Filed electronically with the Securities and Exchange Commission
on July 31, 1997
File No. 2-14400
File No. 811-642
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
--------
Post-Effective Amendment No. 56
--------
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 36
--------
Scudder International Fund, Inc.
--------------------------------
(Exact Name of Registrant as Specified in Charter)
345 Park Avenue, New York, NY 10154
-----------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2567
---------------
Thomas F. McDonough
Scudder, Stevens & Clark, Inc.
Two International Place, Boston, MA 02110-4103
----------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b)
--------
X on August 1, 1997 pursuant to paragraph (b)
--------
60 days after filing pursuant to paragraph (a)(i)
--------
on ________________________ pursuant to paragraph (a)(i)
--------
75 days after filing pursuant to paragraph (a)(ii)
--------
on ________________________ pursuant to paragraph (a)(ii) of
-------- Rule 485
If appropriate, check the following:
this post-effective amendment designates a new effective date
-------- for a previously filed post-effective amendment
The Registrant has filed a declaration registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. The Registrant filed the notice required by Rule 24f-2 for its most
recent fiscal year on May 29, 1997.
<PAGE>
SCUDDER INTERNATIONAL FUND, INC.
Calculation of Registration Fee under the Securities Act of 1933
<TABLE>
<CAPTION>
Title of Securities Proposed Maximum Proposed Maximum Amount of
Being Amount Offering Price Per Aggregate Offering Registration
Registered Being Registered Share (1) Price (1,2) Fee (2)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares of Capital Stock, $.01 par
value:
Scudder International Fund 1,288,824 $55.92 $0 $0
</TABLE>
This Post-Effective Amendment No. 56 seeks to register 1,288,824 additional
shares of Scudder International Fund under the Securities Act of 1933.
(1) Computed under Rule 457(d) on the basis of the net asset value per share of
registrant's shares of beneficial interest at the close of business on July
10, 1997. The above calculation shall not be deemed a representation as to
the actual offering price.
(2) Calculated pursuant to Rule 24e-2 under the Investment Company Act of 1940.
(a) Total number of shares redeemed during previous
fiscal year 15,775,731
(b) Total number of shares included in (a) previously
used under Rule 24e-2 this fiscal year -0-
(c) Total number of shares included in (a) previously
used under Rule 24f-2(c) this fiscal year 14,486,907
(d) Total number of shares included in (a) being
used to reduce maximum aggregate offering
price in this Post-Effective Amendment 1,288,824
<PAGE>
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER LATIN AMERICA FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
<S> <C> <C>
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN THE FUND?
LATIN AMERICAN INVESTMENT EXPERIENCE
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND
ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax Information
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated Information Line,
Dividend reinvestment plan, T.D.D. service for the hearing
impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share price,
Processing time, Minimum balances, Third party transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference-1
<PAGE>
SCUDDER LATIN AMERICA FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History FUND ORGANIZATION
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
and Other Practices
18. Capital Stock and Other FUND ORGANIZATION
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference-2
<PAGE>
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER PACIFIC OPPORTUNITIES FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN THE FUND?
INTERNATIONAL INVESTMENT EXPERIENCE
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion NOT APPLICABLE
of Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax Information
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated Information Line,
Dividend reinvestment plan, T.D.D. service for the hearing
impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities PURCHASES
Being Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share price,
Processing time, Minimum balances, Third party transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference-3
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History FUND ORGANIZATION
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
and Other Practices
18. Capital Stock and Other FUND ORGANIZATION
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference-4
<PAGE>
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER GREATER EUROPE GROWTH FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN THE FUND?
INTERNATIONAL INVESTMENT EXPERIENCE
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
RISK CONSIDERATIONS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax information
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated Information Line,
Dividend reinvestment plan, T.D.D. service for the hearing
impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION
INFORMATION--Purchasing
shares, Share price,
Processing time, Minimum
balances, Third party
transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference-5
<PAGE>
SCUDDER GREATER EUROPE GROWTH FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History FUND ORGANIZATION
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS -- Brokerage Commissions, Portfolio
Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
and Other Practices
18. Capital Stock and Other FUND ORGANIZATION
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference-6
<PAGE>
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER EMERGING MARKETS GROWTH FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial NOT APPLICABLE
Information
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN THE FUND?
INTERNATIONAL INVESTMENT EXPERIENCE
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
RISK CONSIDERATIONS
FUND ORGANIZATION
5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax information
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated Information Line,
Dividend reinvestment plan, T.D.D. service for the hearing
impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share price,
Processing time, Minimum balances, Third party transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference-7
<PAGE>
SCUDDER EMERGING MARKETS GROWTH FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History FUND ORGANIZATION
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS -- Brokerage Commissions, Portfolio
Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
and Other Practices
18. Capital Stock and Other FUND ORGANIZATION
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND-- Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference-8
<PAGE>
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER INTERNATIONAL GROWTH AND INCOME FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial NOT APPLICABLE
Information
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant INVESTMENT PROCESS
WHY INVEST IN THE FUND?
INTERNATIONAL INVESTMENT EXPERIENCE
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
RISK CONSIDERATIONS
FUND ORGANIZATION
5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax information
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated Information Line,
Dividend reinvestment plan, T.D.D. service for the hearing
impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share price,
Processing time, Minimum balances, Third party transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference-9
<PAGE>
SCUDDER INTERNATIONAL GROWTH AND INCOME FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History FUND ORGANIZATION
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS -- Brokerage Commissions, Portfolio
Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
and Other Practices
18. Capital Stock and Other FUND ORGANIZATION
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND-- Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
</TABLE>
Cross Reference-10
<PAGE>
This prospectus sets forth concisely the information about Scudder International
Fund, a series of Scudder International Fund, Inc., an open-end management
investment company, that a prospective investor should know before investing.
Please retain it for future reference.
If you require more detailed information, a Statement of Additional Information
dated August 1, 1997, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statement, which is
incorporated by reference into this prospectus, has been filed with the
Securities and Exchange Commission and is available along with other related
materials on the SEC's Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Contents--see page 4.
NOT FDIC-INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Scudder International Fund
Prospectus
August 1, 1997
A pure no-load(TM) (no sales charges) mutual fund seeking long-term growth of
capital primarily from foreign equity securities.
<PAGE>
Expense information
How to compare a Scudder pure no-load(TM) fund
This information is designed to help you understand the various costs and
expenses of investing in Scudder International Fund (the "Fund"). By reviewing
this table and those in other mutual funds' prospectuses, you can compare the
Fund's fees and expenses with those of other funds. With Scudder's pure
no-load(TM) funds, you pay no commissions to purchase or redeem shares, or to
exchange from one fund to another. As a result, all of your investment goes to
work for you.
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE
2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended March 31, 1997.
Investment management fee 0.82%
12b-1 fees NONE
Other expenses 0.33%
-----
Total Fund operating expenses 1.15%
=====
Example
Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its net
investment income to shareholders. (As noted above, the Fund has no redemption
fees of any kind.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$12 $37 $63 $140
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.
* You may redeem by writing or calling the Fund. If you wish to receive your
redemption proceeds via wire, there is a $5 wire service fee. For additional
information, please refer to "Transaction information --Redeeming shares."
2
<PAGE>
Financial highlights
The following table includes selected data for a share outstanding throughout
each period (a) and other performance information derived from the audited
financial statements.
If you would like more detailed information concerning the Fund's performance, a
complete portfolio listing and audited financial statements are available in the
Fund's Annual Report dated March 31, 1997 and may be obtained without charge by
writing or calling Scudder Investor Services, Inc.
<TABLE>
<CAPTION>
Years Ended March 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
---------------------------------------------------------------------------------------
period ........................ $45.71 $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $33.43 $44.05
---------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ............ .30 .38 .21 .31 .38 .44 .80 .49 .40 .45
Net realized and unrealized gain
(loss) on investment
transactions .................. 4.53 7.19 (1.03) 7.74 2.64 (.37) (.39) 5.30 4.15 (.86)
Total from investment
---------------------------------------------------------------------------------------
operations .................... 4.83 7.57 (.82) 8.05 3.02 .07 .41 5.79 4.55 (.41)
---------------------------------------------------------------------------------------
Less distributions:
From net investment income ....... (1.28) (.40) -- (.63) (.83) -- (.74) (.43) (.13) (.82)
In excess of net investment income -- -- -- (.06) -- -- -- -- -- --
From net realized gains on
investment transactions ....... (1.19) (1.18) (2.42) (.09) (.86) (.40) (1.98) (3.15) (3.06) (9.39)
---------------------------------------------------------------------------------------
Total distributions .............. (2.47) (1.58) (2.42) (.78) (1.69) (.40) (2.72) (3.58) (3.19) (10.21)
---------------------------------------------------------------------------------------
Net asset value, end of
---------------------------------------------------------------------------------------
period ........................ $48.07 $45.71 $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $33.43
- ---------------------------------------------------------------------------------------------------------------------------
Total Return (%) ................. 10.74 19.25 (2.02) 22.69 9.12 .18 1.46 17.08 14.34 (.47)
Ratios and Supplemental Data
Net assets, end of period
($ millions) .................... 2,583 2,515 2,192 2,198 1,180 933 929 783 550 559
Ratio of operating expenses to
average net assets (%) ........ 1.15 1.14 1.19 1.21 1.26 1.30 1.24 1.18 1.22 1.21
Ratio of net investment income to
average net assets (%) ........ .64 .86 .48 .75 1.13 1.25 2.22 1.33 1.20 1.16
Portfolio turnover rate (%) ...... 35.8 45.2 46.3 39.9 29.2 50.4 70.1 49.4 48.3 54.8
Average commission rate paid (b) . $.0002 -- -- -- -- -- -- -- -- --
</TABLE>
(a) Based on monthly average share Based on monthly average shares outstanding
during the period.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years ending on or after March 31, 1997.
3
<PAGE>
A message from Scudder's chairman
Scudder, Stevens & Clark, Inc., investment adviser to the Scudder Family of
Funds, was founded in 1919. We offered America's first no-load mutual fund in
1928. Today, we manage in excess of $115 billion for many private accounts and
over 50 mutual fund portfolios. We manage the mutual funds in a special program
for the American Association of Retired Persons, as well as the fund options
available through Scudder Horizon Plan, a tax-advantaged variable annuity. We
also advise The Japan Fund and nine closed-end funds that invest in countries
around the world.
The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.
Services available to all shareholders include toll-free access to the
professional service representatives of Scudder Investor Relations, easy
exchange among funds, shareholder reports, informative newsletters and the
walk-in convenience of Scudder Funds Centers.
All Scudder mutual funds are pure no-load(TM). This means you pay no commissions
to purchase or redeem your shares or to exchange from one fund to another. There
are no "12b-1" fees either, which many other funds now charge to support their
marketing efforts. All of your investment goes to work for you. We look forward
to welcoming you as a shareholder.
/s/Daniel Pierce
Scudder International Fund
Investment objective
o long-term growth of capital primarily from foreign equity securities
Investment characteristics
o professional management to help investors without the time or expertise to
invest directly in foreign securities
o international diversification which helps reduce international investment
risk
o convenient participation in investments denominated in foreign currencies
o daily liquidity at current net asset value
Contents
Investment objective and policies 5
Why invest in the Fund? 5
International investment experience 6
Additional information about policies
and investments 7
Investment results 9
Distribution and performance information 10
Fund organization 11
Transaction information 12
Shareholder benefits 16
Purchases 18
Exchanges and redemptions 19
Directors and Officers 21
Investment products and services 22
How to contact Scudder 23
4
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Investment objective and policies
Scudder International Fund (the "Fund"), a series of Scudder International Fund,
Inc., seeks long-term growth of capital primarily through a diversified
portfolio of marketable foreign equity securities. These securities are selected
primarily to permit the Fund to participate in non-United States companies and
economies with prospects for growth. The Fund invests in companies, wherever
organized, which do business primarily outside the United States. The Fund
intends to diversify investments among several countries and to have represented
in the portfolio, in substantial proportions, business activities in not less
than three different countries. The Fund does not intend to concentrate
investments in any particular industry.
Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. If there is a
change in investment objective, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that the Fund's objective will be
met.
Investments
The Fund generally invests in equity securities of established companies, listed
on foreign exchanges, which the Fund's investment adviser, Scudder, Stevens &
Clark, Inc. (the "Adviser"), believes have favorable characteristics.
When the Adviser believes that it is appropriate to do so in order to achieve
the Fund's investment objective of long-term capital growth, the Fund may invest
up to 20% of its total assets in debt securities. Such debt securities include
debt securities of foreign governments, supranational organizations and private
issuers, including bonds denominated in the European Currency Unit (ECU).
Portfolio debt investments will be selected on the basis of, among other things,
yield, credit quality, and the fundamental outlooks for currency and interest
rate trends in different parts of the globe, taking into account the ability to
hedge a degree of currency or local bond price risk. The Fund may purchase
"investment-grade" bonds, which are those rated Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. ("Moody's") or AAA, AA, A or BBB by Standard & Poor's
("S&P") or, if unrated, judged by the Adviser to be of equivalent quality. The
Fund may also invest up to 5% of its total assets in debt securities which are
rated below investment-grade (see "Risk factors").
In addition, the Fund may enter into repurchase agreements, and invest in
illiquid and restricted securities, and may engage in securities lending and
strategic transactions, which may include derivatives.
When the Adviser determines that exceptional conditions exist abroad, the Fund
may, for temporary defensive purposes, invest all or a portion of its assets in
Canadian or U.S. Government obligations or currencies, or securities of
companies incorporated in and having their principal activities in Canada or the
U.S. It is impossible to accurately predict for how long such alternative
strategies may be utilized.
Why invest in the Fund?
The Fund is designed for investors seeking investment opportunity and
diversification through an actively managed portfolio of foreign securities.
One reason that some investors may wish to invest overseas is that certain
foreign economies may grow more rapidly than the U.S. economy and may offer
opportunities for achieving superior investment returns. Another reason is that
foreign stock and bond markets do not always move in step with each other or
with the U.S. markets. A portfolio invested in a number of markets worldwide
will be better diversified than one which is subject to the movements of a
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single market.
Another benefit of the Fund is that it eliminates the complications and extra
costs associated with direct investment in individual foreign securities.
Individuals investing directly in foreign stocks may find it difficult to make
purchases and sales, to obtain current information, to hold securities in
safekeeping, and to convert the value of their investments from foreign
currencies into U.S. dollars. The Fund manages these tasks for the investor.
With a single investment, the investor has a diversified international
investment portfolio, which is actively managed by experienced professionals.
The Adviser has had long experience in dealing in foreign markets and with
brokers and custodian banks around the world. The Adviser also has the benefit
of an established information network and believes the Fund affords a convenient
and cost-effective method of investing internationally.
The Fund's investments are generally denominated in foreign currencies. The
strength or weakness of the U.S. dollar against these currencies is responsible
for part of the Fund's investment performance. If the dollar falls in value
relative to the Japanese yen, for example, the dollar value of a Japanese stock
held in the portfolio will rise even though the price of the stock remains
unchanged. Conversely, if the dollar rises in value relative to the yen, the
dollar value of the Japanese stock will fall.
In addition, the Fund offers all the benefits of the Scudder Family of Funds.
Scudder, Stevens & Clark, Inc. manages a diverse family of pure no-load(TM)
funds and provides a wide range of services to help investors meet their
investment needs. Please refer to "Investment products and services" for
additional information.
International investment experience
The Adviser has been a leader in international investment management and trading
for over 40 years. In addition to the Fund, which was initially incorporated in
Canada in 1953 as the first foreign investment company registered with the
United States Securities and Exchange Commission, its investment company clients
include Scudder International Bond Fund and Scudder International Growth and
Income Fund, which invest internationally, Scudder Global Fund, Scudder Global
Bond Fund, and Scudder Global Discovery Fund, which invest worldwide, Scudder
Greater Europe Growth Fund, which invests primarily in securities of European
companies, The Japan Fund, Inc., which invests primarily in securities of
Japanese companies, Scudder Latin America Fund, which invests primarily in Latin
American issuers, Scudder Pacific Opportunities Fund, which invests primarily in
issuers located in the Pacific Basin, with the exception of Japan, Scudder
Emerging Markets Income Fund, which invests in debt securities issued in
emerging markets, and Scudder Emerging Markets Growth Fund, which invests in
equity investments in emerging markets. The Adviser also manages the assets of
eight closed-end investment companies investing in foreign securities: The
Argentina Fund, Inc., The Brazil Fund, Inc., The Korea Fund, Inc., The Latin
America Dollar Income Fund, Inc., Scudder New Asia Fund, Inc., Scudder New
Europe Fund, Inc., Scudder Spain and Portugal Fund, Inc. and Scudder World
Income Opportunities Fund, Inc. Assets of Scudder's international investment
company clients exceeded $8.5 billion as of June 30, 1997.
6
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Additional information about policies and investments
Investment restrictions
The Fund has adopted certain fundamental policies which may not be changed
without a vote of shareholders and which are designed to reduce the Fund's
investment risk.
The Fund may not borrow money except as a temporary measure for extraordinary or
emergency purposes, and may not make loans except through the lending of
portfolio securities, the purchase of debt securities or through repurchase
agreements.
A complete description of these and other policies and restrictions is contained
under "Investment Restrictions" in the Fund's Statement of Additional
Information.
Repurchase agreements
As a means of earning income for periods as short as overnight, the Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, the Fund acquires securities, subject to the seller's
agreement to repurchase them at a specified time and price.
Securities lending
The Fund may lend portfolio securities to registered broker/dealers as a means
of increasing its income. These loans may not exceed 30% of the Fund's total
assets taken at market value. Loans of portfolio securities will be secured
continuously by collateral consisting of U.S. Government securities or
fixed-income obligations that are maintained at all times in an amount at least
equal to the current market value of the loaned securities. The Fund will earn
any interest or dividends paid on the loaned securities and may share with the
borrower some of the income received on the collateral for the loan or will be
paid a premium for the loan.
Strategic Transactions and derivatives
The Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements), to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio or to enhance potential gain. These
strategies may be executed through the use of derivative contracts. Such
strategies are generally accepted as a part of modern portfolio management and
are regularly utilized by many mutual funds and other institutional investors.
Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur.
In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other financial instruments, purchase and
sell financial futures contracts and options thereon, enter into various
interest rate transactions such as swaps, caps, floors or collars, and enter
into various currency transactions such as currency forward contracts, currency
futures contracts, currency swaps or options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
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potential gain although no more than 5% of the Fund's assets will be committed
to Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments.
Strategic Transactions involving financial futures and options thereon will be
purchased, sold or entered into only for bona fide hedging, risk management or
portfolio management purposes and not for speculative purposes. Please refer to
"Risk factors--Strategic Transactions and derivatives" for more information.
Risk factors
The Fund's risks are determined by the nature of the securities held and the
portfolio management strategies used by the Adviser. The following are
descriptions of certain risks related to the investments and techniques that the
Fund may use from time to time.
Foreign securities. Investments in foreign securities involve special
considerations due to limited information, higher brokerage costs, different
accounting standards, thinner trading markets as compared to domestic markets
and the likely impact of foreign taxes on the income from securities. They may
also entail other risks, such as the possibility of one or more of the
following: imposition of dividend or interest withholding or confiscatory taxes;
currency blockages or transfer restrictions; expropriation, nationalization or
other adverse political or economic developments; less government supervision
and regulation of securities exchanges, brokers and listed companies; and the
difficulty of enforcing obligations in other countries. Purchases of foreign
securities are usually made in foreign currencies and, as a result, the Fund may
incur currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. Further, it
may be more difficult for the Fund's agents to keep currently informed about
corporate actions which may affect the prices of portfolio securities.
Communications between the U.S. and foreign countries may be less reliable than
within the U.S., increasing the risk of delayed settlements of portfolio
transactions or loss of certificates for portfolio securities. The Fund's
ability and decisions to purchase and sell portfolio securities may be affected
by laws or regulations relating to the convertibility and repatriation of
assets.
Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted, or
the value of the securities may decline before the Fund is able to dispose of
them. In the event of the commencement of bankruptcy or insolvency proceedings
with respect to the seller of the securities before repurchase of the securities
under a repurchase agreement, the Fund may encounter delay and incur costs,
including a decline in the value of the securities, before being able to sell
the securities.
Securities lending. From time to time the Fund may lend its portfolio securities
to registered broker/dealers as described above. The risks of lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially. Loans will be made to registered broker/dealers deemed by the
Adviser to be in good standing and will not be made unless, in the judgment of
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the Adviser, the consideration to be received in exchange for such loans would
justify the risk.
