acquired Fund, as the case may be, determined in accordance with section 2.1
by the net asset value of an Acquiring Fund Share of the same class determined
in accordance with section 2.2.
2.4. All computations of value hereunder shall be made by or under the
direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act and
shall be subject to confirmation by each Fund's respective independent
accountants upon the reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement shall
be June 25, 2001, or such later date as the parties may agree in writing (the
"Closing Date"). All acts taking place at the Closing shall be deemed to take
place simultaneously as of 9:00 a.m., Eastern time, on the Closing Date, unless
otherwise agreed to by the parties. The Closing shall be held at the offices of
Dechert, Ten Post Office Square - South, Boston, MA 02109, or at such other
place and time as the parties may agree.
3.2. The Acquired Fund shall deliver to Acquiring Fund on the Closing Date
a schedule of Assets.
3.3. State Street Bank and Trust Company ("State Street"), custodian for
the Acquired Fund, shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets shall have been delivered in proper form to
State Street, custodian for the Acquiring Fund, prior to or on the Closing Date
and (b) all necessary taxes in connection with the delivery of the Assets,
including all applicable federal and state stock transfer stamps, if any, have
been paid or provision for payment has been made. The Acquired Fund's portfolio
securities represented by a certificate or other written instrument shall be
presented by the custodian for the Acquired Fund to the custodian for the
Acquiring Fund for examination no later than five business days preceding the
Closing Date and transferred and delivered by the Acquired Fund as of the
Closing Date by the Acquired Fund for the account of Acquiring Fund duly
endorsed in proper form for transfer in such condition as to constitute good
delivery thereof. The Acquired Fund's portfolio securities and instruments
deposited with a securities depository, as defined in Rule 17f-4 under the 1940
Act, shall be delivered as of the Closing Date by book entry in accordance with
the customary
<PAGE>
practices of such depositories and the custodian for the Acquiring Fund. The
cash to be transferred by the Acquired Fund shall be delivered by wire transfer
of federal funds on the Closing Date.
3.4. Scudder Service Corporation, as transfer agent for the Acquired Fund,
on behalf of the Acquired Fund, shall deliver at the Closing a certificate of an
authorized officer stating that its records contain the names and addresses of
the Acquired Fund Shareholders and the number and percentage ownership (to three
decimal places) of outstanding Class S, Class A, Class B and Class C Acquired
Fund shares owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall issue and deliver a confirmation evidencing the Acquiring
Fund Shares to be credited on the Closing Date to the Acquired Fund or provide
evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have
been credited to the Acquired Fund's account on the books of the Acquiring Fund.
At the Closing, each party shall deliver to the other such bills of sale,
checks, assignments, share certificates, if any, receipts or other documents as
such other party or its counsel may reasonably request to effect the
transactions contemplated by this Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the NYSE
or another primary trading market for portfolio securities of the Acquiring Fund
or the Acquired Fund shall be closed to trading or trading thereupon shall be
restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Class S, Class A, Class B and Class C shares of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.6. The liabilities of the Acquired Fund shall include all of the Acquired
Fund's liabilities, debts, obligations, and duties of whatever kind or nature,
whether absolute, accrued, contingent, or otherwise, whether or not arising in
the ordinary course of business, whether or not determinable at the Closing
Date, and whether or not specifically referred to in this Agreement including
but not limited to any deferred compensation to the Acquired Fund's board
members.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Trust, on behalf of the Acquired Fund, represents and warrants to
the Acquiring Fund as follows:
(a) The Trust is a voluntary association with transferable shares
commonly referred to as a Massachusetts business trust duly organized and
validly existing under the laws of The Commonwealth of Massachusetts with power
under the Trust's Declaration of Trust, as amended, to own all of its properties
and assets and to carry on its business as it is now being conducted and,
subject to approval of shareholders of the Acquired Fund, to carry out the
Agreement. The Acquired Fund is a separate series of the Trust duly designated
in accordance with the applicable provisions of the Trust's Declaration of
Trust. The Trust and Acquired Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have material adverse
effect on the Trust or Acquired Fund. The Acquired Fund has all material
federal, state and local authorizations necessary to own all of the properties
and assets and to carry on its business as now being conducted, except
authorizations which the failure to so obtain would not have a material adverse
effect on the Acquired Fund;
(b) The Trust is registered with the Commission as an open-end
management investment company under the 1940 Act, and such registration is in
full force and effect and the Acquired Fund is in compliance in all material
respects with the 1940 Act and the rules and regulations thereunder;
<PAGE>
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the 1940 Act and such as may be
required by state securities laws;
(d) Other than with respect to contracts entered into in connection
with the portfolio management of the Acquired Fund which shall terminate on or
prior to the Closing Date, the Trust is not, and the execution, delivery and
performance of this Agreement by the Trust will not result (i) in violation of
Massachusetts law or of the Trust's Declaration of Trust, as amended, or By-
Laws, (ii) in a violation or breach of, or constitute a default under, any
material agreement, indenture, instrument, contract, lease or other undertaking
to which the Acquired Fund is a party or by which it is bound, and the
execution, delivery and performance of this Agreement by the Acquired Fund will
not result in the acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument, contract, lease, judgment
or decree to which the Acquired Fund is a party or by which it is bound, or
(iii) in the creation or imposition of any lien, charge or encumbrance on any
property or assets of the Acquired Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Fund or any properties or
assets held by it. The Acquired Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquired Fund at and for the fiscal year ended September 30, 2000, have been
audited by PricewaterhouseCoopers LLP, independent accountants, and are in
accordance with GAAP consistently applied, and such statements (a copy of each
of which has been furnished to the Acquiring Fund) present fairly, in all
material respects, the financial position of the Acquired Fund as of such date
in accordance with GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(g) Since September 30, 2000, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred except as otherwise disclosed to and
accepted in writing by the Acquiring Fund. For purposes of this subsection (g),
a decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired
Fund Shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquired Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquired Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
<PAGE>
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company and
has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code, and will have distributed all
of its investment company taxable income and net capital gain (as defined in the
Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws, (ii) are, and on the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable and not
subject to preemptive or dissenter's rights (recognizing that, under
Massachusetts law, Acquired Fund Shareholders, under certain circumstances,
could be held personally liable for obligations of the Acquired Fund), and (iii)
will be held at the time of the Closing by the persons and in the amounts set
forth in the records of Scudder Service Corporation, as provided in section 3.4.
The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquired Fund shares, nor is
there outstanding any security convertible into any of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Fund's assets to be transferred to the
Acquiring Fund pursuant to section 1.2 and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder free of any liens or
other encumbrances, except those liens or encumbrances as to which the Acquiring
Fund has received notice at or prior to the Closing, and upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act and the 1940 Act,
except those restrictions as to which the Acquiring Fund has received notice and
necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Trust (including the determinations
required by Rule 17a-8(a) under the 1940 Act), and, subject to the approval of
the Acquired Fund Shareholders, this Agreement constitutes a valid and binding
obligation of the Trust, on behalf of the Acquired Fund, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the National Association of Securities Dealers,
Inc. (the "NASD")), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of
the Acquired Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading; and
(o) The proxy statement of the Acquired Fund to be included in the
Registration Statement referred to in section 5.7 (the "Proxy Statement"),
insofar as it relates to the Acquired Fund,
<PAGE>
will, on the effective date of the Registration Statement and on the Closing
Date, (i) comply in all material respects with the provisions and Regulations of
the 1933 Act, 1934 Act and 1940 Act, as applicable, and (ii) not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements are made, not materially misleading;
provided, however, that the representations and warranties in this section shall
not apply to statements in or omissions from the Proxy Statement and the
Registration Statement made in reliance upon and in conformity with information
that was furnished or should have been furnished by the Acquiring Fund for use
therein.