Debt securities. The Fund may invest no more than 5% of its total assets in debt
securities which are rated below investment-grade; that is, rated below Baa by
Moody's or BBB by S&P (commonly referred to as "junk bonds"). The lower the
ratings of such debt securities, the greater their risks render them like equity
securities. Moody's considers bonds it rates Baa to have speculative elements as
well as investment-grade characteristics. The Fund may invest in securities
which are rated D by S&P or, if unrated, are of equivalent quality. Securities
rated D may be in default with respect to payment of principal or interest.
Investment results
- --------------------------------------------------------------------------------
Scudder International Fund is designed for long-term investors who can accept
international investment risk. The dollar value of the Fund's portfolio
securities fluctuates with changes in market and economic conditions abroad and
with changes in relative currency values. Changes in the Fund's share price may
not be related to changes in the U.S. stock and bond markets. As with any
long-term investment, the value of shares when sold may be higher or lower than
when purchased. For additional information concerning risks of international
investment, see "Risk factors."
Annual capital changes--past ten years*
- ---------------------------------------
<TABLE>
<CAPTION>
Years Ended Net Asset Capital Gains
March 31, Value/Share Dividends Distributions Capital Change
--------- ----------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
1987 $44.05 -- -- --
1988 33.43 $ 0.82 $ 9.39 - 2.45%
1989 34.79 0.13 3.06 + 13.91
1990 37.00 0.43 3.15 + 15.81
1991 34.69 0.74 1.98 - 0.67
1992 34.36 -- 0.40 - 0.95
1993 35.69 0.83 0.86 + 6.53
1994 42.96 0.69 0.09 + 21.59
1995 39.72 -- 2.42 - 2.02
1996 45.71 0.40 1.18 + 18.19
1997 48.07 1.28 1.19 +7.84
</TABLE>
Growth of a $10,000 investment
------------------------------
<TABLE>
Years Ended Value of Initial Total Return
March 31, 1997 $10,000 Investment Average Annual Cumulative
-------------- ------------------ -------------- ----------
<S> <C> <C> <C> <C>
One Year $ 11,074 +10.74% + 10.74%
Five Years $ 17,322 +11.61% + 73.22%
Ten Years $ 23,456 + 8.90% + 134.56%
</TABLE>
* For definition of "capital change" please see "Distribution and performance
information."
Performance figures are historical and all total return calculations assume
reinvestment of capital gains and income distributions.
The investment return and principal value of the Fund's shares represent past
performance and will vary due to market conditions, and the shares may be worth
more or less at redemption than at original purchase.
- --------------------------------------------------------------------------------
9
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Additional information about policies and investments (cont'd)
Illiquid and restricted securities. The absence of a trading market can make it
difficult to ascertain a market value for illiquid and restricted securities.
Disposing of illiquid and restricted securities may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for the
Fund to sell them promptly at an acceptable price.
Strategic Transactions and derivatives. Strategic Transactions, including
derivative contracts, have risks associated with them including possible default
by the other party to the transaction, illiquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. Use of put and call options may result in losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or for
prices higher than (in the case of put options) or lower than (in the case of
call options) current market values, limit the amount of appreciation the Fund
can realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of currency transactions can result in the Fund
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements or the inability to deliver or
receive a specified currency. The use of options and futures transactions
entails certain other risks. In particular, the variable degree of correlation
between price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on the
hedging instrument may be greater than gains in the value of the Fund's
position. In addition, futures and options markets may not be liquid in all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction without incurring substantial losses, if at all. Although the use of
futures contracts and options transactions for hedging should tend to minimize
the risk of loss due to a decline in the value of the hedged position, at the
same time they tend to limit any potential gain which might result from an
increase in value of such position. Finally, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of Strategic
Transactions would reduce net asset value, and possibly income, and such losses
can be greater than if the Strategic Transactions had not been utilized. The
Strategic Transactions that the Fund may use and some of their risks are
described more fully in the Fund's Statement of Additional Information.
Distribution and performance information
Dividends and capital gains distributions
The Fund intends to distribute dividends from its net investment income and any
net realized capital gains after utilization of capital loss carryforwards, if
any, in November or December to prevent application of federal excise tax. An
additional distribution may be made if necessary. Any dividends or capital gains
distributions declared in October, November or December with a record date in
such a month and paid during the following January will be treated by
shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. According to preference, shareholders may receive
distributions in cash or have them reinvested in additional shares of the Fund.
If an investment is in the form of a retirement plan, all dividends and capital
gains distributions must be reinvested into the account.
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Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Long-term capital gains distributions, if any, are taxable as
long-term capital gains regardless of the length of time shareholders have owned
their shares. Short-term capital gains and any other taxable income
distributions are taxable as ordinary income.
Shareholders may be able to claim a credit or deduction on their income tax
returns for their pro rata portion of qualified taxes paid by the Fund to
foreign countries.
The Fund sends detailed tax information about the amount and type of its
distributions by January 31 of the following year.
Performance information
From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. "Total return" is the change in value
of an investment in the Fund for a specified period. The "average annual total
return" of the Fund is the average annual compound rate of return of an
investment in the Fund assuming the investment has been held for one year, five
years and ten years as of a stated ending date. "Cumulative total return"
represents the cumulative change in value of an investment in the Fund for
various periods. All types of total return calculations assume that all
dividends and capital gains distributions during the period were reinvested in
shares of the Fund. "Capital change" measures return from capital, including
reinvestment of any capital gains distributions but does not include the
reinvestment of dividends. Performance will vary based upon, among other things,
changes in market conditions and the level of the Fund's expenses.
Fund organization
Scudder International Fund is a diversified series of Scudder International
Fund, Inc. (the "Corporation"), an open-end, management investment company
registered under the Investment Company Act of 1940 (the "1940 Act"). The
Corporation is a Maryland corporation whose predecessor was organized in 1953.
The Fund's activities are supervised by the Corporation's Board of Directors.
Shareholders have one vote for each share held on matters on which they are
entitled to vote. The Corporation is not required to and has no current
intention of holding annual shareholder meetings, although special meetings may
be called for purposes such as electing or removing Directors, changing
fundamental investment policies or approving an investment advisory contract.
Shareholders will be assisted in communicating with other shareholders in
connection with removing a Director as if Section 16(c) of the 1940 Act were
applicable.
Investment adviser
The Fund retains the investment management firm of Scudder, Stevens & Clark,
Inc., a Delaware corporation, to manage the Fund's daily investment and business
affairs subject to the policies established by the Board of Directors. The
Directors have overall responsibility for the management of the Fund under
Maryland law.
The Adviser receives an investment management fee for these services. As of
September 5, 1996, the Fund pays the Adviser an annual fee of 0.90% of the first
$500 million of average daily net assets, 0.85% of such assets in excess of $500
million, 0.80% of such assets in excess of $1 billion, 0.75% of such assets in
excess of $2 billion and 0.70% of such assets in excess of $3 billion. The
Fund's fee is graduated so that increases in the Fund's net assets may result in
a lower annual fee rate and decreases in the Fund's net assets may result in a
higher annual fee rate.
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The fee is payable monthly, provided that the Fund will make such interim
payments as may be requested by the Adviser not to exceed 75% of the amount of
the fee then accrued on the books of the Fund and unpaid. The fee is higher than
that charged by many funds which invest primarily in U.S. securities but not
necessarily higher than the fees charged to funds with investment objectives
similar to that of the Fund.
Prior to September 5, 1996 the investment management fee was equal, on an annual
basis, to 0.90% of the first $500 million of average daily net assets, 0.85% of
such assets in excess of $500 million, 0.80% of such assets in excess of $1
billion, and 0.75% of such assets in excess of $2 billion.
For the fiscal year ended March 31, 1997, the Adviser received an investment
management fee of 0.82% of the Fund's average daily net assets.
All the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment services.
Scudder, Stevens & Clark, Inc., is located at 345 Park Avenue, New York, New
York.
Transfer agent
Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Fund.
Underwriter
Scudder Investor Services, Inc., a subsidiary of the Adviser, is the Fund's
principal underwriter. Scudder Investor Services, Inc. confirms, as agent, all
purchases of shares of the Fund. Scudder Investor Relations is a telephone
information service provided by Scudder Investor Services, Inc.
Fund accounting agent
Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
accounting records of the Fund.
Custodian
Brown Brothers Harriman & Co. is the Fund's custodian.
Transaction information
Purchasing shares
Purchases are executed at the next calculated net asset value per share after
the Fund's transfer agent receives the purchase request in good order. Purchases
are made in full and fractional shares. (See "Share price.")
By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
the Fund may hold redemption proceeds until the purchase check has cleared. If
you purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone prior to the expiration of the seven-day period will not
be accepted.
By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552
Your wire instructions must also include:
- -- the name of the fund in which the money is to be invested,
- -- the account number of the fund, and
- -- the name(s) of the account holder(s).
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The account will be established once the application and money order are
received in good order.
You may also make additional investments of $100 or more to your existing
account by wire.
By telephone order. Existing shareholders may purchase shares at a certain day's
price by calling 1-800-225-5163 before the close of regular trading on the New
York Stock Exchange (the "Exchange"), normally 4 p.m. eastern time, on that day.
Orders must be for $10,000 or more and cannot be for an amount greater than four
times the value of your account at the time the order is placed. A confirmation
with complete purchase information is sent shortly after your order is received.
You must include with your payment the order number given at the time the order
is placed. If payment by check or wire is not received within three business
days, the order will be canceled and the shareholder will be responsible for any
loss to the Fund resulting from this cancelation. Telephone orders are not
available for shares held in Scudder IRA accounts and most other Scudder
retirement plan accounts.
By "QuickBuy." If you elected "QuickBuy" for your account, you can call
toll-free to purchase shares. The money will be automatically transferred from
your predesignated bank checking account. Your bank must be a member of the
Automated Clearing House for you to use this service. If you did not elect
"QuickBuy," call 1-800-225-5163 for more information.
To purchase additional shares, call 1-800-225-5163. Purchases may not be for
more than $250,000. Proceeds in the amount of your purchase will be transferred
from your bank checking account in two or three business days following your
call. For requests received by the close of regular trading on the Exchange,
shares will be purchased at the net asset value per share calculated at the
close of trading on the day of your call. "QuickBuy" requests received after the
close of regular trading on the Exchange will begin their processing and be
purchased at the net asset value calculated the following business day.
If you purchase shares by "QuickBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "QuickBuy" transactions are not
available for most retirement plan accounts. However, "QuickBuy" transactions
are available for Scudder IRA accounts.
By exchange. The Fund may be exchanged for shares of other funds in the Scudder
Family of Funds unless otherwise determined by the Board of Directors. Your new
account will have the same registration and address as your existing account.
The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.
You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.
Redeeming shares
The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.
By telephone. This is the quickest and easiest way to sell Fund shares. If you
provided your banking information on your application, you can call to request
that federal funds be sent to your authorized bank account. If you did not
provide your banking information on your application, call 1-800-225-5163 for
more information.
Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
13
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mailed to your bank. There will be a $5 charge for all wire redemptions.
You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.
If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.
In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.
By "QuickSell." If you elected "QuickSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "QuickSell,"
call 1-800-225-5163 for more information.
To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "QuickSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
asset value calculated the following business day.
"QuickSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.
Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $100,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Fund reserves the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call 1-800-225-5163.
Telephone transactions
Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. The Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If the Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine.
Share price
Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share as of
the close of regular trading on the Exchange, normally 4 p.m. eastern time, on
each day the Exchange is open for trading. Net asset value per share is
calculated by dividing the value of total Fund assets, less all liabilities, by
14
<PAGE>
the total number of shares outstanding.
Processing time
All purchase and redemption requests must be received in good order by the
Fund's transfer agent. Those requests received by the close of regular trading
on the Exchange are executed at the net asset value per share calculated at the
close of regular trading that day.
Purchase and redemption requests received after the close of regular trading on
the Exchange will be executed the following business day.
If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.
The Fund will normally send your redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).
Purchase restrictions
Purchases and sales should be made for long-term investment purposes only. The
Fund and Scudder Investor Services, Inc. each reserves the right to reject
purchases of Fund shares (including exchanges) for any reason including when a
pattern of frequent purchases and sales made in response to short-term
fluctuations in the Fund's share price appears evident.
Tax information
A redemption of shares, including an exchange into another Scudder fund, is a
sale of shares and may result in a gain or loss for income tax purposes.
Tax identification number
Be sure to complete the Tax Identification Number section of the Fund's
application when you open an account. Federal tax law requires the Fund to
withhold 31% of taxable dividends, capital gains distributions and redemption
and exchange proceeds from accounts (other than those of certain exempt payees)
without a certified Social Security or tax identification number and certain
other certified information or upon notification from the IRS or a broker that
withholding is required. The Fund reserves the right to reject new account
applications without a certified Social Security or tax identification number.
The Fund also reserves the right, following 30 days' notice, to redeem all
shares in accounts without a certified Social Security or tax identification
number. A shareholder may avoid involuntary redemption by providing the Fund
with a tax identification number during the 30-day notice period.
Minimum balances
Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Directors. Scudder retirement plans and certain
other accounts have similar or lower minimum share balance requirements. A
shareholder may open an account with at least $1,000, if an automatic investment
plan of $100/month is established.
Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, will be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other Information" in the Fund's Statement of
15
<PAGE>
Additional Information for more information.
Third party transactions
If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.
Redemption-in-kind
The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by the Fund
and valued as they are for purposes of computing the Fund's net asset value (a
redemption-in-kind).
If payment is made in securities, a shareholder may incur transaction expenses
in converting these securities to cash. The Corporation has elected, however, to
be governed by Rule 18f-1 under the 1940 Act, as a result of which the Fund is
obligated to redeem shares, with respect to any one shareholder during any
90-day period, solely in cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund at the beginning of the period.
Shareholder benefits
Experienced professional management
Scudder, Stevens & Clark, Inc., one of the nation's most experienced investment
management firms, actively manages your Scudder fund investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities.
A team approach to investing
Scudder International Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders and other investment specialists who
work in Scudder's offices across the United States and abroad. Scudder believes
its team approach benefits Fund investors by bringing together many disciplines
and leveraging Scudder's extensive resources.
Lead Portfolio Manager Irene Cheng joined Scudder in 1993. Ms. Cheng, who has
over 13 years of industry experience, focuses on portfolio management and equity
strategy for Scudder's international equity accounts.
Nicholas Bratt, Portfolio Manager, directs Scudder's overall global equity
investment strategies. Mr. Bratt joined Scudder and the team in 1976.
Carol L. Franklin joined Scudder International Fund's portfolio management team
in 1986. Ms. Franklin, who has over 20 years of experience in finance and
investing, joined Scudder in 1981.
Joan Gregory, Portfolio Manager, focuses on stock selection, a role she has
played since she joined Scudder in 1992. Ms. Gregory, who joined the team in
1994, has been involved with investment in global and international stocks.
Marc Joseph, Portfolio Manager, managed international portfolios prior to
joining Scudder in 1997 and is a member of Scudder's Global Equity Group where
he focuses on managing international equity portfolios. Mr. Joseph has over 10
years of industry experience.
Sheridan Reilly joined Scudder in 1995 and is a member of Scudder's Global
Equity Group. Mr. Reilly has over 10 years of industry experience focusing on
strategies for global portfolios, currency hedging and foreign equity markets.
SAIL(TM)--Scudder Automated Information Line
For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
16
<PAGE>
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.
Investment flexibility
Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. Telephone and
fax redemptions and exchanges are subject to termination and their terms are
subject to change at any time by the Fund or the transfer agent. In some cases,
the transfer agent or Scudder Investor Services, Inc. may impose additional
conditions on telephone transactions.
Personal Counsel(SM) -- A Managed Fund Portfolio Program
If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder, Stevens & Clark, Inc., combines the benefits of a
customized portfolio of pure no-load Scudder Funds with ongoing portfolio
monitoring and individualized service, for an annual fee of generally 1% or less
of assets (with a $1,000 minimum). In addition, it draws upon Scudder's more
than 75-year heritage of providing investment counsel to large corporate and
private clients. If you have $100,000 or more to invest initially and would like
more information about Personal Counsel, please call 1-800-700-0183.
Dividend reinvestment plan
You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.
Shareholder statements
You receive a detailed account statement every time you purchase or redeem
shares. All of your statements should be retained to help you keep track of
account activity and the cost of shares for tax purposes.
Shareholder reports
In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.
To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Fund's Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.
Newsletters
Four times a year, Scudder sends you Perspectives, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.
Scudder Investor Centers
As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Investor Centers in Boca Raton, Boston,
Chicago, New York and San Francisco.
T.D.D. service for the hearing impaired
Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.
17
<PAGE>
<TABLE>
<CAPTION>
Purchases
<S> <C>
Opening Minimum initial investment: $2,500; IRAs $1,000
an account Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds."
by regular mail to: or by express, registered,
or certified mail to:
The Scudder Funds Scudder Shareholder Service
P.O. Box 2291 Center
Boston, MA 42 Longwater Drive
02107-2291 Norwell, MA
02061-1612
o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number. Then call
1-800-225-5163 for instructions.
o In Person Visit one of our Investor Centers to complete your application with the
help of a Scudder representative. Investor Center locations are listed
under Shareholder benefits.
-----------------------------------------------------------------------------------------------------------------------
Purchasing Minimum additional investment: $100; IRAs $50
additional Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
shares See appropriate plan literature.
Make checks o By Mail Send a check with a Scudder investment slip, or with a
payable to "The letter instruction including your account number and the
Scudder Funds." complete Fund name, to the appropriate address listed above.
o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number.
o In Person Visit one of our Investor Centers to make an additional
investment in your Scudder fund account. Investor Center locations
are listed under Shareholder benefits.
o By Telephone Please see Transaction information--Purchasing shares--
By QuickBuy for more details.
o By Automatic You may arrange to make investments on a regular basis
Investment Plan through automatic deductions deductions from your bank
($50 minimum) checking account. Please call 1-800-225-5163 for more
information and an enrollment form.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Exchanges and redemptions
<S> <C>
Exchanging Minimum investments: $2,500 to establish a new account;
shares $100 to exchange among existing accounts
o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).
o By Mail Print or type your instructions and include:
or Fax - the name of the Fund and the account number you are exchanging from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions
by regular mail to: or by express, registered, or by fax to:
or certified mail to:
The Scudder Funds Scudder Shareholder 1-800-821-6234
P.O. Box 2291 Service Center
Boston, MA 02107-2291 42 Longwater Drive
Norwell, MA
02061-1612
-----------------------------------------------------------------------------------------------------------------------
Redeeming o By Telephone To speak with a service representative, call 1-800-225-5163
shares from 8 a.m. to 8 p.m. eastern time or to access SAIL(TM),
Scudder's Automated Information Line, call 1-800-343-2890
(24 hours a day). You may have redemption proceeds sent to your
predesignated bank account, or redemption proceeds of up to
$100,000 sent to your address of record.
o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
A signature guarantee is required for redemptions over $100,000.
See Transaction information--Redeeming shares.
o By Automatic You may arrange to receive automatic cash payments periodically.
Withdrawal Call 1-800-225-5163 for more information and an enrollment form.
Plan
</TABLE>
19
<PAGE>
Scudder tax-advantaged retirement plans
Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.
o Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of up to $2,000 per person for anyone with earned income (up
to $2,000 per individual for married couples if only one spouse has earned
income). Many people can deduct all or part of their contributions from
their taxable income, and all investment earnings accrue on a tax-deferred
basis. The Scudder No-Fee IRA charges you no annual custodial fee.
o 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.
o Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000 for each person covered by
the plans. Plans may be adopted individually or paired to maximize
contributions. These are sometimes known as Keogh plans. The Scudder Keogh
charges you no annual custodial fee.
o 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.
o SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation. The Scudder SEP-IRA charges
you no annual custodial fee.
o Scudder Horizon Plan. A no-load variable annuity that lets you build assets
by deferring taxes on your investment earnings. You can start with $2,500
or more.
Scudder Trust Company (a subsidiary of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA, Profit Sharing
or Pension Plan accounts, call 1-800-225-5163.
The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.
Scudder Investor Relations is a service provided through Scudder Investor
Services, Inc., Distributor.
19
<PAGE>
Directors and Officers
Daniel Pierce*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Venture Capitalist and Consultant
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; President, Exeter Capital Management Corporation
William H. Gleysteen, Jr.
Director; Consultant; Guest Scholar, Brookings Institute
David S. Lee*
Director, Vice President and Assistant Treasurer
William H. Luers
Director; President, The Metropolitan Museum of Art
Wilson Nolen
Director; Consultant
Kathryn L. Quirk*
Director, Vice President and Assistant Secretary
Dr. Gordon Shillinglaw
Director; Professor Emeritus of Accounting, Columbia University
Graduate School of Business
Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor, Columbia
University Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman Emeritus and Director, Kirby Corporation
Elizabeth J. Allan*
Vice President
Joyce E. Cornell*
Vice President
Richard W. Desmond*
Assistant Secretary
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
*Scudder, Stevens & Clark, Inc.
20
<PAGE>
Investment products and services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares**
Managed Shares**
Scudder Government Money Market Series --
Managed Shares**
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares**
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund*
Scudder Massachusetts Limited Term Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan *+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *Not available in all
states. **A class of shares of the Fund. +++ +++A no-load variable annuity
contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised
by Scudder, Stevens & Clark, Inc., are traded on various stock exchanges.
22
<PAGE>
<TABLE>
<CAPTION>
How to contact Scudder
Account Service and Information:
<S> <C>
For existing account service and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For personalized information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information:
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services:
To receive information about this discount brokerage service and to obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Personal Counsel(SM) -- A Managed Fund Portfolio Program:
To receive information about this mutual fund portfolio guidance and management program
Personal Counsel from Scudder -- 1-800-700-0183
Please address all correspondence to:
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Investor Center:
Many shareholders enjoy the personal, one-on-one service of the Scudder
Investor Centers. Check for an Investor Center near you--they can be
found in the following cities:
Boca Raton Chicago San Francisco
Boston New York
Scudder Investor Relations and Scudder Investor Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.
</TABLE>
23
<PAGE>
SCUDDER INTERNATIONAL FUND
A Pure No-Load(TM) (No Sales Charges) Mutual Fund Seeking
Long-Term Growth of Capital Primarily
From Foreign Equity Securities
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the prospectus of Scudder International Fund dated
August 1, 1997, as amended from time to time, a copy of which may be obtained
without charge by writing to Scudder Investor Services, Inc., Two International
Place, Boston, Massachusetts 02110-4103.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
THE FUND'S INVESTMENT OBJECTIVE AND POLICIES..........................................................................1
General Investment Objective and Policies....................................................................1
Investment Restrictions.....................................................................................11
PURCHASES............................................................................................................13
Additional Information About Opening An Account.............................................................13
Additional Information About Making Subsequent Investments..................................................13
Additional Information About Making Subsequent Investments by QuickBuy......................................13
Checks......................................................................................................14
Wire Transfer of Federal Funds..............................................................................14
Share Price.................................................................................................14
Share Certificates..........................................................................................14
Other Information...........................................................................................15
EXCHANGES AND REDEMPTIONS............................................................................................15
Exchanges...................................................................................................15
Redemption By Telephone.....................................................................................16
Redemption by QuickSell.....................................................................................17
Redemption by Mail or Fax...................................................................................17
Redemption-in-Kind..........................................................................................17
Other Information...........................................................................................18
FEATURES AND SERVICES OFFERED BY THE FUND............................................................................18
The Pure No-Load(TM) Concept................................................................................18
Internet access.............................................................................................19
Dividend and Capital Gain Distribution Options..............................................................20
Diversification.............................................................................................20
Scudder Investor Centers....................................................................................20
Reports to Shareholders.....................................................................................21
Transaction Summaries.......................................................................................21
THE SCUDDER FAMILY OF FUNDS..........................................................................................21
SPECIAL PLAN ACCOUNTS................................................................................................25
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans for Corporations and
Self-Employed Individuals..............................................................................25
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for Corporations and Self-Employed Individuals.........25
Scudder IRA: Individual Retirement Account.................................................................26
Scudder 403(b) Plan.........................................................................................27
Automatic Withdrawal Plan...................................................................................27
Group or Salary Deduction Plan..............................................................................27
Automatic Investment Plan...................................................................................27
Uniform Transfers/Gifts to Minors Act.......................................................................28
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS............................................................................28
PERFORMANCE INFORMATION..............................................................................................28
Average Annual Total Return.................................................................................29
Cumulative Total Return.....................................................................................29
Total Return................................................................................................29
Capital Change..............................................................................................30
Comparison of Fund Performance..............................................................................30
FUND ORGANIZATION....................................................................................................34
i
<PAGE>
TABLE OF CONTENTS (continued)
Page
INVESTMENT ADVISER...................................................................................................35
Personal Investments by Employees of the Adviser............................................................38
DIRECTORS AND OFFICERS...............................................................................................38
REMUNERATION.........................................................................................................40
Responsibilities of the Board--Board and Committee Meetings.................................................40
Compensation of Officers and Directors......................................................................41
DISTRIBUTOR..........................................................................................................42
TAXES................................................................................................................43
PORTFOLIO TRANSACTIONS...............................................................................................46
Brokerage Commissions.......................................................................................46
Portfolio Turnover..........................................................................................47
NET ASSET VALUE......................................................................................................47
ADDITIONAL INFORMATION...............................................................................................48
Experts.....................................................................................................48
Other Information...........................................................................................48
FINANCIAL STATEMENTS.................................................................................................49
APPENDIX
</TABLE>
ii
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
(See "Investment objective and policies" and "Additional information
about policies and investments" in the Fund's prospectus.)
Scudder International Fund (the "Fund"), a series of Scudder
International Fund, Inc. (the "Corporation"), is a pure no-load(TM), open-end
management investment company which continuously offers and redeems its shares
at net asset value. It is a company of the type commonly known as a mutual fund.
The Fund is a diversified series of the Corporation.
General Investment Objective and Policies
The Fund's investment objective is to seek long-term growth of capital
primarily through a diversified portfolio of marketable foreign equity
securities. These securities are selected primarily to permit the Fund to
participate in non-U.S. companies and economies with prospects for growth.
The Fund invests in companies, wherever organized, which do business
primarily outside the United States.
The Fund intends to diversify investments among several countries and
to have represented in the portfolio, in substantial proportions, business
activities in not less than three different countries. The Fund does not intend
to concentrate investments in any particular industry.
Except as otherwise indicated, the Fund's investment objective and
policies are not fundamental and may be changed without a vote of shareholders.
If there is a change in investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current financial position and needs. There can be no assurance that the Fund's
objective will be met.
The major portion of the Fund's assets consists of equity securities of
established companies listed on recognized exchanges; the Adviser expects this
condition to continue, although the Fund may invest in other securities. Up to
20% of the total assets of the Fund may be invested in debt securities of
foreign governments, supranational organizations and private issuers, including
bonds denominated in the European Currency Unit (ECU). In determining the
location of the principal activities and interests of a company, the Adviser
takes into account such factors as the location of the company's assets,
personnel, sales and earnings. In selecting securities for the Fund's portfolio,
the Adviser seeks to identify companies whose securities prices do not
adequately reflect their established positions in their fields. In analyzing
companies for investment, the Adviser ordinarily looks for one or more of the
following characteristics: above-average earnings growth per share, high return
on invested capital, healthy balance sheets and overall financial strength,
strong competitive advantages, strength of management and general operating
characteristics which will enable the companies to compete successfully in the
marketplace. Investment decisions are made without regard to arbitrary criteria
as to minimum asset size, debt-equity ratios or dividend history of portfolio
companies.
The Fund may invest in any type of security including, but not limited
to shares, preferred or common; bonds and other evidences of indebtedness; and
other securities of issuers wherever organized, and not excluding evidences of
indebtedness of governments and their political subdivisions. The Fund, in view
of its investment objective, intends under normal conditions to maintain a
portfolio consisting primarily of a diversified list of equity securities.
Under exceptional economic or market conditions abroad, the Fund may,
for temporary defensive purposes, until normal conditions return, invest all or
a major portion of its assets in Canadian or U.S. Government obligations or
currencies, or securities of companies incorporated in and having their
principal activities in such countries. It is impossible to accurately predict
for how long such alternate strategies may be utilized.
Foreign securities such as those purchased by the Fund may be subject
to foreign government taxes which could reduce the yield on such securities,
although a shareholder of the Fund may, subject to certain limitations, be
entitled to claim a credit or deduction for U.S. federal income tax purposes for
his or her proportionate share of such foreign taxes paid by the Fund. (See
"TAXES.")
<PAGE>
Foreign Securities. The Fund is intended to provide individual and institutional
investors with an opportunity to invest a portion of their assets in a
diversified group of securities of companies, wherever organized, which do
business primarily outside the U.S., and foreign governments. The Adviser
believes that diversification of assets on an international basis decreases the
degree to which events in any one country, including the U.S., will affect an
investor's entire investment holdings. In certain periods since World War II,
many leading foreign economies and foreign stock market indices have grown more
rapidly than the U.S. economy and leading U.S. stock market indices, although
there can be no assurance that this will be true in the future. Because of the
Fund's investment policy, the Fund is not intended to provide a complete
investment program for an investor.
Investors should recognize that investing in foreign securities
involves certain special considerations, including those set forth below, which
are not typically associated with investing in U.S. securities and which may
favorably or unfavorably affect the Fund's performance. As foreign companies are
not generally subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
companies, there may be less publicly available information about a foreign
company than about a domestic company. Many foreign securities markets, while
growing in volume of trading activity, have substantially less volume than the
U.S. market, and securities of some foreign issuers are less liquid and more
volatile than securities of domestic issuers. Similarly, volume and liquidity in
most foreign bond markets is less than in the U.S. and, at times, volatility of
price can be greater than in the U.S. Fixed commissions on some foreign
securities exchanges and bid to asked spreads in foreign bond markets are
generally higher than commissions or bid to asked spreads on U.S. markets,
although the Fund will endeavor to achieve the most favorable net results on its
portfolio transactions. There is generally less government supervision and
regulation of securities exchanges, brokers and listed companies than in the
U.S. It may be more difficult for the Fund's agents to keep currently informed
about corporate actions which may affect the prices of portfolio securities.
Communications between the U.S. and foreign countries may be less reliable than
within the U.S., thus increasing the risk of delayed settlements of portfolio
transactions or loss of certificates for portfolio securities. Payment for
securities without delivery may be required in certain foreign markets. In
addition, with respect to certain foreign countries, there is the possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect U.S. investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. The management of the Fund seeks to mitigate the risks
associated with the foregoing considerations through continuous professional
management.
Foreign Currencies. Because investments in foreign securities usually will
involve currencies of foreign countries, and because the Fund may hold foreign
currencies and forward contracts, futures contracts and options on foreign
currencies and foreign currency futures contracts, the value of the assets of
the Fund as measured in U.S. dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
the Fund may incur costs in connection with conversions between various
currencies. Although the Fund values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. It will do so from time to time, and investors should
be aware of the costs of currency conversion. Although foreign exchange dealers
do not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to resell that currency to the dealer. The Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into options or forward or futures contracts to purchase or sell
foreign currencies.
Debt Securities. When the Adviser believes that it is appropriate to do so in
order to achieve the Fund's objective of long-term capital growth, the Fund may
invest up to 20% of its total assets in debt securities including bonds of
foreign governments, supranational organizations and private issuers, including
bonds denominated in the ECU. Portfolio debt investments will be selected on the
basis of, among other things, yield, credit quality, and the fundamental
outlooks for currency and interest rate trends in different parts of the globe,
taking into account the ability to hedge a degree of currency or local bond
price risk. The Fund may purchase "investment-grade" bonds, which are those
rated Aaa, Aa, A or Baa by Moody's Investors Service, Inc. ("Moody's) or AAA,
AA, A or BBB by Standard & Poor's ("S&P") or, if unrated, judged to be of
equivalent quality as determined by the Adviser. Moody's considers bonds it
rates Baa to have speculative elements as well as investment-grade
characteristics.
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High Yield/High Risk Bonds. The Fund may also purchase, to a limited extent,
debt securities which are rated below investment-grade, that is, rated below Baa
by Moody's or below BBB by S&P and unrated securities, which usually entail
greater risk (including the possibility of default or bankruptcy of the issuers
of such securities), generally involve greater volatility of price and risk of
principal and income, and may be less liquid, than securities in the higher
rating categories. The lower the ratings of such debt securities, the greater
their risks render them like equity securities. The Fund will invest no more
than 5% of its total assets in securities rated BB or lower by Moody's or Ba by
S&P, and may invest in securities which are rated D by S&P. Securities rated D
may be in default with respect to payment of principal or interest. See the
Appendix to this Statement of Additional Information for a more complete
description of the ratings assigned by ratings organizations and their
respective characteristics.
An economic downturn could disrupt the high yield market and impair the
ability of issuers to repay principal and interest. Also, an increase in
interest rates would have a greater adverse impact on the value of such
obligations than on higher quality debt securities. During an economic downturn
or period of rising interest rates, highly leveraged issues may experience
financial stress which would adversely affect their ability to service their
principal and interest payment obligations. Prices and yields of high yield
securities will fluctuate over time and, during periods of economic uncertainty,
volatility of high yield securities may adversely affect the Fund's net asset
value. In addition, investments in high yield zero coupon or pay-in-kind bonds,
rather than income-bearing high yield securities, may be more speculative and
may be subject to greater fluctuations in value due to changes in interest
rates.
The trading market for high yield securities may be thin to the extent
that there is no established retail secondary market. A thin trading market may
limit the ability of the Fund to accurately value high yield securities in its
portfolio and to dispose of those securities. Adverse publicity and investor
perceptions may decrease the values and liquidity of high yield securities.
These securities may also involve special registration responsibilities,
liabilities and costs, and liquidity and valuation difficulties.
Credit quality in the high-yield securities market can change suddenly
and unexpectedly, and even recently-issued credit ratings may not fully reflect
the actual risks posed by a particular high-yield security. For these reasons,
it is the policy of the Adviser not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of the Fund's
investment objective by investment in such securities may be more dependent on
the Adviser's credit analysis than is the case for higher quality bonds. Should
the rating of a portfolio security be downgraded, the Adviser will determine
whether it is in the best interest of the Fund to retain or dispose of such
security.
Prices for below investment-grade securities may be affected by
legislative and regulatory developments. For example, new federal rules require
savings and loan institutions to gradually reduce their holdings of this type of
security. Also, Congress has from time to time considered legislation which
would restrict or eliminate the corporate tax deduction for interest payments in
these securities and regulate corporate restructurings. Such legislation may
significantly depress the prices of outstanding securities of this type.
On average, for the fiscal year ended March 31, 1997, the Fund's
holdings in debt securities rated below investment grade by one or more
nationally recognized rating services, or judged by the Adviser to be of
equivalent quality to the established categories of such rating services
comprised less than 5% of the Fund's total assets. For more information
regarding tax issues related to high yield securities, see "TAXES."
Illiquid and Restricted Securities. The Fund may occasionally purchase
securities other than in the open market. While such purchases may often offer
attractive opportunities for investment not otherwise available on the open
market, the securities so purchased are often "restricted securities" or "not
readily marketable," i.e., securities which cannot be sold to the public without
registration under the Securities Act of 1933 or the availability of an
exemption from registration (such as Rules 144 or 144A) or because they are
subject to other legal or contractual delays in or restrictions on resale.
Repurchase Agreements. The Fund may enter into repurchase agreements with any
member bank of the Federal Reserve System and any broker-dealer which is
recognized as a reporting government securities dealer if the creditworthiness
of the bank or broker-dealer has been determined by the Adviser to be at least
as high as that of other obligations the Fund may purchase or to be at least
equal to that of issuers of commercial paper rated within the two highest grades
assigned by Moody's or S&P.
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A repurchase agreement provides a means for the Fund to earn income on
funds for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., the Fund) acquires a security ("Obligation") and the seller
agrees, at the time of sale, to repurchase the Obligation at a specified time
and price. Securities subject to a repurchase agreement are held in a segregated
account and the value of such securities kept at least equal to the repurchase
price on a daily basis. The repurchase price may be higher than the purchase
price, the difference being income to the Fund, or the purchase and repurchase
prices may be the same, with interest at a stated rate due to the Fund together
with the repurchase price upon repurchase. In either case, the income to the
Fund is unrelated to the interest rate on the Obligation itself. Obligations
will be held by the Custodian or in the Federal Reserve Book Entry system.
For purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"), a repurchase agreement is deemed to be a loan from the Fund to the
seller of the Obligation subject to the repurchase agreement and is therefore
subject to the Fund's investment restriction applicable to loans. It is not
clear whether a court would consider the Obligation purchased by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the Obligation before repurchase of the Obligation under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Delays may involve loss of interest or decline in price of
the Obligation. If the court characterizes the transaction as a loan and the
Fund has not perfected a security interest in the Obligation, the Fund may be
required to return the Obligation to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt instrument purchased for the Fund, the
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller of the
Obligation. Apart from the risk of bankruptcy or insolvency proceedings, there
is also the risk that the seller may fail to repurchase the Obligation, in which
case the Fund may incur a loss if the proceeds to the Fund of the sale to a
third party are less than the repurchase price. However, if the market value of
the Obligation subject to the repurchase agreement becomes less than the
repurchase price (including interest), the Fund will direct the seller of the
Obligation to deliver additional securities so that the market value of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that the Fund will be unsuccessful in seeking
to enforce the seller's contractual obligation to deliver additional securities.
Lending of Portfolio Securities. The Fund may seek to increase its income by
lending portfolio securities. Such loans may be made to registered
broker/dealers and are required to be secured continuously by collateral in
cash, U.S. Government Securities and liquid high grade debt obligations
maintained on a current basis at an amount at least equal to the market value
and accrued interest of the securities loaned. The Fund has the right to call a
loan and obtain the securities loaned on no more than five days' notice. During
the existence of a loan, the Fund will continue to receive the equivalent of any
distributions paid by the issuer on the securities loaned and will also receive
compensation based on investment of the collateral. As with other extensions of
credit there are risks of delay in recovery or even loss of rights in the
collateral should the borrower of the securities fail financially. However, the
loans will be made only to firms deemed by the Adviser to be in good standing.
The value of the securities loaned will not exceed 30% of the value of the
Fund's total assets at the time any loan is made.
Strategic Transactions and Derivatives. The Fund may, but is not required to,
utilize various other investment strategies as described below to hedge various
market risks (such as interest rates, currency exchange rates, and broad or
specific equity or fixed-income market movements), to manage the effective
maturity or duration of fixed-income securities in the Fund's portfolio, or to
enhance potential gain. These strategies may be executed through the use of
derivative contracts. Such strategies are generally accepted as a part of modern
portfolio management and are regularly utilized by many mutual funds and other
institutional investors. Techniques and instruments may change over time as new
instruments and strategies are developed or regulatory changes occur.
In the course of pursuing these investment strategies, the Fund may
purchase and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other financial instruments,
purchase and sell financial futures contracts and options thereon, enter into
various interest rate transactions such as swaps, caps, floors or collars, and
enter into various currency transactions such as currency forward contracts,
currency futures contracts, currency swaps or options on currencies or currency
futures (collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
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<PAGE>
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
potential gain although no more than 5% of the Fund's assets will be committed
to Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. Strategic Transactions involving
financial futures and options thereon will be purchased, sold or entered into
only for bona fide hedging, risk management or portfolio management purposes and
not for speculative purposes.
Strategic Transactions, including derivative contracts, have risks
associated with them including possible default by the other party to the
transaction, illiquidity and, to the extent the Adviser's view as to certain
market movements is incorrect, the risk that the use of such Strategic
Transactions could result in losses greater than if they had not been used. Use
of put and call options may result in losses to the Fund, force the sale or
purchase of portfolio securities at inopportune times or for prices higher than
(in the case of put options) or lower than (in the case of call options) current
market values, limit the amount of appreciation the Fund can realize on its
investments or cause the Fund to hold a security it might otherwise sell. The
use of currency transactions can result in the Fund incurring losses as a result
of a number of factors including the imposition of exchange controls, suspension
of settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.
General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of Fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."
A put option gives the purchaser of the option, upon payment of a
premium, the right to sell, and the writer the obligation to buy, the underlying
security, commodity, index, currency or other instrument at the exercise price.
For instance, the Fund's purchase of a put option on a security might be
designed to protect its holdings in the underlying instrument (or, in some
cases, a similar instrument) against a substantial decline in the market value
by giving the Fund the right to sell such instrument at the option exercise
price. A call option, upon payment of a premium, gives the purchaser of the
option the right to buy, and the seller the obligation to sell, the underlying
instrument at the exercise price. The Fund's purchase of a call option on a
security, financial future, index, currency or other instrument might be
intended to protect the Fund against an increase in the price of the underlying
instrument that it intends to purchase in the future by fixing the price at
which it may purchase such instrument. An American style put or call option may
be exercised at any time during the option period while a European style put or
call option may be exercised only upon expiration or during a fixed period prior
thereto. The Fund is authorized to purchase and sell exchange listed options and
over-the-counter options ("OTC options"). Exchange listed options are issued by
a regulated intermediary such as the Options Clearing Corporation ("OCC"), which
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guarantees the performance of the obligations of the parties to such options.
The discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries.
With certain exceptions, OCC issued and exchange listed options
generally settle by physical delivery of the underlying security or currency,
although in the future cash settlement may become available. Index options and
Eurodollar instruments are cash settled for the net amount, if any, by which the
option is "in-the-money" (i.e., where the value of the underlying instrument
exceeds, in the case of a call option, or is less than, in the case of a put
option, the exercise price of the option) at the time the option is exercised.
Frequently, rather than taking or making delivery of the underlying instrument
through the process of exercising the option, listed options are closed by
entering into offsetting purchase or sale transactions that do not result in
ownership of the new option.
The Fund's ability to close out its position as a purchaser or seller
of an OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.
The hours of trading for listed options may not coincide with the hours
during which the underlying financial instruments are traded. To the extent that
the option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.
OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. The
Fund will only sell OTC options (other than OTC currency options) that are
subject to a buy-back provision permitting the Fund to require the Counterparty
to sell the option back to the Fund at a formula price within seven days. The
Fund expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.
Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails to
make or take delivery of the security, currency or other instrument underlying
an OTC option it has entered into with the Fund or fails to make a cash
settlement payment due in accordance with the terms of that option, the Fund
will lose any premium it paid for the option as well as any anticipated benefit
of the transaction. Accordingly, the Adviser must assess the creditworthiness of
each such Counterparty or any guarantor or credit enhancement of the
Counterparty's credit to determine the likelihood that the terms of the OTC
option will be satisfied. The Fund will engage in OTC option transactions only
with U.S. government securities dealers recognized by the Federal Reserve Bank
of New York as "primary dealers" or broker/dealers, domestic or foreign banks or
other financial institutions which have received (or the guarantors of the
obligation of which have received) a short-term credit rating of A-1 from S&P or
P-1 from Moody's or an equivalent rating from any nationally recognized
statistical rating organization ("NRSRO") or, in the case of OTC currency
transactions, are determined to be of equivalent credit quality by the Adviser.
The staff of the SEC currently takes the position that OTC options purchased by
the Fund, and portfolio securities "covering" the amount of the Fund's
obligation pursuant to an OTC option sold by it (the cost of the sell-back plus
the in-the-money amount, if any) are illiquid, and are subject to the Fund's
limitation on investing no more than 10% of its total assets in illiquid
securities.
If the Fund sells a call option, the premium that it receives may serve
as a partial hedge, to the extent of the option premium, against a decrease in
the value of the underlying securities or instruments in its portfolio or will
increase the Fund's income. The sale of put options can also provide income.
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The Fund may purchase and sell call options on securities including
U.S. Treasury and agency securities, mortgage-backed securities, corporate debt
securities, equity securities (including convertible securities) and Eurodollar
instruments that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets, and on securities indices, currencies and futures
contracts. All calls sold by the Fund must be "covered" (i.e., the Fund must own
the securities or futures contract subject to the call) or must meet the asset
segregation requirements described below as long as the call is outstanding.
Even though the Fund will receive the option premium to help protect it against
loss, a call sold by the Fund exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require the Fund to hold a security or
instrument which it might otherwise have sold.
The Fund may purchase and sell put options on securities including U.S.
Treasury and agency securities, mortgage-backed securities, foreign sovereign
debt, corporate debt securities, equity securities (including convertible
securities) and Eurodollar instruments (whether or not it holds the above
securities in its portfolio), and on securities indices, currencies and futures
contracts other than futures on individual corporate debt and individual equity
securities. The Fund will not sell put options if, as a result, more than 50% of
the Fund's assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.
General Characteristics of Futures. The Fund may enter into financial futures
contracts or purchase or sell put and call options on such futures as a hedge
against anticipated interest rate, currency or equity market changes, for
duration management and for risk management purposes. Futures are generally
bought and sold on the commodities exchanges where they are listed with payment
of initial and variation margin as described below. The sale of a futures
contract creates a firm obligation by the Fund, as seller, to deliver to the
buyer the specific type of financial instrument called for in the contract at a
specific future time for a specified price (or, with respect to index futures
and Eurodollar instruments, the net cash amount). Options on futures contracts
are similar to options on securities except that an option on a futures contract
gives the purchaser the right in return for the premium paid to assume a
position in a futures contract and obligates the seller to deliver such
position.
The Fund's use of financial futures and options thereon will in all
cases be consistent with applicable regulatory requirements and in particular
the rules and regulations of the Commodity Futures Trading Commission and will
be entered into only for bona fide hedging, risk management (including duration
management) or other portfolio management purposes. Typically, maintaining a
futures contract or selling an option thereon requires the Fund to deposit with
a financial intermediary as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of the Fund.
If the Fund exercises an option on a futures contract it will be obligated to
post initial margin (and potential subsequent variation margin) for the
resulting futures position just as it would for any position. Futures contracts
and options thereon are generally settled by entering into an offsetting
transaction but there can be no assurance that the position can be offset prior
to settlement at an advantageous price, nor that delivery will occur.
The Fund will not enter into a futures contract or related option
(except for closing transactions) if, immediately thereafter, the sum of the
amount of its initial margin and premiums on open futures contracts and options
thereon would exceed 5% of the Fund's total assets (taken at current value);
however, in the case of an option that is in-the-money at the time of the
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. The segregation requirements with respect to futures contracts and
options thereon are described below.
Options on Securities Indices and Other Financial Indices. The Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
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of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.
Currency Transactions. The Fund may engage in currency transactions with
Counterparties in order to hedge the value of portfolio holdings denominated in
particular currencies against fluctuations in relative value. Currency
transactions include forward currency contracts, exchange listed currency
futures, exchange listed and OTC options on currencies, and currency swaps. A
forward currency contract involves a privately negotiated obligation to purchase
or sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional difference among two
or more currencies and operates similarly to an interest rate swap, which is
described below. The Fund may enter into currency transactions with
Counterparties which have received (or the guarantors of the obligations which
have received) a credit rating of A-1 or P-1 by S&P or Moody's, respectively, or
that have an equivalent rating from a NRSRO or are determined to be of
equivalent credit quality by the Adviser.
The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
The Fund will not enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.
The Fund may also cross-hedge currencies by entering into transactions
to purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing
or anticipated holdings of portfolio securities, the Fund may also engage in
proxy hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Adviser considers that
the Austrian schilling is correlated to the German deutschemark (the "D-mark"),
the Fund holds securities denominated in schillings and the Adviser believes
that the value of schillings will decline against the U.S. dollar, the Adviser
may enter into a commitment or option to sell D-marks and buy dollars. Currency
hedging involves some of the same risks and considerations as other transactions
with similar instruments. Currency transactions can result in losses to the Fund
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived
correlation between various currencies may not be present or may not be present
during the particular time that the Fund is engaging in proxy hedging. If the
Fund enters into a currency hedging transaction, the Fund will comply with the
asset segregation requirements described below.
Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to the Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
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rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.
Combined Transactions. The Fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Adviser, it is in the best interests of the Fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the Adviser's judgment that the combined strategies will reduce
risk or otherwise more effectively achieve the desired portfolio management
goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.
Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter are interest rate, currency and index swaps and the purchase or
sale of related caps, floors and collars. The Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, to protect against currency fluctuations, as a
duration management technique or to protect against any increase in the price of
securities the Fund anticipates purchasing at a later date. The Fund intends to
use these transactions as hedges and not as speculative investments and will not
sell interest rate caps or floors where it does not own securities or other
instruments providing the income stream the Fund may be obligated to pay.
Interest rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A currency swap is an agreement to exchange cash flows on a notional
amount of two or more currencies based on the relative value differential among
them and an index swap is an agreement to swap cash flows on a notional amount
based on changes in the values of the reference indices. The purchase of a cap
entitles the purchaser to receive payments on a notional principal amount from
the party selling such cap to the extent that a specified index exceeds a
predetermined interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from the party
selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.
The Fund will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the Adviser
and the Fund believe such obligations do not constitute senior securities under
the 1940 Act, and, accordingly, will not treat them as being subject to its
borrowing restrictions. The Fund will not enter into any swap, cap, floor or
collar transaction unless, at the time of entering into such transaction, the
unsecured long-term debt of the Counterparty, combined with any credit
enhancements, is rated at least A by S&P or Moody's or has an equivalent rating
from a NRSRO or is determined to be of equivalent credit quality by the Adviser.
If there is a default by the Counterparty, the Fund may have contractual
remedies pursuant to the agreements related to the transaction. The swap market
has grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps, floors and collars are more recent innovations for
which standardized documentation has not yet been fully developed and,
accordingly, they are less liquid than swaps.
Eurodollar Instruments. The Fund may make investments in Eurodollar instruments.
Eurodollar instruments are U.S. dollar-denominated futures contracts or options
thereon which are linked to the London Interbank Offered Rate ("LIBOR"),
although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for borrowings. The Fund
might use Eurodollar futures contracts and options thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked.
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Risks of Strategic Transactions Outside the U.S. When conducted outside the
U.S., Strategic Transactions may not be regulated as rigorously as in the U.S.,
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the U.S. of data on which to
make trading decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the U.S., (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the U.S., and (v) lower trading volume and
liquidity.
Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate cash or liquid
assets with its custodian to the extent Fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by the Fund to
pay or deliver securities or assets must be covered at all times by the
securities, instruments or currency required to be delivered, or, subject to any
regulatory restrictions, an amount of cash or liquid securities at least equal
to the current amount of the obligation must be segregated with the custodian.
The segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. For
example, a call option written by the Fund will require the Fund to hold the
securities subject to the call (or securities convertible into the needed
securities without additional consideration) or to segregate cash or liquid
securities sufficient to purchase and deliver the securities if the call is
exercised. A call option sold by the Fund on an index will require the Fund to
own portfolio securities which correlate with the index or to segregate cash or
liquid assets equal to the excess of the index value over the exercise price on
a current basis. A put option written by the Fund requires the Fund to segregate
cash or liquid assets equal to the exercise price.
Except when the Fund enters into a forward contract for the purchase or
sale of a security denominated in a particular currency, which requires no
segregation, a currency contract which obligates the Fund to buy or sell
currency will generally require the Fund to hold an amount of that currency or
liquid securities denominated in that currency equal to the Fund's obligations
or to segregate cash or liquid assets equal to the amount of the Fund's
obligation.
OTC options entered into by the Fund, including those on securities,
currency, financial instruments or indices and OCC issued and exchange listed
index options, will generally provide for cash settlement. As a result, when the
Fund sells these instruments it will only segregate an amount of assets equal to
its accrued net obligations, as there is no requirement for payment or delivery
of amounts in excess of the net amount. These amounts will equal 100% of the
exercise price in the case of a non cash-settled put, the same as an OCC
guaranteed listed option sold by the Fund, or the in-the-money amount plus any
sell-back formula amount in the case of a cash-settled put or call. In addition,
when the Fund sells a call option on an index at a time when the in-the-money
amount exceeds the exercise price, the Fund will segregate, until the option
expires or is closed out, cash or cash equivalents equal in value to such
excess. OCC issued and exchange listed options sold by the Fund other than those
above generally settle with physical delivery, or with an election of either
physical delivery or cash settlement and the Fund will segregate an amount of
assets equal to the full value of the option. OTC options settling with physical
delivery, or with an election of either physical delivery or cash settlement
will be treated the same as other options settling with physical delivery.
In the case of a futures contract or an option thereon, the Fund must
deposit initial margin and possible daily variation margin in addition to
segregating assets sufficient to meet its obligation to purchase or provide
securities or currencies, or to pay the amount owed at the expiration of an
index-based futures contract. Such assets may consist of cash, cash equivalents,
liquid debt or equity securities or other acceptable assets.
With respect to swaps, the Fund will accrue the net amount of the
excess, if any, of its obligations over its entitlements with respect to each
swap on a daily basis and will segregate an amount of cash or liquid assets
having a value equal to the accrued excess. Caps, floors and collars require
segregation of assets with a value equal to the Fund's net obligation, if any.
Strategic Transactions may be covered by other means when consistent
with applicable regulatory policies. The Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, the Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating assets if the Fund held a
futures or forward contract, it could purchase a put option on the same futures
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or forward contract with a strike price as high or higher than the price of the
contract held. Other Strategic Transactions may also be offset in combinations.
If the offsetting transaction terminates at the time of or after the primary
transaction no segregation is required, but if it terminates prior to such time,
assets equal to any remaining obligation would need to be segregated.
The Fund's activities involving Strategic Transactions may be limited
by the requirements of Subchapter M of the Internal Revenue Code for
qualification as a regulated investment company. (See "TAXES.")
Investment Restrictions
The policies set forth below are fundamental policies of the Fund and
may not be changed without the approval of a majority of the Fund's outstanding
shares. As used in this Statement of Additional Information, a "majority of the
outstanding voting securities of the Fund" means the lesser of (1) 67% or more
of the voting securities present at such meeting, if the holders of more than
50% of the outstanding voting securities of the Fund are present or represented
by proxy; or (2) more than 50% of the outstanding voting securities of the Fund.
The Fund may not:
(1) with respect to 75% of its total assets, taken at market
value, purchase more than 10% of the voting securities of any
one issuer, or invest more than 5% of the value of its total
assets in the securities of any one issuer, except obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment
companies;
(2) borrow money, except as a temporary measure for extraordinary
or emergency purposes or except in connection with reverse
repurchase agreements; provided that the Fund maintains asset
coverage of 300% for all borrowings;
(3) act as an underwriter of securities issued by others, except
to the extent that it may be deemed an underwriter in
connection with the disposition of portfolio securities of the
Fund;
(4) make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase
agreements and the purchase of debt securities in accordance
with its investment objectives and investment policies may be
deemed to be loans;
(5) purchase or sell real estate (except that the Fund may invest
in (i) securities of companies which deal in real estate or
mortgages, and (ii) securities secured by real estate or
interests therein, and that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of
the Fund's ownership of securities); and
(6) purchase or sell physical commodities or contracts relating to
physical commodities.
The Fund will not as a matter of nonfundamental policy:
(a) purchase or retain securities of any open-end investment
company, or securities of closed-end investment companies
except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchases, or
except when such purchase, though not made in the open market,
is part of a plan of merger, consolidation, reorganization or
acquisition of assets; in any event the Fund may not purchase
more than 3% of the outstanding voting securities of another
investment company, may not invest more than 5% of its assets
in another investment company, and may not invest more than
10% of its assets in other investment companies;
(b) pledge, mortgage or hypothecate its assets in excess, together
with permitted borrowings, of 1/3 of its total assets;
(c) purchase or retain securities of an issuer any of whose
officers, directors, trustees or security holders is an
officer, director or trustee of the Fund or a member, officer,
director or trustee of the investment adviser of the Fund if
one or more of such individuals owns beneficially more than
one-half of one percent (1/2%) of the outstanding shares or
securities or both (taken at market value) of such issuer and
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such individuals owning more than one-half of one percent
(1/2%) of such shares or securities together own beneficially
more than 5% of such shares or securities or both;
(d) purchase securities on margin or make short sales, unless, by
virtue of its ownership of other securities, it has the right
to obtain securities equivalent in kind and amount to the
securities sold and, if the right is conditional, the sale is
made upon the same conditions, except in connection with
arbitrage transactions and except that the Fund may obtain
such short-term credits as may be necessary for the clearance
of purchases and sales of securities;
(e) invest more than 10% of its total assets in securities which
are not readily marketable, the disposition of which is
restricted under Federal securities laws, or in repurchase
agreements not terminable within 7 days, and the Fund will not
invest more than 10% of its total assets in restricted
securities;
(f) purchase securities of any issuer with a record of less than
three years continuous operations, including predecessors, and
in equity securities which are not readily marketable except
U.S. Government securities, and obligations issued or
guaranteed by any foreign government or its agencies or
instrumentalities, if such purchase would cause the
investments of the Fund in all such issuers to exceed 5% of
the total assets of the Fund taken at market value;
(g) buy options on securities or financial instruments, unless the
aggregate premiums paid on all such options held by the Fund
at any time do not exceed 20% of its net assets; or sell put
options on securities if, as a result, the aggregate value of
the obligations underlying such put options would exceed 50%
of the Fund's net assets;
(h) enter into futures contracts or purchase options thereon
unless immediately after the purchase, the value of the
aggregate initial margin with respect to all futures contracts
entered into on behalf of the Fund and the premiums paid for
options on futures contracts does not exceed 5% of the fair
market value of the Fund's total assets; provided, that in the
case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in computing
the 5% limit;
(i) invest in oil, gas or other mineral leases, or exploration or
development programs (although it may invest in issuers which
own or invest in such interests);
(j) borrow money in excess of 5% of its total assets (taken at
market value) except for temporary or emergency purposes or
borrow other than from banks;
(k) purchase warrants if as a result warrants taken at the lower
of cost or market value would represent more than 5% of the
value of the Fund's total net assets or more than 2% of its
net assets in warrants that are not listed on the New York or
American Stock Exchanges or on an exchange with comparable
listing requirements (for this purpose, warrants attached to
securities will be deemed to have no value);
(l) invest more than 20% of its total assets in debt securities
(including convertible securities) or more than 5% of its
total assets in securities rated BB/Ba or below by Moody's or
S&P or the equivalent;
(m) make securities loans if the value of such securities loaned
exceeds 30% of the value of the Fund's total assets at the
time the loan is made; all loans of portfolio securities will
be fully collateralized and marked to market daily; or
(n) purchase or sell real estate limited partnership interests.
In addition to the foregoing restrictions, it is not the policy of the
Fund to concentrate its investments in any particular industry and the Fund's
management does not intend to make acquisitions in particular industries which
would increase the percentage of the market value of the Fund's assets above 25%
for any one industry. The Fund may not deviate from such policy without a vote
of a majority of the outstanding shares as provided by the 1940 Act.
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Any investment restrictions herein which involve a maximum percentage
of securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after, and is caused by, an acquisition
or encumbrance of securities or assets of, or borrowings by, the Fund.
PURCHASES
(See "Purchases" and "Transaction information" in the Fund's prospectus.)
Additional Information About Opening An Account
Clients having a regular investment counsel account with the Adviser or
its affiliates and members of their immediate families, officers and employees
of the Adviser or of any affiliated organization and their immediate families,
members of the National Association of Securities Dealers, Inc. ("NASD") and
banks may, if they prefer, subscribe initially for at least $2,500 of Fund
shares through Scudder Investor Services, Inc. by letter, telegram, fax, TWX, or
telephone.
Shareholders of other Scudder funds who have submitted an account
application and have certified a tax identification number, clients having a
regular investment counsel account with the Adviser or its affiliates and
members of their immediate families, officers and employees of the Adviser or of
any affiliated organization and their immediate families, members of the NASD,
and banks may open an account by wire. These investors must call 1-800-225-5163
to get an account number. During the call the investor will be asked to indicate
the Fund name, amount to be wired ($2,500 minimum), name of bank or trust
company from which the wire will be sent, the exact registration of the new
account, the tax identification number or Social Security number, address and
telephone number. The investor must then call the bank to arrange a wire
transfer to The Scudder Funds, Boston, MA 02101, ABA Number 011000028, DDA
Account 9903-5552. The investor must give the Scudder fund name, account name
and the new account number. Finally, the investor must send a completed and
signed application to the Fund promptly.
The minimum initial purchase amount is less than $2,500 under certain
special plan accounts.
Additional Information About Making Subsequent Investments
Subsequent purchase orders for $10,000 or more and for an amount not
greater than four times the value of the shareholder's account may be placed by
telephone, telegram, etc. by established shareholders (except by Scudder
Individual Retirement Account (IRA), Scudder pension and profit sharing, Scudder
401(k) and Scudder 403(b) Plan holders), members of the NASD, and banks. Orders
placed in this manner may be directed to any Scudder Investor Services, Inc.
office listed in the Fund's prospectus. A two-part invoice of the purchase will
be mailed out promptly following receipt of a request to buy. Payment should be
attached to a copy of the invoice for proper identification. Federal regulations
require that payment be received within three (3) business days. If payment is
not received within that time, the shares may be canceled. In the event of such
cancellation or cancellation at the purchaser's request, the purchaser will be
responsible for any loss incurred by the Fund or the principal underwriter by
reason of such cancellation. If the purchaser is a shareholder, the Fund shall
have the authority, as agent of the shareholder, to redeem shares in the account
in order to reimburse the Fund or the principal underwriter for the loss
incurred. Net losses on such transactions which are not recovered from the
purchaser will be absorbed by the principal underwriter. Any net profit on the
liquidation of unpaid shares will accrue to the Fund.