4.2. The Trust, on behalf of the Acquiring Fund, represents and warrants to
the Acquired Fund as follows:
(a) The Trust is a voluntary association with transferable shares
commonly referred to as a Massachusetts business trust duly organized and
validly existing under the laws of The Commonwealth of Massachusetts with power
under the Trust's Declaration of Trust, as amended, to own all of its properties
and assets and to carry on its business as it is now being conducted and,
subject to the approval of shareholders of the Acquired Fund, to carry out the
Agreement. The Acquiring Fund is a separate series of the Trust duly designated
in accordance with the applicable provisions of the Trust's Declaration of
Trust. The Trust and Acquiring Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have material adverse
effect on the Trust or Acquiring Fund. The Acquiring Fund has all material
federal, state and local authorizations necessary to own all of the properties
and assets and to carry on its business as now being conducted, except
authorizations which the failure to so obtain would not have a material adverse
effect on the Acquiring Fund;
(b) The Trust is registered with the Commission as an open-end
management investment company under the 1940 Act, and such registration is in
full force and effect and the Acquiring Fund is in compliance in all material
respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The Trust is not, and the execution, delivery and performance of
this Agreement by the Trust will not result (i) in violation of Massachusetts
law or of the Trust's Declaration of Trust, as amended, or By-Laws, or (ii) in a
violation or breach of, or constitute a default under, any material agreement,
indenture, instrument, contract, lease or other undertaking known to counsel to
which the Acquiring Fund is a party or by which it is bound, and the execution,
delivery and performance of this Agreement by the Acquiring Fund will not result
in the acceleration of any obligation, or the imposition of any penalty, under
any agreement, indenture, instrument, contract, lease, judgment or decree to
which the Acquiring Fund is a party or by which it is bound, or (iii) in the
creation or imposition of any lien, charge or encumbrance on any property or
assets of the Acquiring Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any properties or
assets held by it. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or
<PAGE>
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquiring Fund at and for the fiscal year ended July 31, 2000, have been audited
by PricewaterhouseCoopers LLP, independent accountants, and are in accordance
with GAAP consistently applied, and such statements (a copy of each of which has
been furnished to the Acquired Fund) present fairly, in all material respects,
the financial position of the Acquiring Fund as of such date in accordance with
GAAP, and there are no known contingent liabilities of the Acquiring Fund
required to be reflected on a balance sheet (including the notes thereto) in
accordance with GAAP as of such date not disclosed therein;
(g) Since July 31, 2000, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred except as otherwise disclosed to
and accepted in writing by the Acquired Fund. For purposes of this subsection
(g), a decline in net asset value per share of the Acquiring Fund due to
declines in market values of securities in the Acquiring Fund's portfolio, the
discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund
shares by Acquiring Fund shareholders shall not constitute a material adverse
change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquiring Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquiring Fund's knowledge, no such return is currently under audit and
no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such, has been eligible to
and has computed its federal income tax under Section 852 of the Code, and will
do so for the taxable year including the Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws and (ii) are, and on the Closing Date will be,
duly and validly issued and outstanding, fully paid and non-assessable, and not
subject to preemptive or dissenter's rights (recognizing that, under
Massachusetts law, Acquiring Fund Shareholders, under certain circumstances,
could be held personally liable for the obligations of the Acquiring Fund). The
Acquiring Fund does not have outstanding any options, warrants or other rights
to subscribe for or purchase any of the Acquiring Fund shares, nor is there
outstanding any security convertible into any of the Acquiring Fund shares;
(k) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Agreement, will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued and
outstanding Acquiring Fund Shares, and will be fully paid and non-assessable
(recognizing that, under Massachusetts law, Acquiring Fund Shareholders, under
certain circumstances, could be held personally liable for the obligations of
the Acquiring Fund);
<PAGE>
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens or other
encumbrances, except those liens or encumbrances as to which the Acquired Fund
has received notice at or prior to the Closing;
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Trust (including the determinations
required by Rule 17a-8(a) under the 1940 Act) and this Agreement will constitute
a valid and binding obligation of the Trust, on behalf of the Acquiring Fund,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(n) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the NASD), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(o) The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading;
(p) The Proxy Statement to be included in the Registration Statement,
only insofar as it relates to the Acquiring Fund, will, on the effective date of
the Registration Statement and on the Closing Date, (i) comply in all material
respects with the provisions and Regulations of the 1933 Act, 1934 Act, and 1940
Act and (ii) not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading; provided, however, that the
representations and warranties in this section shall not apply to statements in
or omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished or should
have been furnished by the Acquired Fund for use therein; and
(q) The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state securities laws as may be necessary in order to continue its
operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each covenants to operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that (a) such ordinary course of business will include (i) the
declaration and payment of customary dividends and other distributions and (ii)
such changes as are contemplated by the Funds' normal operations; and (b) each
Fund shall retain exclusive control of the composition of its portfolio until
the Closing Date. No party shall take any action that would, or reasonably would
be expected to, result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect. The Acquired
Fund and Acquiring Fund covenant and agree to coordinate the respective
portfolios of the Acquired Fund and Acquiring Fund from the date of the
Agreement up to and including the Closing Date in order that at Closing, when
the Assets are added to the Acquiring Fund's portfolio, the resulting
<PAGE>
portfolio will meet the Acquiring Fund's investment objective, policies and
restrictions, as set forth in the Acquiring Fund's Prospectus, a copy of which
has been delivered to the Acquired Fund.
5.2. Upon reasonable notice, the Acquiring Fund's officers and agents
shall have reasonable access to the Acquired Fund's books and records necessary
to maintain current knowledge of the Acquired Fund and to ensure that the
representations and warranties made by the Acquired Fund are accurate.
5.3. The Acquired Fund covenants to call a meeting of the Acquired Fund
Shareholders entitled to vote thereon to consider and act upon this Agreement
and to take all other reasonable action necessary to obtain approval of the
transactions contemplated herein. Such meeting shall be scheduled for no later
than May 24, 2001.
5.4. The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.5. The Acquired Fund covenants that it will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Acquired Fund shares.
5.6. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all actions, and do or
cause to be done, all things reasonably necessary, proper, and/or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.7. Each Fund covenants to prepare in compliance with the 1933 Act, the
1934 Act and the 1940 Act the Registration Statement on Form N-14 (the
"Registration Statement") in connection with the meeting of the Acquired Fund
Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquiring Fund will file the Registration Statement,
including the Proxy Statement, with the Commission. The Acquired Fund will
provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the Proxy Statement referred to
in section 4.1(o), all to be included in the Registration Statement, in
compliance in all material respects with the 1933 Act, the 1934 Act and the 1940
Act.
5.8. The Acquired Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other instruments, and will
take or cause to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.9. The Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act and 1940 Act, and such
of the state securities laws as it deems appropriate in order to continue its
operations after the Closing Date and to consummate the transactions
contemplated herein; provided, however, that the Acquiring Fund may take such
actions it reasonably deems advisable after the Closing Date as circumstances
change.
5.10. The Acquiring Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquired Fund, execute and deliver or cause to
be executed and delivered all such assignments, assumption agreements, releases,
and other instruments, and will take or cause to be taken
<PAGE>
such further action, as the Acquired Fund may reasonably deem necessary or
desirable in order to (i) vest and confirm to the Acquired Fund title to and
possession of all Acquiring Fund shares to be transferred to the Acquired Fund
pursuant to this Agreement and (ii) assume the liabilities from the Acquired
Fund.
5.11. As soon as reasonably practicable after the Closing, the Acquired
Fund shall make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares received at the Closing.
5.12. The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.13. The intention of the parties is that the transaction will qualify as
a reorganization within the meaning of Section 368(a) of the Code. Neither the
Trust, the Acquiring Fund nor the Acquired Fund shall take any action, or cause
any action to be taken (including, without limitation, the filing of any tax
return) that is inconsistent with such treatment or results in the failure of
the transaction to qualify as a reorganization within the meaning of Section
368(a) of the Code. At or prior to the Closing Date, the Trust, the Acquiring
Fund and the Acquired Fund will take such action, or cause such action to be
taken, as is reasonably necessary to enable Willkie Farr & Gallagher to render
the tax opinion contemplated herein in section 8.5.
5.14. At or immediately prior to the Closing, the Acquired Fund may declare
and pay to its stockholders a dividend or other distribution in an amount large
enough so that it will have distributed substantially all (and in any event not
less than 98%) of its investment company taxable income (computed without regard
to any deduction for dividends paid) and realized net capital gain, if any, for
the current taxable year through the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of the Trust, on behalf of the
Acquiring Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than the Acquired Fund, its adviser or any of their affiliates) against the
Acquiring Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquiring Fund which the
Acquiring Fund reasonably believes might result in such litigation.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Trust, on behalf of the
Acquired Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement are
true and correct on and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Acquired Fund shall reasonably request.
6.3. The Acquired Fund shall have received on the Closing Date an opinion
of Dechert, in a form reasonably satisfactory to the Acquired Fund, and dated as
of the Closing Date, to the effect that:
<PAGE>
(a) The Trust has been duly formed and is an existing business trust;
(b) the Acquiring Fund has the power to carry on its business as presently
conducted in accordance with the description thereof in the Acquiring Fund's
registration statement under the 1940 Act; (c) the Agreement has been duly
authorized, executed and delivered by the Trust, on behalf of the Acquiring
Fund, and constitutes a valid and legally binding obligation of the Trust, on
behalf of the Acquiring Fund, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
laws of general applicability relating to or affecting creditors' rights and to
general equity principles; (d) the execution and delivery of the Agreement did
not, and the exchange of the Acquired Fund's assets for Acquiring Fund Shares
pursuant to the Agreement will not, violate the Trust's Declaration of Trust, as
amended, or By-laws; and (e) to the knowledge of such counsel, and without any
independent investigation, (i) the Trust is not subject to any litigation or
other proceedings that might have a materially adverse effect on the operations
of the Trust, (ii) the Trust is duly registered as an investment company with
the Commission and is not subject to any stop order; and (iii) all regulatory
consents, authorizations, approvals or filings required to be obtained or made
by the Acquiring Fund under the federal laws of the United States or the laws of
The Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Dechert
of customary representations it shall reasonably request of the Trust, on behalf
of each of the Acquiring Fund and the Acquired Fund.
6.4. The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
6.5. The Acquiring Fund shall have entered into an administrative services
agreement with Scudder Kemper in a form reasonably satisfactory to the Acquired
Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of the Trust, on behalf of the
Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than the Acquiring Fund, its adviser or any of their affiliates) against the
Acquired Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquired Fund which the
Acquired Fund reasonably believes might result in such litigation.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities as of the Closing Date,
certified by the Treasurer of the Acquired Fund.
7.3. The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to
<PAGE>
the Trust, on behalf of the Acquiring Fund, and dated as of the Closing Date, to
the effect that the representations and warranties of the Trust with respect to
the Acquired Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund shall
reasonably request.