Additional Information About Making Subsequent Investments by QuickBuy
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the QuickBuy program, may purchase shares of the Fund by telephone. Through
this service shareholders may purchase up to $250,000. To purchase shares by
QuickBuy, shareholders should call before 4 p.m. eastern time. Proceeds in the
amount of your purchase will be transferred from your bank checking account two
or three business days following your call. For requests received by the close
of regular trading on the Exchange, shares will be purchased at the net asset
value per share calculated at the close of trading on the day of your call.
QuickBuy requests received after the close of regular trading on the Exchange
will begin their processing and be purchased at the net asset value calculated
the following business day. If you purchase shares by QuickBuy and redeem them
within seven days of the purchase, the Fund may hold the redemption proceeds for
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a period of up to seven business days. If you purchase shares and there are
insufficient funds in your bank account the purchase will be canceled and you
will be subject to any losses or fees incurred in the transaction. QuickBuy
transactions are not available for most retirement plan accounts. However,
QuickBuy transactions are available for Scudder IRA accounts.
In order to request purchases by QuickBuy, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish QuickBuy may so indicate on the application.
Existing shareholders who wish to add QuickBuy to their account may do so by
completing an QuickBuy Enrollment Form. After sending in an enrollment form
shareholders should allow for 15 days for this service to be available.
The Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine. and to discourage fraud. To the extent
that the Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Fund will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Checks
A certified check is not necessary, but checks are only accepted
subject to collection at full face value in U.S. funds and must be drawn on, or
payable through, a U.S. bank.
If shares of a Fund are purchased by a check which proves to be
uncollectible, the Fund reserves the right to cancel the purchase immediately
and the purchaser will be responsible for any loss incurred by the Fund or the
principal underwriter by reason of such cancellation. If the purchaser is a
shareholder, the Fund shall have the authority, as agent of the shareholder, to
redeem shares in the account in order to reimburse the Fund or the principal
underwriter for the loss incurred. Investors whose orders have been canceled may
be prohibited from or restricted in placing future orders in any of the Scudder
funds.
Wire Transfer of Federal Funds
To obtain the net asset value determined as of the close of regular
trading on the New York Stock Exchange ("the Exchange") on a selected day, your
bank must forward federal funds by wire transfer and provide the required
account information so as to be available to the Fund prior to the regular close
of trading on the Exchange (normally 4 p.m. eastern time).
The bank sending an investor's federal funds by bank wire may charge
for the service. Presently, the Fund pays a fee for receipt by the Custodian of
"wired funds," but the right to charge investors for this service is reserved.
Boston banks are presently closed on certain holidays although the
Exchange may be open. These holidays are Martin Luther King, Jr. Day (the 3rd
Monday in January), Columbus Day (the 2nd Monday in October) and Veterans' Day
(November 11). Investors are not able to purchase shares by wiring federal funds
on such holidays because the Custodian is not open to receive such federal funds
on behalf of the Fund.
Share Price
Purchases will be filled without sales charge at the net asset value
next computed after receipt of the purchase order in good order. Net asset value
normally will be computed as of the close of regular trading on each day the
Exchange is open for trading. Orders received after the close of regular trading
on the Exchange will be executed at the next business day's net asset value. If
the order has been placed by a member of the NASD, other than Scudder Investor
Services, Inc., it is the responsibility of that member broker, rather than the
Fund, to forward the purchase order to Scudder Service Corporation (the
"Transfer Agent") in Boston by the close of regular trading on the Exchange.
Share Certificates
Due to the desire of the Fund's management to afford ease of
redemption, certificates will not be issued to indicate ownership in the Fund.
Share certificates now in a shareholder's possession may be sent to the Fund's
Transfer Agent for cancellation and credit to such shareholder's account.
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Shareholders who prefer may hold the certificates in their possession until they
wish to exchange or redeem such shares.
Other Information
If purchases or redemptions of Fund shares are arranged and settlement
is made at an investor's election through a member of the NASD, other than
Scudder Investor Services, Inc., that member may, at its discretion, charge a
fee for that service.
The Board of Directors of the Fund and Scudder Investor Services, Inc.,
the Fund's principal underwriter, each has the right to limit the amount of
purchases by and to refuse to sell to any person and each may suspend or
terminate the offering of shares of the Fund at any time.
The "Tax Identification Number" section of the Application must be
completed when opening an account. Applications and purchase orders without a
certified tax identification number and certain other certified information
(e.g., from exempt organizations a certification of exempt status), may be
returned to the investor if a correct, certified tax identification number and
certain other required certificates are not supplied.
The Fund may issue shares at net asset value in connection with any
merger or consolidation with, or acquisition of the assets of, any investment
company or personal holding company, subject to the requirements of the 1940
Act.
EXCHANGES AND REDEMPTIONS
(See "Exchanges and redemptions" and "Transaction information"
in the Fund's prospectus.)
Exchanges
Exchanges are comprised of a redemption from one Scudder fund and a
purchase into another Scudder fund. The purchase side of the exchange either may
be an additional investment into an existing account or may involve opening a
new account in the other fund. When an exchange involves a new account, the new
account will be established with the same registration, tax identification
number, address, telephone redemption option, "Scudder Automated Information
Line" (SAIL) transaction authorization and dividend option as the existing
account. Other features will not carry over automatically to the new account.
Exchanges to a new fund account must be for a minimum of $2,500. When an
exchange represents an additional investment into an existing account, the
account receiving the exchange proceeds must have identical registration,
address, and account options/features as the account of origin. Exchanges into
an existing account must be for $100 or more. If the account receiving the
exchange proceeds is to be different in any respect, the exchange request must
be in writing and must contain an original signature guarantee as described
under "Transaction Information--Redeeming shares--Signature guarantees" in the
Fund's prospectus.
Exchange orders received before the close of regular trading on the
Exchange on any business day ordinarily will be executed at respective net asset
values determined on that day. Exchange orders received after the close of
regular trading on the Exchange will be executed on the following business day.
Investors may also request, at no extra charge, to have exchanges
automatically executed on a predetermined schedule from one Scudder fund to an
existing account in another Scudder fund, at current net asset value, through
Scudder's Automatic Exchange Program. Exchanges must be for a minimum of $50.
Shareholders may add this free feature over the telephone or in writing.
Automatic Exchanges will continue until the shareholder requests by telephone or
in writing to have the feature removed, or until the originating account is
depleted. The Corporation and the Transfer Agent each reserves the right to
suspend or terminate the privilege of the Automatic Exchange Program at any
time.
There is no charge to the shareholder for any exchange described above.
An exchange into another Scudder fund is a redemption of shares and therefore
may result in tax consequences (gain or loss) to the shareholder, and the
proceeds of such an exchange may be subject to backup withholding. (See
"TAXES.")
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Investors currently receive the exchange privilege, including exchange
by telephone, automatically without having to elect it. The Fund employs
procedures, including recording telephone calls, testing a caller's identity,
and sending written confirmation of telephone transactions, designed to give
reasonable assurance that instructions communicated by telephone are genuine,
and to discourage fraud. To the extent that the Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine. The Fund
and the Transfer Agent each reserves the right to suspend or terminate the
privilege of exchanging by telephone or fax at any time.
The Scudder Funds into which investors may make an exchange are listed
under "THE SCUDDER FAMILY OF FUNDS" herein. Before making an exchange,
shareholders should obtain from Scudder Investor Services, Inc. a prospectus of
the Scudder fund into which the exchange is being contemplated.
Scudder retirement plans may have different exchange requirements.
Please refer to appropriate plan literature.
Redemption By Telephone
Shareholders currently receive the right, automatically without having
to elect it, to redeem by telephone up to $100,000 to their address of record.
Shareholders may also request by telephone to have the proceeds mailed or wired
to their predesignated bank account. In order to request wire redemptions by
telephone, shareholders must have completed and returned to the Transfer Agent
the application, including the designation of a bank account to which the
redemption proceeds are to be sent.
(a) NEW INVESTORS wishing to establish the telephone redemption
privilege must complete the appropriate section on the
application.
(b) EXISTING SHAREHOLDERS (except those who are Scudder IRA, Scudder
pension and profit-sharing, Scudder 401(k) and Scudder 403(b)
Planholders) who wish to establish telephone redemption to a
predesignated bank account or who want to change the bank account
previously designated to receive redemption proceeds should
either return a Telephone Redemption Option Form (available upon
request), or send a letter identifying the account and specifying
the exact information to be changed. The letter must be signed
exactly as the shareholder's name(s) appears on the account. An
original signature and an original signature guarantee are
required for each person in whose name the account is registered.
If a request for a redemption to a shareholder's bank account is made
by telephone or fax, payment will be by Federal Reserve bank wire to the bank
account designated on the application, unless a request is made that the
redemption check be mailed to the designated bank account. There will be a $5
charge for all wire redemptions.
Note: Investors designating a savings bank to receive their telephone
redemption proceeds are advised that if the savings bank is not a participant in
the Federal Reserve System, redemption proceeds must be wired through a
commercial bank which is a correspondent of the savings bank. As this may delay
receipt by the shareholder's account, it is suggested that investors wishing to
use a savings bank discuss wire procedures with their bank and submit any
special wire transfer information with the telephone redemption authorization.
If appropriate wire information is not supplied, redemption proceeds will be
mailed to the designated bank.
The Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that the Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Fund will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
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<PAGE>
Redemption by QuickSell
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and have elected to participate in
the QuickSell program may sell shares of the Fund by telephone. To sell shares
by QuickSell, shareholders should call before 4 p.m. eastern time. Redemptions
must be for at least $250. Proceeds in the amount of your redemption will be
transferred to your bank checking account in two or three business days
following your call. Shares will be redeemed at the net asset value per share
calculated at the close of trading on the day of your call. QuickSell requests
after 4 p.m. eastern time will begin their processing the following business
day. QuickSell transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.
In order to request redemptions by QuickSell, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account to which redemption proceeds will be credited. New
investors wishing to establish QuickSell may so indicate on the application.
Existing shareholders who wish to add QuickSell to their account may do so by
completing an QuickSell Enrollment Form. After sending in an enrollment form,
shareholders should allow for 15 days for this service to be available.
The Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that the Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Fund will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Redemption by Mail or Fax
Any existing share certificates representing shares being redeemed must
accompany a request for redemption and be duly endorsed or accompanied by a
proper stock assignment form with signature(s) guaranteed.
In order to ensure proper authorization before redeeming shares, the
Transfer Agent may request additional documents such as, but not restricted to,
stock powers, trust instruments, certificates of death, appointments as
executor, certificates of corporate authority and waivers of tax (required in
some states when settling estates).
It is suggested that shareholders holding share certificates or shares
registered in other than individual names contact the Transfer Agent prior to
any redemptions to ensure that all necessary documents accompany the request.
When shares are held in the name of a corporation, trust, fiduciary agent,
attorney or partnership, the Transfer Agent requires, in addition to the stock
power, certified evidence of authority to sign. These procedures are for the
protection of shareholders and should be followed to ensure prompt payment.
Redemption requests must not be conditional as to date or price of the
redemption. Proceeds of a redemption will be sent within seven (7) business days
after receipt by the Transfer Agent of a request for redemption that complies
with the above requirements. Delays of more than seven (7) days of payment for
shares tendered for repurchase or redemption may result, but only until the
purchase check has cleared.
The requirements for IRA redemptions are different from those for
regular accounts. For more information call 1-800-225-5163.
Redemption-in-Kind
The Fund reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase order by
making payment in whole or in part in readily marketable securities chosen by
the Fund and valued as they are for purposes of computing the Fund's net asset
value (a redemption-in-kind). If payment is made in securities, a shareholder
may incur transaction expenses in converting these securities into cash. The
Corporation has elected, however, to be governed by Rule 18f-1 under the 1940
Act as a result of which the Fund is obligated to redeem shares, with respect to
any one shareholder during any 90 day period, solely in cash up to the lesser of
$250,000 or 1% of the net asset value of that Fund at the beginning of the
period.
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<PAGE>
Other Information
If a shareholder redeems all shares in the account after the record
date of a dividend, the shareholder receives in addition to the net asset value
thereof, all declared but unpaid dividends thereon. The value of shares redeemed
or repurchased may be more or less than the shareholder's cost depending on the
net asset value at the time of redemption or repurchase. The Fund does not
impose a redemption or repurchase charge, although a wire charge may be
applicable for redemption proceeds wired to an investor's bank account.
Redemption of shares, including redemptions undertaken to effect an exchange for
shares of another Scudder fund, may result in tax consequences (gain or loss) to
the shareholder and the proceeds of such redemptions may be subject to backup
withholding. (See "TAXES.")
Shareholders who wish to redeem shares from Special Plan Accounts
should contact the employer, trustee or custodian of the Plan for the
requirements.
The determination of net asset value may be suspended at times and a
shareholder's right to redeem shares and to receive payment therefore may be
suspended at times (a) during which the Exchange is closed, other than customary
weekend and holiday closings, (b) during which trading on the Exchange is
restricted for any reason, (c) during which an emergency exists as a result of
which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (d) during which the Securities and Exchange
Commission (the "Commission"), by order permits a suspension of the right of
redemption or a postponement of the date of payment or of redemption; provided
that applicable rules and regulations of the Commission (or any succeeding
governmental authority) shall govern as to whether the conditions prescribed in
(b), (c) or (d) exist.
If transactions at any time reduce a shareholder's account balance in
the Fund to below $2,500 in value, the Fund will notify the shareholder that,
unless the account balance is brought up to at least $2,500, the Fund will
redeem all shares and close the account by sending redemption proceeds to the
shareholder. The shareholder has sixty days to bring the account balance up to
$2,500 before any action will be taken by the Fund. (This policy applies to
accounts of new shareholders, but does not apply to certain Special Plan
Accounts.) The Directors have the authority to change the minimum account size.
FEATURES AND SERVICES OFFERED BY THE FUND
(See "Shareholder benefits" in the Fund's prospectus.)
The Pure No-Load(TM) Concept
Investors are encouraged to be aware of the full ramifications of
mutual fund fee structures, and of how Scudder distinguishes its funds from the
vast majority of mutual funds available today. The primary distinction is
between load and no-load funds.
Load funds generally are defined as mutual funds that charge a fee for
the sale and distribution of fund shares. There are three types of loads:
front-end loads, back-end loads, and asset-based 12b-1 fees. 12b-1 fees are
distribution-related fees charged against fund assets and are distinct from
service fees, which are charged for personal services and/or maintenance of
shareholder accounts. Asset-based sales charges and service fees are typically
paid pursuant to distribution plans adopted under Rule 12b-1 under the 1940 Act.
A front-end load is a sales charge, which can be as high as 8.50% of
the amount invested. A back-end load is a contingent deferred sales charge,
which can be as high as 8.50% of either the amount invested or redeemed. The
maximum front-end or back-end load varies, and depends upon whether or not a
fund also charges a 12b-1 fee and/or a service fee or offers investors various
sales-related services such as dividend reinvestment. The maximum charge for a
12b-1 fee is 0.75% of a fund's average annual net assets, and the maximum charge
for a service fee is 0.25% of a fund's average annual net assets.
A no-load fund does not charge a front-end or back-end load, but can
charge a small 12b-1 fee and/or service fee against fund assets. Under the NASD
Rules of Fair Practice, a mutual fund can call itself a "no-load" fund only if
the 12b-1 fee and/or service fee does not exceed 0.25% of a fund's average
annual net assets.
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<PAGE>
Because Scudder funds do not pay any asset-based sales charges or
service fees, Scudder developed and trademarked the phrase pure no-load(TM) to
distinguish Scudder funds from other no-load mutual funds. Scudder pioneered the
no-load concept when it created the nation's first no-load fund in 1928, and
later developed the nation's first family of no-load mutual funds.
The following chart shows the potential long-term advantage of
investing $10,000 in a Scudder pure no-load fund over investing the same amount
in a load fund that collects an 8.50% front-end load, a load fund that collects
only a 0.75% 12b-1 and/or service fee, and a no-load fund charging only a 0.25%
12b-1 and/or service fee. The hypothetical figures in the chart show the value
of an account assuming a constant 10% rate of return over the time periods
indicated and reinvestment of dividends and distributions.
<TABLE>
<CAPTION>
Scudder No-Load Fund with
YEARS Pure No-Load(TM) 8.50% Load Fund Load Fund with 0.25% 12b-1
Fund 0.75% 12b-1 Fee Fee
--------------- --------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C>
10 $ 25,937 $ 23,733 $ 24,222 $ 25,354
15 41,772 38,222 37,698 40,371
20 67,275 61,557 58,672 64,282
</TABLE>
Investors are encouraged to review the fee tables on page 2 of the
Fund's prospectus for more specific information about the rates at which
management fees and other expenses are assessed.
Internet access
World Wide Web Site -- The address of the Scudder Funds site is
http://funds.scudder.com. The site offers guidance on global investing and
developing strategies to help meet financial goals and provides access to the
Scudder investor relations department via e-mail. The site also enables users to
access or view fund prospectuses and profiles with links between summary
information in Profiles and details in the Prospectus. Users can fill out new
account forms on-line, order free software, and request literature on funds.
The site is designed for interactivity, simplicity and maneuverability.
A section entitled "Planning Resources" provides information on asset
allocation, tuition, and retirement planning to users who fill out interactive
"worksheets." Investors can easily establish a "Personal Page," that presents
price information, updated daily, on funds they're interested in following. The
"Personal Page" also offers easy navigation to other parts of the site. Fund
performance data from both Scudder and Lipper Analytical Services, Inc. are
available on the site. Also offered on the site is a news feature, which
provides timely and topical material on the Scudder Funds.
Scudder has communicated with shareholders and other interested parties
on Prodigy since 1988 and has participated since 1994 in GALT's Networth
"financial marketplace" site on the Internet. The firm made Scudder Funds
information available on America Online in early 1996.
Account Access -- Scudder is among the first mutual fund families to allow
shareholders to manage their fund accounts through the World Wide Web. Scudder
Fund shareholders can view a snapshot of current holdings, review account
activity and move assets between Scudder Fund accounts.
Scudder's personal portfolio capabilities -- known as SEAS (Scudder
Electronic Account Services) -- are accessible only by current Scudder Fund
shareholders who have set up a Personal Page on Scudder's Web site. Using a
secure Web browser, shareholders sign on to their account with their Social
Security number and their SAIL password. As an additional security measure,
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<PAGE>
users can change their current password or disable access to their portfolio
through the World Wide Web.
An Account Activity option reveals a financial history of transactions
for an account, with trade dates, type and amount of transaction, share price
and number of shares traded. For users who wish to trade shares between Scudder
Funds, the Fund Exchange option provides a step-by-step procedure to exchange
shares among existing fund accounts or to new Scudder Fund accounts.
A Call Me(TM) feature enables users to speak with a Scudder Investor
Relations telephone representative while viewing their account on the Web site.
In order to use the Call MeTM feature, an individual must have two phone lines
and enter on the screen the phone number that is not being used to connect to
the Internet. They are connected to the next available Scudder Investor
Relations representative from 8 a.m. to 8 p.m. eastern time.
Dividend and Capital Gain Distribution Options
Investors have freedom to choose whether to receive cash or to reinvest
any dividends from net investment income or distributions from realized capital
gains in additional shares of the Fund. A change of instructions for the method
of payment may be given to the Transfer Agent in writing at least five days
prior to a dividend record date. Shareholders may change their dividend option
by calling 1-800-225-5163 or by sending written instructions to the Transfer
Agent. Please include your account number with your written request. See "How to
Contact Scudder" in the Prospectus for the address.
Reinvestment is usually made at the closing net asset value determined
on the business day following the record date. Investors may leave standing
instructions with the Transfer Agent designating their option for either
reinvestment or cash distribution of any income dividends or capital gains
distributions. If no election is made, dividends and distributions will be
invested in additional shares of the Fund.
Investors may also have dividends and distributions automatically
deposited to their predesignated bank account through Scudder's
DistributionsDirect Program. Shareholders who elect to participate in the
DistributionsDirect Program, and whose predesignated checking account of record
is with a member bank of Automated Clearing House Network (ACH) can have income
and capital gain distributions automatically deposited to their personal bank
account usually within three business days after the Fund pays its distribution.
A DistributionsDirect request form can be obtained by calling 1-800-225-5163.
Confirmation Statements will be mailed to shareholders as notification that
distributions have been deposited.
Investors choosing to participate in Scudder's Automatic Withdrawal
Plan must reinvest any dividends or capital gains. For most retirement plan
accounts, the reinvestment of dividends and capital gains is also required.
Diversification
Your investment represents an interest in a large, diversified
portfolio of carefully selected securities. Diversification may protect you
against the possible risks associated with concentrating in fewer securities or
in a specific market section.