7.4. The Acquiring Fund shall have received on the Closing Date an opinion
of Dechert, in a form reasonably satisfactory to the Acquiring Fund, and dated
as of the Closing Date, to the effect that:
(a) The Trust has been duly formed and is an existing business trust;
(b) the Acquired Fund has the power to carry on its business as presently
conducted in accordance with the description thereof in the Trust's registration
statement under the 1940 Act; (c) the Agreement has been duly authorized,
executed and delivered by the Trust, on behalf of the Acquired Fund, and
constitutes a valid and legally binding obligation of the Trust, on behalf of
the Acquired Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and laws
of general applicability relating to or affecting creditors' rights and to
general equity principles; (d) the execution and delivery of the Agreement did
not, and the exchange of the Acquired Fund's assets for Acquiring Fund Shares
pursuant to the Agreement will not, violate the Trust's Declaration of Trust, as
amended, or By-laws; and (e) to the knowledge of such counsel, and without any
independent investigation, (i) the Trust is not subject to any litigation or
other proceedings that might have a materially adverse effect on the operations
of the Trust, (ii) the Trust is duly registered as an investment company with
the Commission and is not subject to any stop order, and (iii) all regulatory
consents, authorizations, approvals or filings required to be obtained or made
by the Acquired Fund under the federal laws of the United States or the laws of
The Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Dechert
of customary representations it shall reasonably request of the Trust, on behalf
of each of the Acquiring Fund and the Acquired Fund.
7.5. The Acquired Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquired Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been met on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Trust's Declaration
of Trust, as amended, and By-Laws, applicable Massachusetts law and the 1940
Act, and certified copies of the resolutions evidencing such approval shall have
been delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or
<PAGE>
prohibit, or obtain material damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions.
8.4. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5. The parties shall have received an opinion of Willkie Farr &
Gallagher addressed to each of the Acquiring Fund and the Acquired Fund, in a
form reasonably satisfactory to each such party to this Agreement, substantially
to the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to the Acquiring
Fund of all or substantially all of the assets of the Acquired Fund in exchange
solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund, followed by the distribution of such
shares to the Acquired Fund Shareholders in exchange for their shares of the
Acquired Fund in complete liquidation of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Acquiring Fund and the Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Acquired Fund upon the transfer of all or substantially all of
its assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund; (iii) the basis of the assets of the Acquired Fund in the hands
of the Acquiring Fund will be the same as the basis of such assets of the
Acquired Fund immediately prior to the transfer; (iv) the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which such assets were held by the Acquired Fund; (v) no gain or
loss will be recognized by the Acquiring Fund upon the receipt of the assets of
the Acquired Fund in exchange for Acquiring Fund Shares and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund; (vi) no gain
or loss will be recognized by Acquired Fund Shareholders upon the receipt of the
Acquiring Fund Shares solely in exchange for their shares of the Acquired Fund
as part of the transaction; (vii) the basis of the Acquiring Fund Shares
received by Acquired Fund Shareholders will be the same as the basis of the
shares of the Acquired Fund exchanged therefor; and (viii) the holding period of
Acquiring Fund Shares received by Acquired Fund Shareholders will include the
holding period during which the shares of the Acquired Fund exchanged therefor
were held, provided that at the time of the exchange the shares of the Acquired
Fund were held as capital assets in the hands of Acquired Fund Shareholders. The
delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher
of representations it shall request of the Trust. Notwithstanding anything
herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the condition set forth in this section 8.5.
9. INDEMNIFICATION
9.1. The Acquiring Fund agrees to indemnify and hold harmless the Acquired
Fund and each of the Acquired Fund's Board members and officers from and against
any and all losses, claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Acquired Fund or any of its
Board members or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with
<PAGE>
respect thereto) arises out of or is based on any breach by the Acquiring Fund
of any of its representations, warranties, covenants or agreements set forth in
this Agreement.
9.2. The Acquired Fund agrees to indemnify and hold harmless the
Acquiring Fund and each of the Acquiring Fund's Board members and officers from
and against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which jointly and severally, the
Acquiring Fund or any of its Board members or officers may become subject,
insofar as any such loss, claim, damage, liability or expense (or actions with
respect thereto) arises out of or is based on any breach by the Acquired Fund of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
10. FEES AND EXPENSES
10.1. The Trust, on behalf of each of the Funds, represents and warrants
that it has no obligations to pay any brokers or finders fees in connection with
the transactions provided for herein.
10.2. [Scudder Kemper will pay the Acquiring Fund's allocable share of
expenses associated with the Reorganization.] Each class of the Acquired Fund
will pay its allocable share of expenses associated with the Reorganization
(approximately $23,240 for Class A, $25,750 for Class B, $6,108 for Class C and
$305,896 for Class S, or $[ ], $[ ], $[ ] and $[ ] per share, respectively,
based on [ ], 2000 net assets for the Fund). Any such expenses which are so
borne by Scudder Kemper will be solely and directly related to the
Reorganization within the meaning of Revenue Ruling 73-54, 1973-1 C.B. 187.
Acquired Fund Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Acquiring Fund and the Acquired Fund agree that neither party has
made any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this section
11.2, the representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquiring Fund and Acquired Fund in sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
12.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before
[ ], 2001, unless such date is extended by mutual agreement of the parties, or
(iii) by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Board members or
officers, except for any such material breach or intentional misrepresentation,
as to each of which all remedies at law or in equity of the party adversely
affected shall survive.
<PAGE>
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by any authorized officer of the Acquired
Fund and any authorized officer of the Acquiring Fund; provided, however, that
following the meeting of the Acquired Fund Shareholders called by the Acquired
Fund pursuant to section 5.3 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of the Acquiring
Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement
to the detriment of such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
Acquired Fund, Two International Place, Boston, MA 02110-4103, with a copy to
Dechert, Ten Post Office Square South, Boston, MA 02109-4603, Attention: Joseph
R. Fleming, Esq., or to the Acquiring Fund, Two International Place, Boston, MA
02110-4103, with a copy to Dechert, Ten Post Office Square South, Boston, MA
02109-4603, Attention: Joseph R. Fleming, Esq., or to any other address that the
Acquired Fund or the Acquiring Fund shall have last designated by notice to the
other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of the
Acquiring Fund and the Acquired Fund and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
15.4. References in this Agreement to the Trust mean and refer to the Board
members of the Trust from time to time serving under its Declaration of Trust on
file with the Secretary of State of The Commonwealth of Massachusetts, as the
same may be amended from time to time, pursuant to which the Trust conducts its
business. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Board members, shareholders, nominees,
officers, agents, or employees of the Trust or the Funds personally, but bind
only the respective property of the Funds, as provided in the Trust's
Declaration of Trust. Moreover, no series of the Trust other than the Funds
shall be responsible for the obligations of the Trust hereunder, and all persons
shall look only to the assets of the Funds to satisfy the obligations of the
Trust hereunder. The execution and the delivery of this Agreement have been
authorized by the Trust's Board members, on behalf of the applicable Fund, and
this Agreement has been signed by authorized officers of each Fund acting as
such, and neither such authorization by such Board members, nor such execution
and delivery by such officers, shall be deemed to have been made by
<PAGE>
any of them individually or to impose any liability on any of them personally,
but shall bind only the respective property of the Funds, as provided in the
Trust's Declaration of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations, agreements, representations and warranties with respect to each
Fund shall constitute the obligations, agreements, representations and
warranties of that Fund only (the "Obligated Fund"), and in no event shall any
other series of the Trust or the assets of any such series be held liable with
respect to the breach or other default by the Obligated Fund of its obligations,
agreements, representations and warranties as set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of The Commonwealth of Massachusetts, without regard
to its principles of conflicts of laws.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by an authorized officer and its seal to be affixed thereto and
attested by its Secretary or Assistant Secretary.
Attest: VALUE EQUITY TRUST
on behalf of Value Fund
_________________________
Secretary
______________________________
By:___________________________
Its:__________________________
Attest: VALUE EQUITY TRUST
on behalf of Scudder Large Company Value Fund
_________________________
Secretary
______________________________
By:___________________________
Its:___________________________
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
______________________________
By:___________________________
Its:__________________________
<PAGE>
EXHIBIT B
MANAGEMENT'S DISCUSSION OF SCUDDER LARGE COMPANY VALUE FUND'S PERFORMANCE
<PAGE>
EXHIBIT B
Performance Update
--------------------------------------------------------------------------------
July 31, 2000
--------------------------------------------------------------------------------
Growth of a $10,000 Investment
--------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Scudder Large Russell 1000
Company Value Fund Value Index*
'90 10000 10000
'91 11016 11071
'92 12683 12797
'93 14753 15192
'94 14939 15742
'95 17863 19024
'96 20084 22045
'97 30186 32810
'98 33405 38626
'99 37243 44415
'00 35525 42199
Yearly periods ended July 31
--------------------------------------------------------------------------------
Fund Index Comparison
--------------------------------------------------------------------------------
Growth of Average
Total Return
Page 1
<PAGE>
<TABLE>
<CAPTION>
Total Return
Growth of Average
Period ended 7/31/2000 $10,000 Cumulative Annual
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Scudder Large Company Value Fund
----------------------------------------------------------------------------------------
1 year $ 9,539 -4.61% -4.61%
----------------------------------------------------------------------------------------
5 year $ 19,887 98.87% 14.74%
----------------------------------------------------------------------------------------
10 year $ 35,525 255.25% 13.51%
----------------------------------------------------------------------------------------
Russell 1000 Value Index*
----------------------------------------------------------------------------------------
1 year $ 9,501 -4.99% -4.99%
----------------------------------------------------------------------------------------
5 year $ 22,183 121.83% 17.25%
----------------------------------------------------------------------------------------
10 year $ 42,199 321.99% 15.47%
----------------------------------------------------------------------------------------
</TABLE>
* The Russell 1000 Value Index is an unmanaged index that consists of those
stocks in the Russell 1000 Index with less than average growth orientation.
Index returns assume reinvestment of dividends and, unlike Fund returns, do
not reflect any fees or expenses.
Page 2
<PAGE>
* The Russell 1000 Value Index is an unmanaged index that consists of those
stocks in the Russell 1000 Index with less than average growth orientation.
Index returns assume reinvestment of dividends and, unlike Fund returns, do
not reflect any fees or expenses.
On February 1, 1997, the Fund adopted its current name. Prior to that date,
the Fund was known as the Scudder Capital Growth Fund. All performance is
historical, assumes reinvestment of all dividends and capital gains, and is
not indicative of future results. Investment return and principal value
will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than when purchased.
Portfolio Management Discussion
--------------------------------------------------------------------------------
July 31, 2000
In the following interview, portfolio manager Lois Roman discusses Scudder Large
Company Value Fund's strategy and the market environment during the twelve-month
period ending July 31, 2000.
Q: Value stocks did not perform well over the full reporting period, but they
showed signs of life in early 2000. What factors are driving the performance of
Page 3
<PAGE>
this asset class?
A: Value stocks underperformed during the final months of 1999 and the early
part of 2000, as a narrow group of stocks in aggressive growth areas such as
technology and biotech dominated the performance charts. For the 12-month period
ending July 31, the Russell 1000 Growth Index jumped 24.36%. At the same time,
the Russell 1000 Value Index actually declined -4.99%. In this period, investors
were searching for companies whose growth prospects were believed to be strong
enough to withstand an environment of rising interest rates. Since most
companies that fit this description possessed rich valuations, we were not able
to benefit from the rally in this area.
Value stocks initially rallied when the Nasdaq began to go through the early
stages of its spring correction, but once the decline began to extend over a
period of several weeks, all sectors of the markets were affected by selling
pressure. An improved outlook for interest rates sparked a rally in equities
during the summer, but unlike the moves of late 1999 and early 2000, a broad
range of stocks participated in the upturn. This phase was marked by a stronger
performance from value stocks and an upturn in "breadth," the term used to
describe the extent to which advancing stocks are outnumbering decliners.
Financials, oils, utilities, and selected cyclicals -- all groups that have
performed poorly over the past two years -- experienced rallies. At the same
time, the unrestrained optimism that characterized the early part of the year
calmed significantly. In this sense, the tone of the market changed,
Page 4
<PAGE>
making individual stock selection -- and the necessary research that accompanies
it -- more important than momentum factors. This environment proved to be much
more healthy for value stocks than the euphoria that characterized the early
part of the year.
Q: How did the fund perform during this period?
A: Over the twelve-month period ended July 31, 2000, the fund posted a total
return of -4.61%, which was slightly better than the -4.99% return of its
unmanaged benchmark, the Russell 1000 Value Index. The fund's outperformance was
due, in part, to strong stock selection within the technology area (Motorola),
insurance (Cigna, Hartford Financial Services Group, and St. Paul Companies),
and health care (American Home Products and Pharmacia). On the negative side, we
were hurt by holdings in chemical stocks such as Dow and DuPont, as well as our
position in Raytheon.
Q: Has the fund's investment discipline helped in the volatile environment of
the past year?
A: Yes. The fund maintains the same steady, disciplined investment process at
all times. We believe that the value of such an approach has been demonstrated
by the volatility we have experienced so far in 2000. Market direction has
changed course significantly on several occasions, and violent sector rotations
Page 5
<PAGE>
have occurred with increasing frequency. In an environment such as this,
investors who try to chase "momentum" stocks or position their portfolios to
take advantage of the most recent "hot" sector are, in our view, destined to
fail. We, on the other hand, strive to position the portfolio for any
environment by buying what we feel are the most attractive value stocks in the
market, and holding on to them over a long-term horizon.
In prospecting for attractive investments, we use a disciplined, three-step
investment process that employs a quantitative screen, fundamental equity
research, and risk management. The quantitative screen helps us find stocks in
the Russell 1000 Index -- a broad, large-capitalization universe -- that are
selling at the most attractive valuations. Companies that are ranked in the top
four deciles (the cheapest 40%) are our potential buy candidates, while those
that fall into the 9th and 10th deciles (the most expensive 20%) are our
potential sell candidates. Not all cheap stocks have value, however. The use of
our internal army of equity analysts helps us to understand the fundamental
dynamics of a company. This is a crucial step in the process, and it helps
prevent us from investing in stocks where the fundamentals have not yet hit
bottom. Lastly, our use of quantitative and qualitative risk analysis allows us
to control for macroeconomic factors. On the sell side, we will sell a holding
Page 6
<PAGE>
if our investment thesis is violated, or if its fundamentals begin to show signs
of deterioration.
Q: How is the portfolio positioned at present?
A: The fund remains overweight in energy stocks through its position in both
integrated oils (Exxon Mobil, Chevron, and Texaco) and oil services companies
such as Schlumberger. The sector was weak during July on the decline in oil
prices, but we believe that the selloff was overdone for the simple fact that
most analysts are still not factoring higher oil prices into their earnings
models. We feel that the sector's fundamentals remain very strong, and intend to
hold the stocks through short-term turbulence.
The financial sector has had difficulty during the last year due to rising
interest rates and merger integration issues. The fund was skewed more towards
insurance than banks during the last year, which boosted returns. The key
question going forward will be when to reinvest in the banking industry.
In technology, which accounts for less than 10% of the fund, we remain focused
on companies such as IBM and Hewlett-Packard. These names aren't exciting
high-fliers, but they offer attractive valuations and very favorable earnings
stories. We continue to believe that value investors can take advantage of the
growth of the tech sector without having to abandon their disciplines.
Page 7
<PAGE>
The fund continues to hold an overweight position in chemical stocks, an area
that has been a drag on performance throughout 2000. Believing that stocks in
this sector are extremely cheap and will participate if there is a rally within
the broader industrial cyclical group, we have added to the fund's holdings in
this area as prices have fallen.
Q: What is your outlook for value stocks?
A: In the past, we have stated that we believe a rebound in the value area is
inevitable. Only rarely have growth stocks outperformed for as long a period as
they have during the past three years. Unfortunately, nobody can accurately
predict when the turn in value will come, as evidenced by the many false rallies
we have witnessed during the past year. What we can say, however, is that the
market currently offers a wealth of companies that in our view, are worth more
than they are selling for. For this reason, we intend to remain focused on our
value discipline, and will continue to use our three-step process to establish
positions in what we believe to be the most attractive value names in the
market. We believe that by taking this approach, the fund will be positioned to
prosper when the turn in value stocks ultimately arrives.
Page 8
<PAGE>
APPENDIX
Beneficial Owners of Fund Shares
<PAGE>
This proxy statement/prospectus is accompanied by Scudder Large
Company Value Fund's prospectus that relates to Class S shares dated October 1,
2000, which was previously filed with the Commission via EDGAR on September 29,
2000 (File No. 811-01444) and is incorporated by reference herein.
This proxy statement/prospectuses is accompanied by Scudder Large
Company Value Fund's prospectus that relates to Class A, Class B and Class C
shares dated December 29, 2000, which was previously filed with the Commission
via EDGAR on October 30, 2000 (File No. 811-01444) and is incorporated by
reference herein.
Value Fund's prospectuses dated February 1, 2001, which were
previously filed with the Commission via EDGAR on December 1, 2000
(File No. 811-01444), are incorporated by reference herein.
Scudder Large Company Value Fund's statement of additional information
that relates to Class A, Class B and Class C shares dated December 29, 2000,
which was previously filed with the Commission via EDGAR on October 30, 2000
(File No. 811-01444), is incorporated by reference herein.
Scudder Large Company Value Fund's statement of additional information
that relates to Class S shares dated October 1, 2000, which was previously filed
with Commission via EDGAR on September 29, 2000 (File No. 811-01444) is
incorporated by reference herein.
<PAGE>
PART B
VALUE EQUITY TRUST
-------------------------------------------------------
Statement of Additional Information
March [ ], 2001
-------------------------------------------------------
Acquisition of the Assets of By and in Exchange for Shares of
Value Fund, Scudder Large Company Value Fund, a series of
a series of the Trust
Value Equity Trust (the "Trust") Two International Place
Two International Place Boston, MA 02110-4103
Boston, MA 02110-4103
This Statement of Additional Information is available to the shareholders
of Value Fund in connection with a proposed transaction whereby Scudder Large
Company Value Fund will acquire all or substantially all of the assets and all
of the liabilities of Value Fund in exchange for shares of Scudder Large Company
Value Fund (the "Reorganization").
This Statement of Additional Information of the Trust contains material
which may be of interest to investors but which is not included in the Proxy
Statement/Prospectus of the Trust relating to the Reorganization. This Statement
of Additional Information consists of this cover page and the following
documents:
1. Scudder Large Company Value Fund's statement of additional information
that relates to Class A, Class B and Class C shares dated December 29, 2000,
which was previously filed with the Securities and Exchange Commission (the
"Commission") via EDGAR on October 30, 2000 (File No. 811-01444) and is
incorporated by reference herein.
2. Scudder Large Company Value Fund's statement of additional information that
relates to Class S shares dated October 1, 2000, which was previously filed with
the Commission via EDGAR on September 29, 2000 (File No. 811-01444) and is
incorporated by reference herein.
3. Scudder Large Company Value Fund's annual report to shareholders for the
fiscal year ended July 31, 2000, which was previously filed with the Commission
via EDGAR on September 20, 2000, 2000 (File No. 811-01444) and is incorporated
by reference herein.