Scudder Investor Centers
Investors may visit any of the Investor Centers maintained by Scudder
Investor Services, Inc. listed in the Fund's Prospectus. The Centers are
designed to provide individuals with services during any business day. Investors
may pick up literature or find assistance with opening an account, adding monies
or special options to existing accounts, making exchanges within the Scudder
Family of Funds, redeeming shares or opening retirement plans. Checks should not
be mailed to the Centers but should be mailed to "The Scudder Funds" at the
address listed under "How to contact Scudder" in the prospectus.
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<PAGE>
Reports to Shareholders
The Fund issues to its shareholders audited semiannual financial
statements, including a list of investments held and statements of assets and
liabilities, operations, changes in net assets and financial highlights. The
Fund presently intends to distribute to shareholders informal quarterly reports
during the intervening quarters, containing certain performance and investment
highlights of the Fund. Each distribution will be accompanied by a brief
explanation of the source of the distribution.
Transaction Summaries
Annual summaries of all transactions in each Fund account are available
to shareholders. The summaries may be obtained by calling 1-800-225-5163.
THE SCUDDER FAMILY OF FUNDS
(See "Investment products and services" in the Funds' prospectuses.)
The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
Initial purchases in most Scudder funds must be at least $2,500 or $1,000 in the
case of IRAs. Subsequent purchases must be for $100 or more. Minimum investments
for special plan accounts may be lower.
MONEY MARKET
Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and consistent therewith to provide current income
through investment in a supervised portfolio of U.S. Government and
U.S. Government guaranteed obligations with maturities of not more than
762 calendar days. The Fund intends to seek to maintain a constant net
asset value of $1.00 per share, although in certain circumstances this
may not be possible.
Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability
of capital, and consistent therewith, to maintain the liquidity of
capital and to provide current income through investment in a
supervised portfolio of short-term debt securities. SCIT intends to
seek to maintain a constant net asset value of $1.00 per share,
although in certain circumstances this may not be possible.
Scudder Money Market Series seeks to provide investors with as high a
level of current income as is consistent with its investment polices
and with preservation of capital and liquidity. The Fund seeks to
maintain a constant net asset value of $1.00 per share and declares
dividends daily. The institutional class of shares of this Fund is not
within the Scudder Family of Funds.
Scudder Government Money Market Series seeks to provide investors with
as high a level of current income as is consistent with its investment
polices and with preservation of capital and liquidity. The Fund
invests exclusively in obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities that have remaining
maturities of not more than 397 calendar days and certain repurchase
agreements. The institutional class of shares of this Fund is not
within the Scudder Family of Funds.
INCOME
Scudder Emerging Markets Income Fund seeks to provide high current
income and, secondarily, long-term capital appreciation through
investments primarily in high-yielding debt securities issued in
emerging markets.
Scudder Global Bond Fund seeks to provide total return with an emphasis
on current income by investing primarily in high-grade bonds
denominated in foreign currencies and the U.S. dollar. As a secondary
objective, the Fund will seek capital appreciation.
21
<PAGE>
Scudder GNMA Fund seeks to provide investors with high current income
from a portfolio of high-quality GNMA securities.
Scudder High Yield Bond Fund seeks to provide a high level of current
income and, secondarily, capital appreciation through investment
primarily in below investment grade domestic debt securities.
Scudder Income Fund seeks to earn a high level of income consistent
with the prudent investment of capital through a flexible investment
program emphasizing high-grade bonds.
Scudder International Bond Fund seeks to provide income from a
portfolio of high-grade bonds denominated in foreign currencies. As a
secondary objective, the Fund seeks protection and possible enhancement
of principal value by actively managing currency, bond market and
maturity exposure and by security selection.
Scudder Short Term Bond Fund seeks to provide a higher and more stable
level of income than is normally provided by money market investments,
and more price stability than investments in intermediate- and
long-term bonds.
Scudder Zero Coupon 2000 Fund seeks to provide as high an investment
return over a selected period as is consistent with the minimization of
reinvestment risks through investments primarily in zero coupon
securities.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund ("STFMF") is designed to provide investors
with income exempt from regular federal income tax while seeking
stability of principal. STFMF seeks to maintain a constant net asset
value of $1.00 per share, although in certain circumstances this may
not be possible.
Scudder Tax Free Money Market Series seeks to provide investors with as
high a level of current income that cannot be subjected to federal
income tax by reason of federal law as is consistent with its
investment policies and with preservation of capital and liquidity. The
institutional class of shares of this Fund is not within the Scudder
Family of Funds.
Scudder California Tax Free Money Fund* is designed to provide
California taxpayers income exempt from California state and regular
federal income taxes, and seeks stability of capital and the
maintenance of a constant net asset value of $1.00 per share, although
in certain circumstances this may not be possible.
Scudder New York Tax Free Money Fund* is designed to provide New York
taxpayers income exempt from New York state, New York City and regular
federal income taxes, and seeks stability of capital and the
maintenance of a constant net asset value of $1.00 per share, although
in certain circumstances this may not be possible.
TAX FREE
Scudder High Yield Tax Free Fund seeks to provide high income which is
exempt from regular federal income tax by investing in municipal
securities.
Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a
high degree of principal stability.
Scudder Managed Municipal Bonds seeks to provide income which is exempt
from regular federal income tax primarily through investments in
high-grade, long-term municipal securities.
- ----------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
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<PAGE>
Scudder Medium Term Tax Free Fund seeks to provide a high level of
income free from regular federal income taxes and to limit principal
fluctuation by investing in high-grade municipal securities of
intermediate maturities.
Scudder California Tax Free Fund* seeks to provide income exempt from
both California and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
California state, municipal and local government obligations.
Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide as
high a level of income exempt from Massachusetts personal and regular
federal income tax as is consistent with a high degree of principal
stability.
Scudder Massachusetts Tax Free Fund* seeks to provide income exempt
from both Massachusetts and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
Massachusetts state, municipal and local government obligations.
Scudder New York Tax Free Fund* seeks to provide income exempt from New
York state, New York City and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
investments in New York state, municipal and local government
obligations.
Scudder Ohio Tax Free Fund* seeks to provide income exempt from both
Ohio and regular federal income taxes through the professional and
efficient management of a portfolio consisting of Ohio state, municipal
and local government obligations.
Scudder Pennsylvania Tax Free Fund* seeks to provide income exempt from
both Pennsylvania and regular federal income taxes through a portfolio
consisting of Pennsylvania state, municipal and local government
obligations.
GROWTH AND INCOME
Scudder Balanced Fund seeks to provide a balance of growth and income,
as well as long-term preservation of capital, from a diversified
portfolio of equity and fixed income securities.
Scudder Growth and Income Fund seeks to provide long-term growth of
capital, current income, and growth of income through a portfolio
invested primarily in common stocks and convertible securities by
companies which offer the prospect of growth of earnings while paying
current dividends.
GROWTH
Scudder Classic Growth Fund seeks long-term growth of capital with
reduced share price volatility compared to other growth mutual funds.
Scudder Development Fund seeks to achieve long-term growth of capital
primarily through investments in marketable securities, principally
common stocks, of relatively small or little-known companies which in
the opinion of management have promise of expanding their size and
profitability or of gaining increased market recognition for their
securities, or both.
Scudder Emerging Markets Growth Fund seeks long-term growth of capital
primarily through equity investment in emerging markets around the
globe.
Scudder Global Discovery Fund seeks above-average capital appreciation
over the long term by investing primarily in the equity securities of
small companies located throughout the world.
- ----------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
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<PAGE>
Scudder Global Fund seeks long-term growth of capital primarily through
a diversified portfolio of marketable equity securities selected on a
worldwide basis. It may also invest in debt securities of U.S.
and foreign issuers. Income is an incidental consideration.
Scudder Gold Fund seeks maximum return (principal change and income)
consistent with investing in a portfolio of gold-related equity
securities and gold.
Scudder Greater Europe Growth Fund seeks long-term growth of capital
through investments primarily in the equity securities of European
companies.
Scudder International Fund seeks long-term growth of capital through
investment principally in a diversified portfolio of marketable equity
securities selected primarily to permit participation in non-U.S.
companies and economies with prospects for growth. It also invests in
fixed-income securities of foreign governments and companies, with a
view toward total investment return.
Scudder International Growth and Income Fund seeks long-term growth of
capital and current income primarily from foreign equity.
Scudder Large Company Growth Fund seeks to provide long-term growth of
capital through investment primarily in equity securities of large U.S.
growth companies.
Scudder Large Company Value Fund seeks to maximize long-term capital
appreciation through a broad and flexible investment program
emphasizing common stocks.
Scudder Latin America Fund seeks to provide long-term capital
appreciation through investment primarily in the securities of Latin
American issuers.
Scudder Micro Cap Fund seeks long-term growth of capital by investing
primarily in a diversified portfolio of U.S. micro-cap stocks.
Scudder Pacific Opportunities Fund seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.
Scudder Small Company Value Fund invests for long-term growth of
capital by seeking out undervalued stocks of small U.S. companies.
Scudder 21st Century Growth Fund seeks long-term growth of capital by
investing primarily in securities of emerging growth companies poised
to be leaders in the 21st century.
Scudder Value Fund seeks long-term growth of capital through investment
in undervalued equity securities.
The Japan Fund, Inc. seeks capital appreciation through investment
in Japanese securities, primarily in common stocks of Japanese
companies.
ASSET ALLOCATION
Scudder Pathway Series: Conservative Portfolio seeks primarily current
income and secondarily long-term growth of capital. In pursuing these
objectives, the Portfolio will, under normal market conditions, invest
substantially in a select mix of Scudder bond mutual funds, but will
have some exposure to Scudder equity mutual funds.
Scudder Pathway Series: Balanced Portfolio seeks a balance of growth
and income by investing in a select mix of Scudder money market, bond
and equity mutual funds.
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Scudder Pathway Series: Growth Portfolio seeks to provide investors
with long-term growth of capital. In pursuing this objective, the
Portfolio will, under normal market conditions, invest predominantly in
a select mix of Scudder equity mutual funds designed to provide
long-term growth.
Scudder Pathway Series: International Portfolio seeks maximum total
return. Total return consists of any capital appreciation plus dividend
income and interest. To achieve this objective, the Portfolio invests
in a select mix of international and global Scudder Funds.
The net asset values of most Scudder Funds can be found daily in the
"Mutual Funds" section of The Wall Street Journal under "Scudder Funds," and in
other leading newspapers throughout the country. Investors will notice the net
asset value and offering price are the same, reflecting the fact that no sales
commission or "load" is charged on the sale of shares of the Scudder Funds. The
latest seven-day yields for the money-market funds can be found every Monday and
Thursday in the "Money-Market Funds" section of The Wall Street Journal. This
information also may be obtained by calling the Scudder Automated Information
Line (SAIL) at 1-800-343-2890.
The Scudder Family of Funds offers many conveniences and services,
including: active professional investment management; broad and diversified
investment portfolios; pure no-load funds with no commissions to purchase or
redeem shares or Rule 12b-1 distribution fees; individual attention from a
service representative of Scudder Investor Relations; and easy telephone
exchanges into other Scudder funds.
SPECIAL PLAN ACCOUNTS
(See "Scudder tax-advantaged retirement plans," "Purchases--By Automatic
Investment Plan" and "Exchanges and redemptions--By Automatic Withdrawal Plan"
in the Fund's prospectus.)
Detailed information on any Scudder investment plan, including the
applicable charges, minimum investment requirements and disclosures made
pursuant to Internal Revenue Service (the "IRS") requirements, may be obtained
by contacting Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103 or by calling toll free, 1-800-225-2470. It is
advisable for an investor considering the funding of the investment plans
described below to consult with an attorney or other investment or tax adviser
with respect to the suitability requirements and tax aspects thereof.
Shares of the Fund may also be a permitted investment under profit
sharing and pension plans and IRA's other than those offered by the Fund's
distributor depending on the provisions of the relevant plan or IRA.
None of the plans assures a profit or guarantees protection against
depreciation, especially in declining markets.
Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals
Shares of the Fund may be purchased as the investment medium under a
plan in the form of a Scudder Profit-Sharing Plan (including a version of the
Plan which includes a cash-or-deferred feature) or a Scudder Money Purchase
Pension Plan (jointly referred to as the Scudder Retirement Plans) adopted by a
corporation, a self-employed individual or a group of self-employed individuals
(including sole proprietorships and partnerships), or other qualifying
organization. Each of these forms was approved by the IRS as a prototype. The
IRS's approval of an employer's plan under Section 401(a) of the Internal
Revenue Code will be greatly facilitated if it is in such approved form. Under
certain circumstances, the IRS will assume that a plan, adopted in this form,
after special notice to any employees, meets the requirements of Section 401(a)
of the Internal Revenue Code.
Scudder 401(k): Cash or Deferred Profit-Sharing Plan
for Corporations and Self-Employed Individuals
Shares of the Fund may be purchased as the investment medium under a
plan in the form of a Scudder 401(k) Plan adopted by a corporation, a
self-employed individual or a group of self-employed individuals (including sole
proprietors and partnerships), or other qualifying organization. This plan has
been approved as a prototype by the IRS.
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Scudder IRA: Individual Retirement Account
Shares of the Fund may be purchased as the underlying investment for an
Individual Retirement Account which meets the requirements of Section 408(a) of
the Internal Revenue Code.
A single individual who is not an active participant in an
employer-maintained retirement plan, a simplified employee pension plan, or a
tax-deferred annuity program (a "qualified plan"), and a married individual who
is not an active participant in a qualified plan and whose spouse is also not an
active participant in a qualified plan, are eligible to make tax deductible
contributions of up to $2,000 to an IRA prior to the year such individual
attains age 70 1/2. In addition, certain individuals who are active participants
in qualified plans (or who have spouses who are active participants) are also
eligible to make tax-deductible contributions to an IRA; the annual amount, if
any, of the contribution which such an individual will be eligible to deduct
will be determined by the amount of his, her, or their adjusted gross income for
the year. Whenever the adjusted gross income limitation prohibits an individual
from contributing what would otherwise be the maximum tax-deductible
contribution he or she could make, the individual will be eligible to contribute
the difference to an IRA in the form of nondeductible contributions.
An eligible individual may contribute as much as $2,000 of qualified
income (earned income or, under certain circumstances, alimony) to an IRA each
year (up to $2,000 per individual for married couples if only one spouse has
earned income). All income and capital gains derived from IRA investments are
reinvested and compound tax-deferred until distributed. Such tax-deferred
compounding can lead to substantial retirement savings.
The table below shows how much individuals would accumulate in a fully
tax-deductible IRA by age 65 (before any distributions) if they contribute
$2,000 at the beginning of each year, assuming average annual returns of 5, 10,
and 15%. (At withdrawal, accumulations in this table will be taxable.)
Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution
------------- -------------- -------------------------- -------------------
Starting Annual Rate of Return
Age of -------------------------------------------------------------
Contributions 5% 10% 15%
------------- -------------- -------------------------- -------------------
25 $253,680 $973,704 $4,091,908
35 139,522 361,887 999,914
45 69,439 126,005 235,620
55 26,414 35,062 46,699
This next table shows how much individuals would accumulate in non-IRA
accounts by age 65 if they start with $2,000 in pretax earned income at the
beginning of each year (which is $1,380 after taxes are paid), assuming average
annual returns of 5, 10 and 15%. (At withdrawal, a portion of the accumulation
in this table will be taxable.)
Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket
------------- --------------- -------------------------- -------------------
Starting Annual Rate of Return
Age of --------------------------------------------------------------
Contributions 5% 10% 15%
------------- --------------- -------------------------- -------------------
25 $119,318 $287,021 $741,431
35 73,094 136,868 267,697
45 40,166 59,821 90,764
55 16,709 20,286 24,681
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Scudder 403(b) Plan
Shares of the Fund may also be purchased as the underlying investment
for tax sheltered annuity plans under the provisions of Section 403(b)(7) of the
Internal Revenue Code. In general, employees of tax-exempt organizations
described in Section 501(c)(3) of the Internal Revenue Code (such as hospitals,
churches, religious, scientific, or literary organizations and educational
institutions) or a public school system are eligible to participate in a 403(b)
plan.
Automatic Withdrawal Plan
Non-retirement plan shareholders may establish an Automatic Withdrawal
Plan to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Shareholders may designate
which day they want the automatic withdrawal processed. The check amounts may be
based on the redemption of a fixed dollar amount, fixed share amount, percent of
account value or declining balance. The Plan provides for income dividends and
capital gains distributions, if any, to be reinvested in additional shares.
Shares are then liquidated as necessary to provide for withdrawal payments.
Since the withdrawals are in amounts selected by the investor and have no
relationship to yield or income, payments received cannot be considered as yield
or income on the investment and the resulting liquidations may deplete or
possibly extinguish the initial investment and any reinvested dividends and
capital gains distributions. Requests for increases in withdrawal amounts or to
change the payee must be submitted in writing, signed exactly as the account is
registered, and contain signature guarantee(s) as described under "Transaction
information--Redeeming shares--Signature guarantees" in the Fund's prospectus.
Any such requests must be received by the Fund's transfer agent ten days prior
to the date of the first automatic withdrawal. An Automatic Withdrawal Plan may
be terminated at any time by the shareholder, the Corporation or its agent on
written notice, and will be terminated when all shares of the Fund under the
Plan have been liquidated or upon receipt by the Corporation of notice of death
of the shareholder.
An Automatic Withdrawal Plan request form can be obtained by calling
1-800-225-5163.
Group or Salary Deduction Plan
An investor may join a Group or Salary Deduction Plan where
satisfactory arrangements have been made with Scudder Investor Services, Inc.
for forwarding regular investments through a single source. The minimum annual
investment is $240 per investor which may be made in monthly, quarterly,
semiannual or annual payments. The minimum monthly deposit per investor is $20.
Except for trustees or custodian fees for certain retirement plans, at present
there is no separate charge for maintaining group or salary deduction plans;
however, the Corporation and its agents reserve the right to establish a
maintenance charge in the future depending on the services required by the
investor.
The Corporation reserves the right, after notice has been given to the
shareholder, to redeem and close a shareholder's account in the event that the
shareholder ceases participating in the group plan prior to investment of $1,000
per individual or in the event of a redemption which occurs prior to the
accumulation of that amount or which reduces the account value to less than
$1,000 and the account value is not increased to $1,000 within a reasonable time
after notification. An investor in a plan who has not purchased shares for six
months shall be presumed to have stopped making payments under the plan.
Automatic Investment Plan
Shareholders may arrange to make periodic investments through automatic
deductions from checking accounts by completing the appropriate form and
providing the necessary documentation to establish this service. The minimum
investment is $50.
The Automatic Investment Plan involves an investment strategy called
dollar cost averaging. Dollar cost averaging is a method of investing whereby a
specific dollar amount is invested at regular intervals. By investing the same
dollar amount each period, when shares are priced low the investor will purchase
more shares than when the share price is higher. Over a period of time this
investment approach may allow the investor to reduce the average price of the
shares purchased. However, this investment approach does not assure a profit or
protect against loss. This type of regular investment program may be suitable
27
<PAGE>
for various investment goals such as, but not limited to, college planning or
saving for a home.
Uniform Transfers/Gifts to Minors Act
Grandparents, parents or other donors may set up custodian accounts for
minors. The minimum initial investment is $1,000 unless the donor agrees to
continue to make regular share purchases for the account through Scudder's
Automatic Investment Plan (AIP). In this case, the minimum initial investment is
$500.
The Corporation reserves the right, after notice has been given to the
shareholder and custodian, to redeem and close a shareholder's account in the
event that regular investments to the account cease before the $1,000 minimum is
reached.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
(See"Distribution and performance information -- Dividends and
capital gains distributions" in the Fund's prospectus.)
The Fund intends to follow the practice of distributing all of its
investment company taxable income, which includes any excess of net realized
short-term capital gains over net realized long-term capital losses. The Fund
may follow the practice of distributing the entire excess of net realized
long-term capital gains over net realized short-term capital losses. However,
the Fund may retain all or part of such gain for reinvestment after paying the
related federal income taxes for which the shareholders may then be asked to
claim a credit against their federal income tax liability. (See "TAXES.")
If the Fund does not distribute the amount of capital gain and/or
ordinary income required to be distributed by an excise tax provision of the
Code, the Fund may be subject to that excise tax. (See "TAXES.") In certain
circumstances, the Fund may determine that it is in the interest of shareholders
to distribute less than the required amount.
Earnings and profits distributed to shareholders on redemptions of Fund
shares may be utilized by the Fund, to the extent permissible, as part of the
Fund's dividends paid deduction on its federal tax return.
The Fund intends to distribute its investment company taxable income
and any net realized capital gains in November or December to avoid federal
excise tax, although an additional distribution may be made if necessary.