4. Value Fund's prospectuses dated February 1, 2001, which were previously
filed with the Commission via EDGAR on December 1, 2000 (File No. 811-01444) and
are incorporated by reference herein.
5. Value Fund's statements of additional information dated February 1, 2001,
which were previously filed with the Commission via EDGAR on December 1, 2000
(File No. 811-01444) and are incorporated by reference herein.
6. Value Fund's annual report to shareholders for the fiscal year ended
September 30, 2000, which was previously filed with the Commission via EDGAR on
December 4, 2000 (File No. 811-01444) and is incorporated by reference herein.
7. The financial statements and schedules of Scudder Large Company Value Fund
and Value Fund required by Regulation S-X for the periods specified in Article 3
thereof, which are filed herein.
<PAGE>
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated March [ ], 2001 relating to the Reorganization may be
obtained by writing Value Fund at Two International Place, Boston, Massachusetts
02110-4103 or by calling [ ] at 1-800-[ ]. This Statement of
Additional Information should be read in conjunction with the Proxy
Statement/Prospectus.
<PAGE>
Pro Forma
Portfolio of Investments
as of September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Scudder Large Scudder Pro Forma Scudder Large Scudder Pro Forma
Company Value Value Fund Combined Company Value Value Fund Combined
Par/Share Par/Share Par/Share Market Market Market
Amount Amount Amount Value ($) Value ($) Value ($)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Repurchase Agreements 2.7%
--------------------------
Repurchase Agreement with State 65,015,000 6,084,000 71,099,000 65,015,000 6,084,000 71,099,000
Street Bank, 6.480%, 10/02/2000
-------------------------------------
Total Repurchase Agreements (Cost of $65,015,000, $6,084,000, and $71,099,000 respectively) 65,015,000 6,084,000 71,099,000
=====================================
Common Stocks 97.3%
--------------------
COMMUNICATIONS 8.8% AT&T Corp. 841,350 166,550 1,007,900 24,714,656 4,892,406 29,607,062
BellSouth Corp. 1,188,300 207,800 1,396,100 47,829,075 8,363,950 56,193,025
SBC Communicatons, Inc. 1,198,100 234,000 1,432,100 59,905,000 11,700,000 71,605,000
Verizon Communications 1,278,200 247,300 1,525,500 61,912,812 11,978,593 73,891,405
-------------------------------------
194,361,543 36,934,949 231,296,492
-------------------------------------
CONSUMER DISCRETIONARY 1.2% Target Corp. 1,095,800 130,000 1,225,800 28,079,875 3,331,250 31,411,125
-------------------------------------
28,079,875 3,331,250 31,411,125
-------------------------------------
CONSUMER STAPLES 7.8% Anheuser-Busch Co., Inc. 133,200 133,200 5,636,025 5,636,025
Gillette Co. 846,200 160,100 1,006,300 26,126,425 4,943,087 31,069,512
H.J. Heinz Co. 1,055,200 204,200 1,259,400 39,108,350 7,568,162 46,676,512
Hershey Foods Corp. 312,500 61,600 374,100 16,914,062 3,334,100 20,248,162
PepsiCo, Inc. 1,259,800 246,500 1,506,300 57,950,800 11,339,000 69,289,800
Unilever NV 675,285 675,285 32,582,501 32,582,501
-------------------------------------
172,682,138 32,820,374 205,502,512
-------------------------------------
DURABLES 9.1% Boeing Co. 958,770 171,400 1,130,170 60,402,510 10,798,200 71,200,710
Deere & Co. 809,400 153,300 962,700 26,912,550 5,097,225 32,009,775
Lockheed Martin Corp. 1,786,300 386,264 2,172,564 58,876,448 12,731,261 71,607,709
United Technologies Corp. 794,400 101,800 896,200 55,012,200 7,049,650 62,061,850
-------------------------------------
201,203,708 35,676,336 236,880,044
-------------------------------------
ENERGY 14.7% Baker Hughes, Inc. 686,700 134,700 821,400 25,493,737 5,000,737 30,494,474
Chevron Corp. 357,500 87,200 444,700 30,476,875 7,433,800 37,910,675
Conoco, Inc. - Class A 152,600 152,600 3,986,675 3,986,675
Conoco, Inc. - Class B 739,000 739,000 19,906,812 19,906,812
The Montana Power Co. 664,000 125,300 789,300 22,161,000 4,181,887 26,342,887
Royal Dutch Petroleum Co. 825,300 124,900 950,200 49,466,418 7,486,193 56,952,611
Schlumberger Ltd. 356,100 69,800 425,900 29,311,481 5,745,412 35,056,893
Texaco, Inc. 398,500 111,900 510,400 20,921,250 5,874,750 26,796,000
Exxon Mobil Corp. 1,394,723 264,992 1,659,715 124,304,687 23,617,410 147,922,097
-------------------------------------
322,042,260 63,326,864 385,369,124
-------------------------------------
FINANCIAL 26.3% AFLAC, Inc. 661,000 135,900 796,900 42,345,326 8,706,093 51,051,419
Allstate Corp. 1,118,900 211,100 1,330,000 38,881,775 7,335,725 46,217,500
Bank of America Corp. 647,628 133,352 780,980 33,919,516 6,984,311 40,903,827
Cigna Corp. 702,100 149,700 851,800 73,299,240 15,628,680 88,927,920
Citigroup, Inc. 1,574,330 320,400 1,894,730 85,112,215 17,321,625 102,433,840
Federal National Mortgage
Association 398,700 77,900 476,600 28,507,050 5,569,850 34,076,900
FleetBoston Financial Corp. 857,554 168,600 1,026,154 33,444,606 6,575,400 40,020,006
Hartford Financial Services
Group, Inc. 433,300 83,200 516,500 31,603,818 6,068,400 37,672,218
J.P. Morgan & Co., Inc. 223,300 25,500 248,800 36,481,637 4,166,062 40,647,699
PNC Bank Corp. 584,900 117,900 702,800 38,018,500 7,663,500 45,682,000
Post Properties, Inc. 310,800 64,900 375,700 13,539,225 2,827,206 16,366,431
St. Paul Companies, Inc. 563,800 110,100 673,900 27,802,387 5,429,306 33,231,693
Wells Fargo Co. 379,200 71,400 450,600 17,419,500 3,279,937 20,699,437
Zions Bancorp 99,700 20,400 120,100 5,098,720 1,043,268 6,141,988
Bank One Corp. 812,200 156,600 968,800 31,371,225 6,048,675 37,419,900
Chase Manhattan Corp. 502,300 95,950 598,250 23,199,981 4,431,690 27,631,671
MetLife, Inc. 622,000 119,700 741,700 16,288,625 3,134,643 19,423,268
-------------------------------------
576,333,346 112,214,371 688,547,717
-------------------------------------
HEALTH 8.9% American Home Products Corp. 1,037,900 189,900 1,227,800 58,706,218 10,741,218 69,447,436
Becton, Dickinson & Co. 826,100 161,900 988,000 21,840,018 4,280,231 26,120,249
Bristol-Myers Squibb Co. 679,800 133,200 813,000 38,833,575 7,609,050 46,442,625
Eli Lilly & Co. 416,400 80,500 496,900 33,780,450 6,530,562 40,311,012
Pharmacia Corp. 721,259 134,351 855,610 43,410,776 8,086,250 51,497,026
-------------------------------------
196,571,037 37,247,311 233,818,348
-------------------------------------
MANUFACTURING 4.6% Dow Chemical Co. 801,000 154,500 955,500 19,974,937 3,852,843 23,827,780
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
E.I. du Pont de Nemours & Co. 860,300 148,700 1,009,000 35,648,681 6,161,756 41,810,437
PPG Industries, Inc. 485,700 92,100 577,800 19,276,218 3,655,218 22,931,436
Parker-Hannifin Corp. 396,700 90,450 487,150 13,388,625 3,052,687 16,441,312
Sherwin-Williams Co. 625,100 117,700 742,800 13,361,512 2,515,837 15,877,349
------------------------------------------
101,649,973 19,238,341 120,888,314
------------------------------------------
MEDIA 1.7% The Walt Disney Co. 972,100 201,000 1,173,100 37,182,825 7,688,250 44,871,075
------------------------------------------
37,182,825 7,688,250 44,871,075
------------------------------------------
SERVICE INDUSTRIES 1.1% Merrill Lynch & Co., Inc. 367,000 72,600 439,600 24,222,000 4,791,600 29,013,600
------------------------------------------
24,222,000 4,791,600 29,013,600
------------------------------------------
TECHNOLOGY 5.4% AgilentTechnologies Inc. 0 0 0 18 5 23
Apple Computer, Inc. 247,300 247,300 6,367,975 6,367,975
Compaq Computer Corp. 821,200 821,200 22,648,696 22,648,696
Diebold, Inc. 396,100 76,000 472,100 10,521,406 2,018,750 12,540,156
Hewlett-Packard Co. 212,400 41,500 253,900 20,602,800 4,025,500 24,628,300
International Business Machines
Corp. 255,100 50,200 305,300 28,698,750 5,647,500 34,346,250
Intuit,Inc. 581,000 112,000 693,000 33,117,000 6,384,000 39,501,000
------------------------------------------
121,956,645 18,075,755 140,032,400
------------------------------------------
TRANSPORTATION 1.2% Burlington Northern Santa
Fe Corp. 1,246,700 248,000 1,494,700 26,881,968 5,347,500 32,229,468
------------------------------------------
26,881,968 5,347,500 32,229,468
------------------------------------------
UTILITIES 6.5% Allegheny Energy, Inc. 747,100 142,100 889,200 28,529,881 5,426,443 33,956,324
Duke Energy Corp. 357,900 72,500 430,400 30,689,925 6,216,875 36,906,800
FPL Group, Inc. 474,800 87,300 562,100 31,218,100 5,739,975 36,958,075
Peco Energy Co. 155,700 34,900 190,600 9,429,581 2,113,631 11,543,212
Southern Energy Inc 90,300 17,000 107,300 2,833,162 533,375 3,366,537
Unicom Corp. 717,600 134,100 851,700 40,320,149 7,534,761 47,854,910
------------------------------------------
143,020,798 27,565,060 170,585,858
------------------------------------------
------------------------------------------
Total Common Stocks (Cost of $1,562,849,003, $344,256,380, and $1,907,105,383
respectively) 2,146,188,116 404,257,961 2,550,446,077
==========================================
------------------------------------------
Total Investment Portfolio (Cost of $1,627,864,003,$350,340,380 and $1,978,204,383
respectively) 2,211,203,116 410,341,961 2,621,545,077
==========================================
</TABLE>
<PAGE>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Large Scudder Pro Forma Pro Forma
Company Value Value Fund Adjustments Combined
--------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Investments, at value $ 2,211,203,116 $ 410,341,961 $ 2,621,545,077
Cash 6,849 138 $ 6,987
Other assets less
liabilities 26,390,204 9,520,589 $ - (2) $ 35,910,793
--------------- ------------- ------------ ---------------
Total Net assets $ 2,237,600,169 $ 419,862,688 $ - $ 2,657,462,857
=============== ============= ============ ===============
Net Assets