Both types of distributions will be made in shares of the Fund and
confirmations will be mailed to each shareholder unless a shareholder has
elected to receive cash, in which case a check will be sent. Distributions of
investment company taxable income and net realized capital gains are taxable
(See "TAXES"), whether made in shares or cash.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. The characterization of distributions on such
correspondence may differ from the characterization for federal tax purposes. In
January of each year the Fund issues to each shareholder a statement of the
federal income tax status of all distributions in the prior calendar year.
PERFORMANCE INFORMATION
(See "Distribution and performance information--Performance
information" in the Fund's prospectus.)
From time to time, quotations of the Fund's performance may be included
in advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures will be calculated in the following manner:
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<PAGE>
Average Annual Total Return
Average Annual Total Return is the average annual compound rate of
return for the periods of one year, five years, and ten years, all ended on the
last day of a recent calendar quarter. Average annual total return quotations
reflect changes in the price of the Fund's shares and assume that all dividends
and capital gains distributions during the respective periods were reinvested in
Fund shares. Average annual total return is calculated by finding the average
annual compound rates of return of a hypothetical investment over such periods,
according to the following formula (average annual total return is then
expressed as a percentage):
T = (ERV/P)^1/n - 1
Where:
P = a hypothetical initial investment of $1,000
T = Average Annual Total Return
n = number of years
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
Average Annual Total Return for years ended March 31, 1997
One Year Five Years Ten Years
10.74% 11.61% 8.90%
Cumulative Total Return
Cumulative Total Return is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
Total Return quotations reflect changes in the price of the Fund's shares and
assume that all dividends and capital gains distributions during the period were
reinvested in Fund shares. Cumulative Total Return is calculated by finding the
cumulative rates of return of a hypothetical investment over such periods,
according to the following formula (Cumulative Total Return is then expressed as
a percentage):
C = (ERV/P) -1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
Cumulative Total Return for years ended March 31, 1997
One Year Five Years Ten Years
10.74% 73.22% 134.56%
Total Return
Total Return is the rate of return on an investment for a specified
period of time calculated in the same manner as Cumulative Total Return.
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<PAGE>
Capital Change
Capital Change measures the return from invested capital including
reinvested capital gains distributions. Capital Change does not include the
reinvestment of income dividends.
Quotations of the Fund's performance are historical and are not
intended to indicate future performance. An investor's shares when redeemed may
be worth more or less than their original cost. Performance of the Fund will
vary based on changes in market conditions and the level of the Fund's expenses.
Comparison of Fund Performance
A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of the Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or
prospective shareholders, the Fund also may compare these figures to the
performance of unmanaged indices which may assume reinvestment of dividends or
interest but generally do not reflect deductions for administrative and
management costs. Examples include, but are not limited to the Dow Jones
Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite
Stock Price Index (S&P 500), the Nasdaq OTC Composite Index, the Nasdaq
Industrials Index, the Russell 2000 Index, and statistics published by the Small
Business Administration.
Because some or all of the Fund's investments are denominated in
foreign currencies, the strength or weakness of the U.S. dollar as against these
currencies may account for part of the Fund's investment performance. Historical
information on the value of the dollar versus foreign currencies may be used
from time to time in advertisements concerning the Fund. Such historical
information is not indicative of future fluctuations in the value of the U.S.
dollar against these currencies. In addition, marketing materials may cite
country and economic statistics and historical stock market performance for any
of the countries in which the Fund invests, including, but not limited to, the
following: population growth, gross domestic product, inflation rate, average
stock market price-earnings ratios and the total value of stock markets. Sources
for such statistics may include official publications of various foreign
governments and exchanges.
From time to time, in advertising and marketing literature, this Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as,
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value
Line Mutual Fund Survey and other independent organizations. When these
organizations' tracking results are used, the Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings, or
to the appropriate volatility grouping, where volatility is a measure of a
fund's risk. For instance, a Scudder growth fund will be compared to funds in
the growth fund category; a Scudder income fund will be compared to funds in the
income fund category; and so on. Scudder funds (except for money market funds)
may also be compared to funds with similar volatility, as measured statistically
by independent organizations. In addition, the Fund's performance may also be
compared to the performance of broad groups of comparable mutual funds.
Unmanaged indices with which the Fund's performance may be compared include, but
are not limited to, the following:
The Europe/Australia/Far East (EAFE) Index
International Finance Corporation's Latin America Investable
Total Return Index
Morgan Stanley Capital International World Index
J.P. Morgan Global Traded Bond Index
Salomon Brothers World Government Bond Index
Nasdaq Composite Index
Wilshire 5000 Stock Index
From time to time, in marketing and other Fund literature, Directors
and officers of the Fund, the Fund's portfolio manager, or members of the
portfolio management team may be depicted and quoted to give prospective and
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<PAGE>
current shareholders a better sense of the outlook and approach of those who
manage the Fund. In addition, the amount of assets that the Adviser has under
management in various geographical areas may be quoted in advertising and
marketing materials.
The Fund may be advertised as an investment choice in Scudder's college
planning program. The description may contain illustrations of projected future
college costs based on assumed rates of inflation and examples of hypothetical
fund performance, calculated as described above.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Fund. The
description may include a "risk/return spectrum" which compares the Fund to
other Scudder funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Money market funds are
designed to maintain a constant $1.00 share price and have a fluctuating yield.
Share price, yield and total return of a bond fund will fluctuate. The share
price and return of an equity fund also will fluctuate. The description may also
compare the Fund to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.
Because bank products guarantee the principal value of an investment
and money market funds seek stability of principal, these investments are
considered to be less risky than investments in either bond or equity funds,
which may involve the loss of principal. However, all long-term investments,
including investments in bank products, may be subject to inflation risk, which
is the risk of erosion of the value of an investment as prices increase over a
long time period. The risks/returns associated with an investment in bond or
equity funds depend upon many factors. For bond funds these factors include, but
are not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.
A risk/return spectrum generally will position the various investment
categories in the following order: bank products, money market funds, bond funds
and equity funds. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more risky
than domestic equity funds but generally offer the potential for greater return.
Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.
Evaluation of Fund performance or other relevant statistical
information made by independent sources may also be used in advertisements
concerning the Fund, including reprints of, or selections from, editorials or
articles about this Fund. Sources for Fund performance information and articles
about the Fund include the following:
American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
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<PAGE>
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
CDA Investment Technologies, Inc., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.
Consumer Digest, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
Financial Times, Europe's business newspaper, which features from time to time
articles on international or country-specific funds.
Financial World, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.
The Frank Russell Company, a West-Coast investment management firm that
periodically evaluates international stock markets and compares foreign equity
market performance to U.S. stock market performance.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
IBC Money Fund Report, a weekly publication of IBC Financial Data, Inc.,
reporting on the performance of the nation's money market funds, summarizing
money market fund activity and including certain averages as performance
benchmarks, specifically "IBC's Money Fund Average," and "IBC's Government Money
Fund Average."
Ibbotson Associates, Inc., a company specializing in investment research and
data.
Investment Company Data, Inc., an independent organization which provides
performance ranking information for broad classes of mutual funds.
Investor's Business Daily, a daily newspaper that features financial, economic,
and business news.
Kiplinger's Personal Finance Magazine, a monthly investment advisory publication
that periodically features the performance of a variety of securities.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a weekly
publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
Morgan Stanley International, an integrated investment banking firm that
compiles statistical information.
Mutual Fund Values, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.
The New York Times, a nationally distributed newspaper which regularly covers
financial news.
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<PAGE>
The No-Load Fund Investor, a monthly newsletter, published by Sheldon Jacobs,
that includes mutual fund performance data and recommendations for the mutual
fund investor.
No-Load Fund*X, a monthly newsletter, published by DAL Investment Company, Inc.,
that reports on mutual fund performance, rates funds and discusses investment
strategies for the mutual fund investor.
Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.
Personal Investor, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
Smart Money, a national personal finance magazine published monthly by Dow Jones
and Company, Inc. and The Hearst Corporation. Focus is placed on ideas for
investing, spending and saving.
Success, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
United Mutual Fund Selector, a semi-monthly investment newsletter, published by
Babson United Investment Advisors, that includes mutual fund performance data
and reviews of mutual fund portfolios and investment strategies.
USA Today, a leading national daily newspaper.
U.S. News and World Report, a national news weekly that periodically reports
mutual fund performance data.
Value Line Mutual Fund Survey, an independent organization that provides
biweekly performance and other information on mutual funds.
The Wall Street Journal, a Dow Jones and Company, Inc. newspaper which regularly
covers financial news.
Wiesenberger Investment Companies Services, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records and price ranges.
Working Woman, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.
Worth, a national publication issued 10 times per year by Capital Publishing
Company, a subsidiary of Fidelity Investments. Focus is placed on personal
financial journalism.
Taking a Global Approach
Many U.S. investors limit their holdings to U.S. securities because
they assume that international or global investing is too risky. While there are
risks connected with investing overseas, it's important to remember that no
investment -- even in blue-chip domestic securities -- is entirely risk free.
Looking outside U.S. borders, an investor today can find opportunities that
mirror domestic investments -- everything from large, stable multinational
companies to start-ups in emerging markets. To determine the level of risk with
which you are comfortable, and the potential for reward you're seeking over the
long term, you need to review the type of investment, the world markets, and
your time horizon.
The U.S. is unusual in that it has a very broad economy that is well
represented in the stock market. However, many countries around the world are
not only undergoing a revolution in how their economies operate, but also in
terms of the role their stock markets play in financing activities. There is
vibrant change throughout the global economy and all of this represents
potential investment opportunity.
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Investing beyond the United States can open this world of opportunity,
due partly to the dramatic shift in the balance of world markets. In 1970, the
United States alone accounted for two-thirds of the value of the world's stock
markets. Now, the situation is reversed -- only 35% of global stock market
capitalization resides here. There are companies in Southeast Asia that are
starting to dominate regional activity; there are companies in Europe that are
expanding outside of their traditional markets and taking advantage of faster
growth in Asia and Latin America; other companies throughout the world are
getting out from under state control and restructuring; developing countries
continue to open their doors to foreign investment.
Stocks in many foreign markets can be attractively priced. The global
stock markets do not move in lock step. When the valuations in one market rise,
there are other markets that are less expensive. There is also volatility within
markets in that some sectors may be more expensive while others are depressed in
valuation. A wider set of opportunities can help make it possible to find the
best values available.
International or global investing offers diversification because the
investment is not limited to a single country or economy. In fact, many experts
agree that investment strategies that include both U.S. and non-U.S.
investments strike the best balance between risk and reward.
Scudder's 30% Solution
The 30 Percent Solution -- A Global Guide for Investors Seeking Better
Performance With Reduced Portfolio Risk is a booklet, created by Scudder, to
convey its vision about the new global investment dynamic. This dynamic is a
result of the profound and ongoing changes in the global economy and the
financial markets. The booklet explains how Scudder believes an equity
investment portfolio with up to 30% in international holdings and 70% in
domestic holdings can improve long-term performance while simultaneously helping
to reduce overall risk.
FUND ORGANIZATION
(See "Fund organization" in the Fund's prospectus.)
The Corporation was organized as Scudder Fund of Canada Ltd. in Canada
in 1953 by the investment management firm of Scudder, Stevens & Clark. On March
16, 1964, the name of the Corporation was changed to Scudder International
Investments Ltd. On July 31, 1975, the corporate domicile of the Corporation was
changed to the U.S. through the transfer of its net assets to a newly formed
Maryland corporation, Scudder International Fund, Inc., in exchange for shares
of the Corporation which then were distributed to the shareholders of the
Corporation.
The authorized capital stock of the Corporation consists of 700 million
shares of a par value of $.01 each--all of one class and all having equal rights
as to voting, redemption, dividends and liquidation. Shareholders have one vote
for each share held. The Corporation's capital stock is comprised of six series:
Scudder International Fund, the original series; Scudder Latin America Fund,
Scudder Pacific Opportunities Fund, both organized in December 1992, Scudder
Greater Europe Growth Fund, organized in October 1994, Scudder Emerging Markets
Growth Fund, organized in May 1996 and Scudder International Growth and Income
Fund, organized in June 1997. Each series consists of 100 million shares except
for the Fund which consists of 200 million shares. The Directors have the
authority to issue additional series of shares and to designate the relative
rights and preferences as between the different series. All shares issued and
outstanding are fully paid and non-assessable, transferable, and redeemable at
net asset value at the option of the shareholder. Shares have no pre-emptive or
conversion rights.
The shares of the Corporation have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
Directors can elect 100% of the Directors if they choose to do so, and, in such
event, the holders of the remaining less than 50% of the shares voting for the
election of Directors will not be able to elect any person or persons to the
Board of Directors. The assets of the Corporation received for the issue or sale
of the shares of each series and all income, earnings, profits and proceeds
thereof, subject only to the rights of creditors, are specifically allocated to
such series and constitute the underlying assets of such series. The underlying
assets of each series are segregated on the books of account, and are to be
charged with the liabilities in respect to such series and with such a share of
the general liabilities of the Corporation. If a series were unable to meet its
obligations, the assets of all other series may in some circumstances be
available to creditors for that purpose, in which case the assets of such other
series could be used to meet liabilities which are not otherwise properly
chargeable to them. Expenses with respect to any two or more series are to be
34
<PAGE>
allocated in proportion to the asset value of the respective series except where
allocations of direct expenses can otherwise be fairly made. The officers of the
Corporation, subject to the general supervision of the Directors, have the power
to determine which liabilities are allocable to a given series, or which are
general or allocable to two or more series. In the event of the dissolution or
liquidation of the Corporation or any series, the holders of the shares of any
series are entitled to receive as a class the underlying assets of such shares
available for distribution to shareholders.
Shares of the Corporation entitle their holders to one vote per share;
however, separate votes are taken by each series on matters affecting an
individual series. For example, a change in investment policy for a series would
be voted upon only by shareholders of the series involved. Additionally,
approval of the investment advisory agreement is a matter to be determined
separately by each series. Approval by the shareholders of one series is
effective as to that series whether or not enough votes are received from the
shareholders of the other series to approve such agreement as to the other
series.
The Directors, in their discretion, may authorize the division of
shares of the Corporation (or shares of a series) into different classes
permitting shares of different classes to be distributed by different methods.
Although shareholders of different classes of a series would have an interest in
the same portfolio of assets, shareholders of different classes may bear
different expenses in connection with different methods of distribution. The
Directors have no present intention of taking the action necessary to effect the
division of shares into separate classes, or of changing the method of
distribution of shares of the Fund.
The Corporation's Amended and Restated Articles of Incorporation (the
"Articles") provide that the Directors of the Corporation, to the fullest extent
permitted by Maryland General Corporation Law and the 1940 Act, shall not be
liable to the Corporation or its shareholders for damages. Maryland law
currently provides that Directors shall be immune from liability for any action
taken by them in good faith, in a manner reasonably believed to be in the best
interests of the Corporation and with the care that an ordinarily prudent person
in a like position would use under similar circumstances. In so acting, a
Director shall be fully protected in relying in good faith upon the records of
the Corporation and upon reports made to the Corporation by persons selected in
good faith by the Directors as qualified to make such reports. The Articles and
the By-Laws provide that the Corporation will indemnify its Directors, officers,
employees or agents against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices with the
Corporation consistent with applicable law. Nothing in the Articles or the
By-Laws protects or indemnifies a Director, officer, employee or agent against
any liability to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
INVESTMENT ADVISER
(See "Fund organization--Investment adviser" in the Fund's prospectus.)
Scudder, Stevens & Clark, Inc., an investment counsel firm, acts as
investment adviser to the Fund. This organization is one of the most experienced
investment management firms in the U.S. It was established as a partnership in
1919 and pioneered the practice of providing investment counsel to individual
clients on a fee basis. In 1928 it introduced the first no-load mutual fund to
the public. In 1953, the Adviser introduced the Fund, the first mutual fund
available in the U.S. investing internationally in securities of issuers in
several foreign countries. The firm reorganized from a partnership to a
corporation on June 28, 1985.
The principal source of the Adviser's income is professional fees
received from providing continuous investment advice, and the firm derives no
income from brokerage or underwriting of securities. Today, it provides
investment counsel for many individuals and institutions, including insurance
companies, colleges, industrial corporations, and financial and banking
organizations. In addition, it manages Montgomery Street Income Securities,
Inc., Scudder California Tax Free Trust, Scudder Cash Investment Trust, Scudder
Equity Trust, Scudder Fund, Inc., Scudder Funds Trust, Scudder Global Fund,
Inc., Scudder GNMA Fund, Scudder Portfolio Trust, Scudder Institutional Fund,
Inc., Scudder International Fund, Inc., Scudder Investment Trust, Scudder
Municipal Trust, Scudder Mutual Funds, Inc., Scudder New Asia Fund, Inc.,
Scudder New Europe Fund, Inc., Scudder Pathway Series, Scudder Securities Trust,
Scudder State Tax Free Trust, Scudder Tax Free Money Fund, Scudder Tax Free
Trust, Scudder U.S. Treasury Money Fund, Scudder Variable Life Investment Fund,
Scudder World Income Opportunities Fund, Inc., The Argentina Fund, Inc., The
35
<PAGE>
Brazil Fund, Inc., The Korea Fund, Inc., The Japan Fund, Inc., The Latin America
Dollar Income Fund, Inc. and Scudder Spain and Portugal Fund, Inc. Some of the
foregoing companies or trusts have two or more series.
The Adviser also provides investment advisory services to the mutual
funds which comprise the AARP Investment Program from Scudder. The AARP
Investment Program from Scudder has assets over $13 billion and includes the
AARP Growth Trust, AARP Income Trust, AARP Tax Free Income Trust, AARP Managed
Investment Portfolios Trust and AARP Cash Investment Funds.
Pursuant to an Agreement between Scudder, Stevens & Clark, Inc.
("Scudder") and AMA Solutions, Inc., a subsidiary of the American Medical
Association (the "AMA"), dated May 9, 1997, Scudder has agreed, subject to
applicable state regulations, to pay AMA Solutions, Inc. royalties in an amount
equal to 5% of the management fee received by Scudder with respect to assets
invested by AMA members in Scudder funds in connection with the AMA
InvestmentLinkSM Program. Scudder will also pay AMA Solutions, Inc. a general
monthly fee, currently in the amount of $833. The AMA and AMA Solutions, Inc.
are not engaged in the business of providing investment advice and neither is
registered as an investment adviser or broker/dealer under federal securities
laws. Any person who participates in the AMA InvestmentLinkSM Program will be a
customer of Scudder (or of a subsidiary thereof) and not the AMA or AMA
Solutions, Inc. AMA InvestmentLinkSM is a service mark of AMA Solutions, Inc.
The Adviser maintains a large research department, which conducts
continuous studies of the factors that affect the position of various
industries, companies and individual securities. The Adviser receives published
reports and statistical compilations from issuers and other sources, as well as
analyses from brokers and dealers who may execute portfolio transactions for the
Adviser's clients. However, the Adviser regards this information and material as
an adjunct to its own research activities. Scudder's international investment
management team travels the world, researching hundreds of companies. In
selecting the securities in which the Fund may invest, the conclusions and
investment decisions of the Adviser with respect to the Fund are based primarily
on the analyses of its own research department.
Certain investments may be appropriate for the Fund and also for other
clients advised by the Adviser. Investment decisions for the Fund and other
clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings, availability
of cash for investment and the size of their investments generally. Frequently,
a particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients on the same day. In
such event, such transactions will be allocated among the clients in a manner
believed by the Adviser to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by the Fund. Purchase and sale orders for the Fund may be combined with
those of other clients of the Adviser in the interest of achieving the most
favorable net results to the Fund.
The Investment Management Agreement (the "Agreement") dated September
5, 1996 was approved by the Directors of the Fund on September 5, 1996. The
Agreement will continue in effect until September 30, 1997 and from year to year
thereafter only if its continuance is approved annually by the vote of a
majority of those Directors who are not parties to such Agreement or interested
persons of the Adviser or the Fund, cast in person at a meeting called for the
purpose of voting on such approval, and either by a vote of the Fund's Directors
or of a majority of the outstanding voting securities of the Fund. The Agreement
may be terminated at any time without payment of penalty by either party on
sixty days' written notice, and automatically terminates in the event of its
assignment.
Under the Agreement, the Adviser regularly provides the Fund with
continuing investment management for the Fund's portfolio consistent with the
Fund's investment objectives, policies and restrictions and determines what
securities shall be purchased, held or sold and what portion of the Fund's
assets shall be held uninvested, subject to the Fund's Articles, By-Laws, the
1940 Act, the Code and to the Fund's investment objective, policies and
restrictions, and subject, further, to such policies and instructions as the
Board of Directors of the Fund may from time to time establish.