Class S Shares $ 2,237,600,169 $ 331,123,448 $ 2,568,723,617
Class A Shares $ 50,693,642 $ 50,693,642
Class B Shares $ 30,573,600 $ 30,573,600
Class C Shares $ 7,471,998 $ 7,471,998
Shares Outstanding
Class S Shares 77,496,256 12,846,172 (1,376,707) 88,965,721
Class A Shares 1,968,732 (212,804) 1,755,928
Class B Shares 1,195,742 (136,733) 1,059,009
Class C Shares 292,512 (33,697) 258,815
Net Asset Value per Share
Class S Shares $ 28.87 $ 25.78 $ 28.87
Class A Shares $ 25.75 $ 28.87
Class B Shares $ 25.57 $ 28.87
Class C Shares $ 25.54 $ 28.87
</TABLE>
<PAGE>
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED September 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Large Scudder Pro Forma Pro Forma
Company Value Value Adjustments Combined
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest and dividend income $ 47,061,459 8,694,159 $ -- $ 55,755,618
----------------------------------------------------------------------
Total Investment Income 47,061,459 8,694,159 55,755,618
Expenses
Management fees 13,718,497 3,001,573 (1,426,352) (3) 15,293,718
Trustees Fees 84,792 53,784 - (4) 138,576
12B-1 -- 460,185 460,185
All other expenses 7,105,442 3,167,426 (2,372,518) (5) 7,900,350
----------------------------------------------------------------------
Total expenses before reductions 20,908,731 6,682,968 (3,798,870) 23,792,829
Expense reductions - - - -
----------------------------------------------------------------------
Expenses, net 20,908,731 6,682,968 (3,798,870) 23,792,829
----------------------------------------------------------------------
Net investment income (loss) 26,152,728 2,011,191 3,798,870 31,962,789
----------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain (loss) from investments 211,160,385 52,726,443 -- 263,886,828
Net unrealized appreciation (depreciation)
of investments (14,536,052) 13,596,001 -- (940,051)
----------------------------------------------------------------------
Net increase in net assets from operations $ 222,777,061 $ 68,333,635 $ 3,798,870 $ 294,909,566
======================================================================
</TABLE>
Notes to Pro Forma Combining Financial Statements
(Unaudited)
September 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
Statement of Assets and Liabilities as of September 30, 2000, and the
unaudited pro forma condensed Statement of Operations for the twelve month
period ended September 30, 2000 for the Scudder Large Company Value Fund and
Scudder Value Fund as adjusted giving effect to the Reorganization as if it
had occurred as of the beginning of the period. These statements have been
derived from the books and records utilized in calculating daily net asset
value for each fund.
2. Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxxx and $xxxxxx to be borne by Scudder Large Company
Value Fund and the Scudder Value Fund, respectively.
3. Represents reduction in management fees resulting from the utilization of
Scudder Large Company Value Fund's lower management fees.
4. Reduction in trustee fees resulting from the Reorganization.
5. Represents reduction in other expenses resulting from the implementation of
an administrative fee contract by Scudder Large Company Value Fund for the
entire year.
<PAGE>
PART C. OTHER INFORMATION
Item 15 Indemnification.
------- ----------------
A policy of insurance covering Scudder Kemper
Investments, Inc., its subsidiaries including
Scudder Investor Services, Inc., and all of the
registered investment companies advised by Scudder
Kemper Investments, Inc. insures the Registrant's
trustees and officers and others against liability
arising by reason of an alleged breach of duty
caused by any negligent act, error or accidental
omission in the scope of their duties.
Article IV, Section 4.1 - 4.3 of the Registrant's
Declaration of Trust provide as follows:
Section 4.1. No Personal Liability of
Shareholders, Trustees, etc. No Shareholder shall
be subject to any personal liability whatsoever to
any Person in connection with Trust Property or
the acts, obligations or affairs of the Trust. No
Trustee, officer, employee or agent of the Trust
shall be subject to any personal liability
whatsoever to any Person, other than to the Trust
or its Shareholders, in connection with Trust
Property or the affairs of the Trust, save only
that arising from bad faith, willful misfeasance,
gross negligence or reckless disregard of his
duties with respect to such Person; and all such
Persons shall look solely to the Trust Property
for satisfaction of claims of any nature arising
in connection with the affairs of the Trust. If
any Shareholder, Trustee, officer, employee, or
agent, as such, of the Trust, is made a party to
any suit or proceeding to enforce any such
liability of the Trust, he shall not, on account
thereof, be held to any personal liability. The
Trust shall indemnify and hold each Shareholder
harmless from and against all claims and
liabilities, to which such Shareholder may become
subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder
for all legal and other expenses reasonably
incurred by him in connection with any such claim
or liability. The indemnification and
reimbursement required by the preceding sentence
shall be made only out of the assets of the one or
more Series of which the Shareholder who is
entitled to indemnification or reimbursement was a
Shareholder at the time the act or event occurred
which gave rise to the claim against or liability
of said Shareholder. The rights accruing to a
Shareholder under this Section 4.1 shall not
impair any other right to which such Shareholder
may be lawfully entitled, nor shall anything
herein contained restrict the right of the Trust
to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically
provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No
Trustee, officer, employee or agent of the Trust
shall be liable to the Trust, its Shareholders, or
to any Shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act
(including without
<PAGE>
limitation the failure to compel in any way any
former or acting Trustee to redress any breach of
trust) except for his own bad faith, willful
misfeasance, gross negligence or reckless
disregard of the duties involved in the conduct of
his office.
Section 4.3. Mandatory Indemnification.
(a) Subject to the exceptions and limitations
contained in paragraph (b) below:
(i) every person who is, or has been, a
Trustee or officer of the Trust shall be
indemnified by the Trust to the fullest extent
permitted by law against all liability and against
all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or
proceeding in which he becomes involved as a party
or otherwise by virtue of his being or having been
a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit,"
or "proceeding" shall apply to all claims,
actions, suits or proceedings (civil, criminal,
administrative or other, including appeals),
actual or threatened; and the words "liability"
and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided
hereunder to a Trustee or officer:
(i) against any liability to the Trust, a
Series thereof, or the Shareholders by reason of a
final adjudication by a court or other body before
which a proceeding was brought that he engaged in
willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in
the conduct of his office;
(ii) with respect to any matter as to which
he shall have been finally adjudicated not to have
acted in good faith in the reasonable belief that
his action was in the best interest of the Trust;
(iii) in the event of a settlement or other
disposition not involving a final adjudication as
provided in paragraph (b)(i) or (b)(ii) resulting
in a payment by a Trustee or officer, unless there
has been a determination that such Trustee or
officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office:
(A) by the court or other body
approving the settlement or other
disposition; or
<PAGE>
(B) based upon a review of readily
available facts (as opposed to a full trial-type
inquiry) by (x) vote of a majority of the
Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested
Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.
(c) The rights of indemnification herein provided
may be insured against by policies maintained by
the Trust, shall be severable, shall not affect
any other rights to which any Trustee or officer
may now or hereafter be entitled, shall continue
as to a person who has ceased to be such Trustee
or officer and shall inure to the benefit of the
heirs, executors, administrators and assigns of
such a person. Nothing contained herein shall
affect any rights to indemnification to which
personnel of the Trust other than Trustees and
officers may be entitled by contract or otherwise
under law.
(d) Expenses of preparation and presentation of a
defense to any claim, action, suit or proceeding
of the character described in paragraph (a) of
this Section 4.3 may be advanced by the Trust
prior to final disposition thereof upon receipt of
an undertaking by or on behalf of the recipient to
repay such amount if it is ultimately determined
that he is not entitled to indemnification under
this Section 4.3, provided that either:
(i) such undertaking is secured by a surety
bond or some other appropriate security provided
by the recipient, or the Trust shall be insured
against losses arising out of any such advances;
or
(ii) a majority of the Disinterested
Trustees acting on the matter (provided that a
majority of the Disinterested Trustees act on the
matter) or an independent legal counsel in a
written opinion shall determine, based upon a
review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to
believe that the recipient ultimately will be
found entitled to indemnification.
As used in this Section 4.3, a "Disinterested
Trustee" is one who is not (i) an "Interested
Person") of the Trust (including anyone who has
been exempted from being an "Interested Person" by
any rule, regulation or order of the Commission),
or (ii) involved in the claim, action, suit or
proceeding.
Item 16. Exhibits.
-------- ---------
(1) (a)(1) Amended and Restated Declaration of Trust dated
March 17, 1988. Incorporated by reference to Post-
Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A, as amended
(the "Registration Statement").
<PAGE>
(a)(2) Establishment and Designation of Series dated
December 15, 1986. (Incorporated by reference
to Exhibit 1(b) to Post-Effective Amendment
No. 25 to the Registration Statement.)
(a)(3) Amended Establishment and Designation of
Series dated May 4, 1987. (Incorporated by
reference to Exhibit 1(c) to Post-Effective
Amendment No. 25 to the Registration
Statement.)
(a)(4) Certificate of Amendment dated December 13,
1990. (Incorporated by reference to Exhibit
1(d) to Post-Effective Amendment No. 25 to
the Registration Statement.)
(a)(5) Establishment and Designation of Series dated
October 6, 1992. (Incorporated by reference
to Exhibit 1(e) to Post-Effective Amendment
No. 25 to the Registration Statement.)
(a)(6) Redesignation of Series by the Registrant on
behalf of Scudder Capital Growth Fund, dated
December 2, 1996. (Incorporated by reference
to Exhibit 1(f) to Post-Effective Amendment
No. 25 to the Registration Statement.)
(a)(7) Establishment and Designation of Classes of
Shares of Beneficial Interest, $0.01 Par
Value, Kemper A, B & C Shares, and Scudder
Shares. (Incorporated by reference to Post-
Effective Amendment No. 30 to the
Registration Statement.)
(a)(8) Redesignation of Series, Scudder Value Fund
to Value Fund. (Incorporated by reference to
Post-Effective Amendment No. 30 to the
Registration Statement.)
(a)(9) (a) Establishment and Designation of Classes of
Shares of Beneficial Interest, $.01 Par
Value, Scudder Large Company Value Fund -
Class S Shares and Scudder Large Company
Value Fund - AARP Shares, dated March 17,
2000. (Incorporated by reference to Post-
Effective Amendment No. 39 to the
Registration Statement.)
(a)(9) (b) Establishment and Designation of Classes of
Shares of Beneficial Interest, $.01 Par
Value, Scudder Select 500 Fund- Class S
Shares and Scudder Select 500 Fund - AARP
Shares, dated March 17, 2000. (Incorporated
by reference to Post-Effective Amendment No.
39 to the Registration Statement.)
(a)(9) (c) Establishment and Designation of Classes of
Shares of Beneficial Interest, $.01 Par
Value, Scudder Select 1000 Growth Fund -
Class S Shares and Scudder Select 1000 Growth
Fund - AARP Shares, dated March 17, 2000.
(Incorporated by reference to Post-Effective
Amendment No. 39 to the Registration
Statement.)
(2) (b)(1) By-Laws as of October 16, 1985. (Incorporated
by reference to Exhibit 2(a) to Post-
Effective Amendment No. 25 to the
Registration Statement.)
<PAGE>
(b)(2) Amendment to the By-Laws of Registrant as
amended through December 9, 1985.
(Incorporated by reference to Exhibit 2(b) to
Post-Effective Amendment No. 25 to the
Registration Statement.)
(b)(3) Amendment to the Registrant's By-Laws dated
December 12, 1991. (Incorporated by reference
to Exhibit 2(c) to Post-Effective Amendment
No. 25 to the Registration Statement.)
(b)(4) Amendment to the Registrant's By-Laws dated
September 17, 1992. (Incorporated by
reference to the Exhibit 2(d) to Post-
Effective Amendment No. 25 to the
Registration Statement.)
(b)(5) Amendment to the Registrant's By-Laws dated
February 7, 2000. (Incorporated by reference
to Post-Effective Amendment No. 39 to the
Registration Statement.)
(3) Inapplicable.
(4) Form of Agreement and Plan of Reorganization
is filed herein as Exhibit A to Part A.
(5) Inapplicable.
(6) (d)(1) Investment Management Agreement between the
Registrant, on behalf of Scudder Large
Company Value Fund, and Scudder Kemper
Investments, Inc. dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 30 to the Registration
Statement.)
(d)(2) Investment Management Agreement between the
Registrant, on behalf of Value Fund, and
Scudder Kemper Investment, Inc. dated
September 7, 1998. (Incorporated by reference
to Post-Effective Amendment No. 30 to the
Registration Statement.)
(d)(3) Investment Management Agreement between the
Registrant on behalf of Scudder Select 500
Fund and Scudder Kemper Investments, Inc.,
dated March 31, 1999. (Incorporated by
reference to Post-Effective Amendment No. 33
to the Registration Statement.)
(d)(4) Investment Management Agreement between the
Registrant on behalf of Scudder Select 1000
Growth Fund and Scudder Kemper Investments,
Inc., dated March 31, 1999. (Incorporated by
reference to Post-Effective Amendment No. 33
to the Registration Statement.)
<PAGE>
(d)(5) Investment Management Agreement between the
Registrant on behalf of Scudder Large Company
Value Fund and Scudder Kemper Investments,
Inc., dated February 7, 2000. (Incorporated
by reference to Post-Effective Amendment No.
39 to the Registration Statement.)
(d)(6) Form of Investment Management Agreement
between the Registrant on behalf of Scudder
Select 500 Fund and Scudder Kemper
Investments, Inc., dated August 25, 2000.
(Incorporated by reference to Post-Effective
Amendment No. 39 to the Registration
Statement.)
(d)(7) Form of Investment Management Agreement
between the Registrant on behalf of Scudder
Select 1000 Growth Fund and Scudder Kemper
Investments, Inc., dated October 2, 2000.
(Incorporated by reference to Post-Effective
Amendment No. 39 to the Registration
Statement.)
(d)(8) Investment Management Agreement between the
Registrant, on behalf of Scudder Large
Company Value Fund, and Scudder Kemper
Investments, Inc., dated October 1, 2000 is
incorporated by reference to Post-Effective
Amendment No. 42 to the Registration
Statement.
(7) (e)(1) Underwriting and Distribution Services
Agreement between the Registrant, on behalf
of Value Fund, and Kemper Distributors, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 30
to the Registration Statement.)
(e)(2) Underwriting Agreement between the Registrant
and Scudder Investor Services, Inc. dated
September 7, 1998. (Incorporated by reference
to Post-Effective Amendment No. 30 to the
Registration Statement.)
(e)(3) Amendment dated September 30, 1999 to the
Underwriting and Distribution Services
Agreement between the Registrant, on behalf
of Value Fund, and Kemper Distributors, Inc.
(Incorporated by reference to Post-Effective
Amendment No. 35 to the Registration
Statement.)
(e)(4) Amendment dated December 7, 1999 to the
Underwriting and Distribution Services
Agreement between the Registrant, on behalf
of Value Fund, and Kemper Distributors, Inc.
(Incorporated by reference to Post-Effective
Amendment No. 44 to the Registration
Statement.)
(8) Inapplicable.
<PAGE>
(9) (g)(1) Custodian Agreement between the Registrant
and State Street Bank and Trust Company
("State Street Bank") dated October 1, 1982.
(Incorporated by reference to Exhibit 8(a)(1)
to Post-Effective Amendment No. 25 to the
Registration Statement.)
(g)(1)(a) Fee schedule for Exhibit (g)(1).
(Incorporated by reference to Exhibit 8(a)(2)
to Post-Effective Amendment No. 25 to the
Registration Statement.)
(g)(2) Amendment to Custodian Contract dated March
31, 1986. (Incorporated by reference to
Exhibit 8(a)(3) to Post-Effective Amendment
No. 25 to the Registration Statement.)
(g)(3) Amendment to Custodian Contract dated October
1, 1982. (Incorporated by reference to
Exhibit 8(a)(4)to Post-Effective Amendment
No. 25 to the Registration Statement.)
(g)(4) Amendment to Custodian Contract dated
September 16, 1988. (Incorporated by
reference to Exhibit 8(a)(5) to Post-
Effective Amendment No. 25 to the
Registration Statement.)
(g)(5) Amendment to Custodian Contract dated
December 13, 1990. (Incorporated by reference
to Exhibit 8(a)(6) to Post-Effective
Amendment No. 25 to the Registration
Statement.)
(g)(5)(a) Fee schedule for Exhibit (g)(5) dated August
1, 1994. (Incorporated by reference to
Exhibit 8(a)(7) to Post-Effective Amendment
No. 25 to the Registration Statement.)
(g)(6) Amendment to Custodian Contract dated March
1, 1999. (Incorporated by reference to Post-
Effective Amendment No. 35 to the
Registration Statement.)
(g)(6)(a) Form of Fee schedule for Exhibit (g)(6).
(Incorporated by reference to Post-Effective
Amendment No. 35 to the Registration
Statement.)
(g)(7) Agency Agreement between State Street Bank
and Trust Company and The Bank of New York,
London office dated January 1, 1979.
(Incorporated by reference to Exhibit (b)(1)
to Post-Effective Amendment No. 25 to the
Registration Statement.)
(g)(8) Subcustodian Agreement between State Street
Bank and the Chase Manhattan Bank, N.A. dated
September 1, 1986. (Incorporated by reference
to Exhibit 8(c)(1) to Post-Effective
Amendment No. 25 to the Registration
Statement.)
(10) (n)(1) Mutual Funds Multi-Distribution System Plan,
Rule 18f-3 Plan. (Incorporated by reference
to Exhibit 18 to Post-Effective Amendment No.
29 to the Registration Statement.)
<PAGE>
(n)(2) Plan With Respect to Scudder Large Company
Value Fund Pursuant to Rule 18f-3, dated
March 14, 2000. (Incorporated by reference to
Post-Effective Amendment No. 39 to the
Registration Statement.)
(n)(3) Amended and Restated Plan With Respect to
Scudder Large Company Value Fund Pursuant to
Rule 18f-3, dated May 8, 2000. (Incorporated
by reference to Post-Effective Amendment No.
39 to the Registration Statement.)
(n)(4) Plan With Respect to Scudder Select 500 Fund
Pursuant to Rule 18f-3, dated March 14, 2000.
(Incorporated by reference to Post-Effective
Amendment No. 39 to the Registration
Statement.)
(n)(5) Amended and Restated Plan With Respect to
Scudder Select 500 Fund Pursuant to Rule 18f-
3, dated May 8, 2000. (Incorporated by
reference to Post-Effective Amendment No. 39
to the Registration Statement.)
(n)(6) Plan With Respect to Scudder Select 1000
Growth Fund Pursuant to Rule 18f-3, dated
March 14, 2000. (Incorporated by reference to
Post-Effective Amendment No. 39 to the
Registration Statement.)
(n)(7) Amended and Restated Plan With Respect to
Scudder Select 1000 Growth Fund Pursuant to
Rule 18f-3, dated May 8, 2000. (Incorporated
by reference to Post-Effective Amendment No.
39 to the Registration Statement.)
(n)(8) Scudder Funds Amended and Restated Multi-
Distribution System Plan is filed herewith.
(11) Opinion and consent of Dechert is filed
herewith.
(12) Opinion of Willkie Farr & Gallagher to be
filed by post-effective amendment.
(13) (h)(1) Transfer Agency and Service Agreement between
the Registrant and Scudder Service
Corporation dated October 2, 1989.
(Incorporated by reference to Exhibit 9(a)(1)
to Post-Effective Amendment No. 25 to the
Registration Statement.)
(h)(1)(a) Fee schedule for Exhibit (h)(1).
(Incorporated by reference to Exhibit 9(a)(2)
to Post Effective Amendment No. 25 to the
Registration Statement.)
(h)(1)(b) Form of revised fee schedule for Exhibit
(h)(1). (Incorporated by reference to Exhibit
9(a)(3) to Post-Effective Amendment No. 23 to
the Registration Statement.)
<PAGE>
(h)(2) Transfer Agency Fee Schedule between the
Registrant and Kemper Service Company on
behalf of Scudder Value Fund dated January 1,
1999. (Incorporated by reference to Post-
Effective Amendment No. 35 to the
Registration Statement.)
(h)(3) Agency Agreement between the Registrant on
behalf of Value Fund and Kemper Service
Company dated April 16, 1998. (Incorporated
by reference to Post-Effective No. 30 to the
Registration Statement.)
(h)(4) Amendment No. 1 dated September 30, 1999 to
the Agency Agreement between the Registrant,
on behalf of Value Fund, and Kemper Service
Company. (Incorporated by reference to Post-
Effective Amendment No. 35 to the
Registration Statement.)
(h)(5) COMPASS Service Agreement between Scudder
Trust Company and the Registrant dated
October 1, 1995. (Incorporated by reference
to Exhibit 9(b)(3)to Post-Effective Amendment
No. 24 to the Registration Statement.)
(h)(6) Shareholder Services Agreement between the
Registrant and Charles Schwab & Co., Inc.
dated June 1, 1990. (Incorporated by
reference to Exhibit 9(c) to Post-Effective
Amendment No. 25 to the Registration
Statement.)
(h)(7) Service Agreement between Copeland
Associates, Inc. and Scudder Service
Corporation, on behalf of Scudder Equity
Trust, dated June 8, 1995. (Incorporated by
reference to Exhibit 9(c)(1) to Post-
Effective Amendment No. 23 to the
Registration Statement.)
(h)(8) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Capital
Growth Fund, and Scudder Fund Accounting
Corporation dated October 19, 1994.
(Incorporated by reference to Exhibit 9(e)(1)
to Post-Effective Amendment No. 25 to the
Registration Statement.)
(h)(9) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Value
Fund, and Scudder Fund Accounting Corporation
dated October 24, 1994. (Incorporated by
reference to Exhibit 9(e)(2) to Post-
Effective Amendment No. 25 to the
Registration Statement.)
(h)(10) Amendment No. 1 dated September 30, 1999 to
the Fund Accounting Service Agreement between
the Registrant, on behalf of Value Fund, and
Scudder Fund Accounting Corporation.
(Incorporated by reference to Post-Effective
Amendment No. 35 to the Registration
Statement.)
<PAGE>
(h)(11) Special Servicing Agreement dated November
15, 1996 between Scudder Pathway Series and
the Registrant, on behalf of Scudder Capital
Growth Fund and Scudder Value Fund.
(Incorporated by reference to Exhibit 9(f) to
Post-Effective Amendment No. 25 to the
Registration Statement.)
(h)(12) Administrative Services Agreement between the
Registrant and Kemper Distributors, Inc.
dated April 1998. (Incorporated by reference
to Post-Effective Amendment No. 30 to the
Registration Statement.)
(h)(12)(a) Amendment No. 1 dated September 14, 1999 to
the Administrative Services Agreement between
the Registrant on behalf of Value Fund and
Kemper Distributors, Inc. (Incorporated by
reference to Post-Effective Amendment No. 35
to the Registration Statement.)
(h)(12)(b) Form of Administrative Services Agreement
(and Fee Schedule thereto) between the
Registrant, on behalf of Scudder Large
Company Value Fund, Scudder Select 500 Fund,
Scudder Select 1000 Growth Fund, and Value
Fund, and Scudder Kemper Investments, Inc.,
dated August 28, 2000. (Incorporated by
reference to Post-Effective Amendment No. 39
to the Registration Statement.)
(h)(13) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Select
500 Fund, and Scudder Fund Accounting
Corporation dated March 31, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 33 to the Registration
Statement.)
(h)(14) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Select
1000 Growth Fund, and Scudder Fund Accounting
Corporation dated March 31, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 33 to the Registration
Statement.)
(h)(15) License Agreement between the Registrant, on
behalf of Scudder Select 500 Fund, and
Standard & Poor's Corporation, dated March
31, 1999. (Incorporated by reference to Post-
Effective Amendment No. 34 to the
Registration Statement.)
(h)(16) Research License Agreement between the
Registrant, on behalf of Scudder Select 1000
Growth Fund, and Frank Russell Company dated
March 31, 1999. (Incorporated by reference to
Post-Effective Amendment No. 34 to the
Registration Statement.)
(14) Consents of Independent Accountants is filed
herewith.
(15) Inapplicable.
(16) Powers of Attorney are filed herewith.
<PAGE>
(17) Form of Proxy is filed herewith.
Item 17. Undertakings.
-------- -------------
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act [17 CFR 230.145c], the reoffering prospectus will
contain the information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned Registrant undertakes to file, by post-effective
amendment, an opinion of counsel supporting the tax consequences of
the proposed reorganization within a reasonable time after receipt of
such opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Value Equity Trust has duly caused this
Registration Statement on Form N-14 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 14/th/ day of December, 2000.
VALUE EQUITY TRUST
By: /s/ Linda C. Coughlin
--------------------------
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Linda C. Coughlin President & Trustee December 14, 2000
---------------------------
Linda C. Coughlin
/s/ Henry P. Becton, Jr.* Trustee December 14, 2000
---------------------------
Henry P. Becton, Jr.
/s/ Dawn-Marie Driscoll* Trustee December 14, 2000
---------------------------
Dawn-Marie Driscoll
/s/ Edgar R. Fiedler* Trustee December 14, 2000
---------------------------
Edgar R. Fiedler
/s/ Keith R. Fox* Trustee December 14, 2000
---------------------------
Keith R. Fox
/s/ Joan Edelman Spero* Trustee December 14, 2000
---------------------------
Joan Edelman Spero
/s/ Jean Gleason Stromberg* Trustee December 14, 2000
---------------------------
Jean Gleason Stromberg
/s/ Jean C. Tempel* Trustee December 14, 2000
---------------------------
Jean C. Tempel
/s/ Steven Zaleznick* Trustee December 14, 2000
---------------------------
Steven Zaleznick
/s/ John R. Hebble Treasurer (Principal Financial December 14, 2000
--------------------------- and Accounting Officer)
John R. Hebble
*By: /s/ Joseph R. Fleming December 14, 2000
-------------------------------------
Joseph R. Fleming, Attorney-in-fact
*Executed pursuant to powers of attorney filed herein as an exhibit to the
Registrant's Registration Statement on Form N-14.
<PAGE>
File No. [ - ]
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VALUE EQUITY TRUST
<PAGE>
VALUE EQUITY TRUST
EXHIBIT INDEX
Exhibit 10(n)(8) Scudder Funds Amended and Restated Multi-Distribution System
Plan
Exhibit 11 Opinion and Consent of Dechert
Exhibit 14 Consents of Independent Accountants
Exhibit 16 Powers of Attorney
Exhibit 17 Form of Proxy