Under the Agreement, the Adviser renders significant administrative
services (not otherwise provided by third parties) necessary for the Fund's
operations as an open-end investment company including, but not limited to,
36
<PAGE>
preparing reports and notices to the Directors and shareholders; supervising,
negotiating contractual arrangements with, and monitoring various third-party
service providers to the Fund (such as the Fund's transfer agent, pricing
agents, custodian, accountants and others); preparing and making filings with
the Commission and other regulatory agencies; assisting in the preparation and
filing of the Fund's federal, state and local tax returns; preparing and filing
the Fund's federal excise tax returns; assisting with investor and public
relations matters; monitoring the valuation of securities and the calculation of
net asset value; monitoring the registration of shares of the Fund under
applicable federal and state securities laws; maintaining the Fund's books and
records to the extent not otherwise maintained by a third party; assisting in
establishing accounting policies of the Fund; assisting in the resolution of
accounting and legal issues; establishing and monitoring the Fund's operating
budget; processing the payment of the Fund's bills; assisting the Fund in, and
otherwise arranging for, the payment of distributions and dividends and
otherwise assisting the Fund in the conduct of its business, subject to the
direction and control of the Directors.
The Adviser pays the compensation and expenses (except those of
attending Board and committee meetings outside New York, New York or Boston,
Massachusetts) of all Directors, officers and executive employees of the Fund
affiliated with the Adviser and makes available, without expense to the Fund,
the services of such Directors, officers and employees of the Adviser as may
duly be elected officers of the Fund, subject to their individual consent to
serve and to any limitations imposed by law, and provides the Fund's office
space and facilities.
On September 5, 1996, the Fund's Board of Directors approved a new
Investment Management Agreement (the "Management Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"). The management fee payable under the
Management Agreement is equal to an annual rate of approximately 0.90% of the
first $500,000,000 of average daily net assets, 0.85% of the next $500,000,000
of such net assets, 0.80% of the next $1,000,000,000 of such net assets, 0.75%
of the next $1,000,000,000 of such net assets, and 0.70% of such net assets in
excess of $3,000,000,000, computed and accrued daily and payable monthly.
Under the Investment Management Agreement between the Fund and the
Adviser which was in effect prior to September 5, 1996 (the "Agreement"), the
Fund agreed to pay to the Adviser a fee equal to an annual rate of 0.90% on the
first $500,000,000 of the Fund's average daily net assets, 0.85% on the next
$500,000,000, 0.80% on the next $1,000,000,000, and 0.75% of such net assets in
excess of $2,000,000,000, computed and accrued daily and payable monthly.
The net investment advisory fees for the fiscal years ended March 31,
1997, 1996 and 1995 were $20,989,160, $19,502,443 and $19,032,146, respectively.
Under the Agreement the Fund is responsible for all of its other
expenses including: fees and expenses incurred in connection with membership in
investment company organizations; brokers' commissions; legal, auditing and
accounting expenses; the calculation of net asset value; taxes and governmental
fees; the fees and expenses of the Transfer Agent; the cost of preparing share
certificates or any other expenses of issue, sale, underwriting, distribution,
redemption or repurchase of shares; the expenses of and the fees for registering
or qualifying securities for sale; the fees and expenses of Directors, officers
and employees of the Fund who are not affiliated with the Adviser; the cost of
printing and distributing reports and notices to stockholders; and the fees and
disbursements of custodians. The Fund may arrange to have third parties assume
all or part of the expenses of sale, underwriting and distribution of shares of
the Fund. The Fund is also responsible for its expenses of shareholders'
meetings, the cost of responding to shareholders' inquiries, and its expenses
incurred in connection with litigation, proceedings and claims and the legal
obligation it may have to indemnify its officers and Directors of the Fund with
respect thereto.
The Agreement expressly provides that the Adviser shall not be required
to pay a pricing agent of the Fund for portfolio pricing services, if any.
The Agreement also provides that the Fund may use any name derived from
the name "Scudder, Stevens & Clark" only as long as the Agreement or any
extension, renewal or amendment thereof remains in effect.
In reviewing the terms of the Agreement and in discussions with the
Adviser concerning such Agreement, the Directors of the Fund who are not
"interested persons" of the Adviser are represented by independent counsel at
the Fund's expense.
37
<PAGE>
The Agreement provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which the Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Adviser in the performance of its duties or from reckless disregard by the
Adviser of its obligations and duties under the Agreement.
Officers and employees of the Adviser from time to time may have
transactions with various banks, including the Fund's custodian bank. It is the
Adviser's opinion that the terms and conditions of those transactions which have
occurred were not influenced by existing or potential custodial or other Fund
relationships.
None of the officers or Directors of the Fund may have dealings with
the Fund as principals in the purchase or sale of securities, except as
individual subscribers to or holders of shares of the Fund.
Personal Investments by Employees of the Adviser
Employees of the Adviser are permitted to make personal securities
transactions, subject to requirements and restrictions set forth in the
Adviser's Code of Ethics. The Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of investment advisory
clients such as the Fund. Among other things, the Code of Ethics, which
generally complies with standards recommended by the Investment Company
Institute's Advisory Group on Personal Investing, prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the submission
of duplicate broker confirmations and monthly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the Code of Ethics may be granted in
particular circumstances after review by appropriate personnel.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
Position with
Underwriter,
Scudder Investor
Name, Age, and Address Position with Fund Principal Occupation** Services, Inc.
- ---------------------- ------------------ ---------------------- ----------------
<S> <C> <C> <C>
Daniel Pierce (63)+* Chairman of the Board Chairman of the Board and Managing Vice President,
and Director Director of Scudder, Stevens & Director & Assistant
Clark, Inc. Treasurer
Nicholas Bratt (49)#* President and Director Managing Director of Scudder, --
Stevens & Clark, Inc.
Paul Bancroft III (67) Director Venture Capitalist and Consultant; --
1120 Cheston Lane Retired President, Chief Executive
Queenstown, MD 21658 Officer and Director, Bessemer
Securities Corporation
Thomas J. Devine (70) Director Consultant --
641 Lexington Avenue
New York, NY 10022
Keith R. Fox (43) Director President, Exeter Capital Management --
10 East 53rd Street Corporation
New York, NY 10022
William H. Gleysteen, Jr. Director Consultant; Guest Scholar, Brookings --
(71) Institute
38
<PAGE>
Position with
Underwriter,
Scudder Investor
Name, Age, and Address Position with Fund Principal Occupation** Services, Inc.
- ---------------------- ------------------ ---------------------- ----------------
David S. Lee (63)+ *@ Director, Managing Director of Scudder, President, Assistant
Vice President and Stevens & Clark, Inc. Treasurer and Director
Assistant Treasurer
William H. Luers (68) Director President, The Metropolitan Museum --
The Metropolitan of Art (1986 to present)
Museum of Art
1000 Fifth Avenue
New York, NY 10028
Wilson Nolen (70) Director Consultant (1989 to present); --
1120 Fifth Avenue Corporate Vice President, Becton,
New York, NY 10128 Dickinson & Company (manufacturer of
medical and scientific products)
until 1989
Kathryn L. Quirk (44)#@ Director; Vice Managing Director of Scudder, Vice President
President and Stevens & Clark, Inc.
Assistant Secretary
Gordon Shillinglaw (72) Director Professor Emeritus of Accounting, --
196 Villard Avenue Columbia University Graduate School
Hastings-on-Hudson, NY 10706 of Business
Robert G. Stone, Jr. (74) Honorary Director Chairman Emeritus and Director, --
405 Lexington Avenue Kirby Corporation (inland and
New York, NY 10174 offshore marine transportation and
diesel repairs)
Robert W. Lear (80) Honorary Director Executive-in-Residence, --
429 Silvermine Road Visiting Professor,
New Canaan, CT 06840 Columbia University
Graduate School of Business
Elizabeth J. Allan (44) # Vice President Principal of Scudder, Stevens & --
Clark, Inc.
Joyce E. Cornell (53)# Vice President Managing Director of Scudder, --
Stevens & Clark, Inc.
Carol L. Franklin (44)# Vice President Managing Director of Scudder, --
Stevens & Clark, Inc.
Edmund B. Games, Jr. (60)+ Vice President Principal of Scudder, Stevens & --
Clark, Inc.
Jerard K. Hartman (64) # Vice President Managing Director of Scudder, --
Stevens & Clark, Inc.
39
<PAGE>
Position with
Underwriter,
Scudder Investor
Name, Age, and Address Position with Fund Principal Occupation** Services, Inc.
- ---------------------- ------------------ ---------------------- ----------------
Thomas W. Joseph (58)+ Vice President Principal of Scudder, Stevens & Vice President,
Clark, Inc. Director, Treasurer &
Assistant Clerk
Thomas F. McDonough (50)+ Vice President and Principal of Scudder, Stevens & Clerk
Secretary Clark, Inc.
Pamela A. McGrath (43)+ Vice President and Managing Director of Scudder, --
Treasurer Stevens & Clark, Inc.
Edward J. O'Connell (52)# Vice President and Principal of Scudder, Stevens & Assistant Treasurer
Assistant Treasurer Clark, Inc.
Richard W. Desmond (61)# Assistant Secretary Vice President of Scudder, Stevens & Vice President
Clark, Inc.
* Messrs. Lee, Bratt, Pierce and Ms. Quirk are considered by the Fund and its counsel to be persons who are
"interested persons" of the Adviser or of the Fund within the meaning of the 1940 Act.
** Unless otherwise stated, all officers and directors have been associated with their respective companies
for more than five years, but not necessarily in the same capacity.
@ Mr. Lee and Ms. Quirk are members of the Executive Committee which may exercise substantially all of the
powers of the Board of Directors when it is not in session.
+ Address: Two International Place, Boston, Massachusetts 02110
# Address: 345 Park Avenue, New York, New York 10154
</TABLE>
As of June 30, 1997, all Directors and officers of the Fund as a group
owned beneficially (as that term is defined under Section 13(d) of the
Securities Exchange Act) less than 1% of the shares of the Fund outstanding on
such date.
As of June 30, 1997, 3,476,330 shares in the aggregate, 6.48% of the
outstanding shares of the Fund, were held in the name of Charles Schwab, c/o
Charles Schwab & Co., Inc., Attn: Mutual Fund Department, 101 Montgomery Street,
San Francisco, CA 94104-4122, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial ownership therein.
To the best of the Fund's knowledge, as of June 30, 1997 no person
owned beneficially (as so defined) more than 5% of the Fund's outstanding shares
except as stated above.
The Directors and officers of the Fund also serve in similar capacities
with other Scudder Funds.
REMUNERATION
Responsibilities of the Board--Board and Committee Meetings
The Board of Directors is responsible for the general oversight of each
Fund's business. A majority of the Board's members are not affiliated with
Scudder, Stevens & Clark, Inc. (the "Adviser"). These "Independent Directors"
have primary responsibility for assuring that each Fund is managed in the best
interests of its shareholders.
The Board of Directors meets at least quarterly to review the
investment performance of the Fund and other operational matters, including
policies and procedures designated to assure compliance with various regulatory
40
<PAGE>
requirements. At least annually, the Independent Directors review the fees paid
to the Adviser and its affiliates for investment advisory services and other
administrative and shareholder services. In this regard, they evaluate, among
other things, the Fund's investment performance, the quality and efficiency of
the various other services provided, costs incurred by the Adviser and its
affiliates, and comparative information regarding fees and expenses of
competitive funds. They are assisted in this process by the Fund's independent
public accountants and by independent legal counsel selected by the Independent
Directors.
All of the Independent Directors serve on the Committee on Independent
Directors, which nominates Independent Trustees and considers other related
matters, and the Audit Committee, which selects the Fund's independent public
accountants and reviews accounting policies and controls. In addition,
Independent Directors from time to time have established and served on task
forces and subcommittees focusing on particular matters such as investment,
accounting and shareholder service issues.
The Independent Directors met nineteen times during 1996, including
Board and Committee meetings and meetings to review each Fund's contractual
arrangements as described above. All of the Independent Directors attended 97.4%
of all such meetings.
Compensation of Officers and Directors
The Independent Directors receive the following compensation from
Funds: an annual director's fee of $4,000; a fee of $400 for attendance at each
Board meeting, audit committee meeting, or other meeting held for the purposes
of considering arrangements between the Funds and the Adviser or any affiliate
of the Adviser; $150 for any other committee meeting (although in some cases the
Independent Directors have waived committee meeting fees); and reimbursement of
expenses incurred for travel to and from Board Meetings. No additional
compensation is paid to any Independent Director for travel time to meetings,
attendance at directors' educational seminars or conferences, service on
industry or association committees, participation as speakers at directors'
conferences, service on special trustee task forces or subcommittees or service
as lead or liaison trustee. Independent Directors do not receive any employee
benefits such as pension, retirement or health insurance.
The Independent Directors also serve in the same capacity for other
funds managed by the Adviser. These funds differ broadly in type an complexity
and in some cases have substantially different Director fee schedules. The
following table shows the aggregate compensation received by each Independent
Director during 1996 from the Corporation and from all of Scudder funds as a
group.
<TABLE>
<CAPTION>
Name Scudder International Fund, Inc.* All Scudder Funds
---- --------------------------------- -----------------
<S> <C> <C> <C>
Paul Bancroft III, Director $41,486 $143,358 (16 funds)
Thomas J. Devine, Director $44,086 $156,058 (18 funds)
Keith R. Fox, Director $43,486 $87,508 (10 funds)
William H. Gleysteen, Jr., $44,086 $130,336 (13 funds)
Director
William H. Luers, Director $43,486 $100,486 (11 funds)
Wilson Nolen, Director $45,086 $165,608 (17 funds)
Dr. Gordon Shillinglaw, $45,086 $119,918 (19 funds)
Director
</TABLE>
41
<PAGE>
* Scudder International Fund, Inc. consists of six funds: Scudder
International Fund, Scudder Latin America Fund, Scudder Pacific
Opportunities Fund, Scudder Greater Europe Growth Fund, Scudder Emerging
Markets Growth Fund and Scudder International Growth and Income Fund.
Members of the Board of Directors who are employees of Scudder or its
affiliates receive no direct compensation from the Corporation, although they
are compensated as employees of Scudder, or its affiliates, as a result of which
they may be deemed to participate in fees paid by each Fund.
DISTRIBUTOR
The Corporation has an underwriting agreement with Scudder Investor
Services, Inc. (the "Distributor"), a Massachusetts corporation, which is a
subsidiary of the Adviser, a Delaware corporation. The Corporation's
underwriting agreement dated September 17, 1992 will remain in effect until
September 30, 1997 and from year to year thereafter only if its continuance is
approved annually by a majority of the members of the Board of Directors who are
not parties to such agreement or interested persons of any such party and either
by vote of a majority of the Board of Directors or a majority of the outstanding
voting securities of the Fund. The underwriting agreement was last approved by
the Directors on September 4-5, 1996.
Under the underwriting agreement, the Fund is responsible for: the
payment of all fees and expenses in connection with the preparation and filing
with the Commission of its registration statement and prospectus and any
amendments and supplements thereto; the registration and qualification of shares
for sale in the various states, including registering the Fund as a broker or
dealer in various states as required; the fees and expenses of preparing,
printing and mailing prospectuses annually to existing shareholders (see below
for expenses relating to prospectuses paid by the Distributor); notices, proxy
statements, reports or other communications to shareholders of the Fund; the
cost of printing and mailing confirmations of purchases of shares and any
prospectuses accompanying such confirmations; any issuance taxes and/or any
initial transfer taxes; a portion of shareholder toll-free telephone charges and
expenses of shareholder service representatives; the cost of wiring funds for
share purchases and redemptions (unless paid by the shareholder who initiates
the transaction); the cost of printing and postage of business reply envelopes;
and a portion of the cost of computer terminals used by both the Fund and the
Distributor.
The Distributor will pay for printing and distributing prospectuses or
reports prepared for its use in connection with the offering of the Fund's
shares to the public and preparing, printing and mailing any other literature or
advertising in connection with the offering of shares of the Fund to the public.
The Distributor will pay all fees and expenses in connection with its
qualification and registration as a broker or dealer under federal and state
laws, a portion of the cost of toll-free telephone service and expenses of
shareholder service representatives, a portion of the cost of computer
terminals, and expenses of any activity which is primarily intended to result in
the sale of shares issued by the Fund, unless a Rule 12b-1 Plan is in effect
which provides that the Fund shall bear some or all of such expenses.
Note: Although the Fund does not currently have a 12b-1 Plan, and the
Directors have no current intention of adopting one, the Fund would
also pay those fees and expenses permitted to be paid or assumed by the
Fund pursuant to a 12b-1 Plan, if any, were adopted by the Fund,
notwithstanding any other provision to the contrary in the underwriting
agreement.
As agent, the Distributor currently offers shares of the Fund on a
continuous basis to investors in all states in which shares of the Fund may from
time to time be registered or where permitted by applicable law. The
underwriting agreement provides that the Distributor accepts orders for shares
at net asset value as no sales commission or load is charged to the investor.
The Distributor has made no firm commitment to acquire shares of the Fund.
42
<PAGE>
TAXES
(See "Distribution and performance information -- Dividends and capital
gains distributions" and "Transaction information--Tax information,
Tax identification number" in the Fund's prospectus.)
The Fund has elected to be treated as a regulated investment company
under Subchapter M of the Code, or a predecessor statute and has qualified as
such since its inception. Such qualification does not involve governmental
supervision or management of investment practices or policy.
A regulated investment company qualifying under Subchapter M of the
Code is required to distribute to its shareholders at least 90 percent of its
investment company taxable income (including net short-term capital gain) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code.
The Fund is subject to a 4% nondeductible excise tax on amounts
required to be but not distributed under a prescribed formula. The formula
requires payment to shareholders during a calendar year of distributions
representing at least 98% of the Fund's ordinary income for the calendar year,
at least 98% of the excess of its capital gains over capital losses (adjusted
for certain ordinary losses) realized during the one-year period ending October
31 during such year, and all ordinary income and capital gains for prior years
that were not previously distributed.
Investment company taxable income generally is made up of dividends,
interest and net short-term capital gains in excess of net long-term capital
losses, less expenses. Net realized capital gains for a fiscal year are computed
by taking into account any capital loss carryforward of the Fund. Presently, the
Fund has no capital loss carryforwards.
If any net realized long-term capital gains in excess of net realized
short-term capital losses are retained by the Fund for reinvestment, requiring
federal income taxes to be paid thereon by the Fund, the Fund intends to elect
to treat such capital gains as having been distributed to shareholders. As a
result, each shareholder will report such capital gains as long-term capital
gains, will be able to claim a proportionate share of federal income taxes paid
by the Fund on such gains as a credit against the shareholder's federal income
tax liability, and will be entitled to increase the adjusted tax basis of the
shareholder's Fund shares by the difference between the shareholder's pro rata
share of such gains and the shareholder's tax credit.
Distributions of investment company taxable income are taxable to
shareholders as ordinary income.
Dividends from domestic corporations are not expected to comprise a
substantial part of the Fund's gross income. If any such dividends constitute a
portion of the Fund's gross income, a portion of the income distributions of the
Fund may be eligible for the 70% deduction for dividends received by
corporations. Shareholders will be informed of the portion of dividends which so
qualify. The dividends-received deduction is reduced to the extent the shares of
the Fund with respect to which the dividends are received are treated as
debt-financed under federal income tax law and is eliminated if either those
shares or the shares of the Fund are deemed to have been held by the Fund or the
shareholders, as the case may be, for less than 46 days.
Properly designated distributions of the excess of net long-term
capital gain over net short-term capital loss are taxable to shareholders as
long-term capital gain, regardless of the length of time the shares of the Fund
have been held by such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less will be treated as a
long-term capital loss to the extent of any amounts treated as distributions of
long-term capital gain during such six-month period.
Distributions of investment company taxable income and net realized
capital gains will be taxable as described above, whether received in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment
date.
All distributions of investment company taxable income and net realized
capital gain, whether received in shares or in cash, must be reported by each
shareholder on his or her federal income tax return. Dividends declared in
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October, November or December with a record date in such a month will be deemed
to have been received by shareholders on December 31, if paid during January of
the following year. Redemptions of shares, including exchanges for shares of
another Scudder Fund, may result in tax consequences (gain or loss) to the
shareholder and are also subject to these reporting requirements.
An individual may make a deductible IRA contribution of up to $2,000
or, if less, the amount of the individual's earned income for any taxable year
only if (i) neither the individual nor his or her spouse (unless filing separate
returns) is an active participant in an employer's retirement plan, or (ii) the
individual (and his or her spouse, if applicable) has an adjusted gross income
below a certain level ($40,050 for married individuals filing a joint return,
with a phase-out of the deduction for adjusted gross income between $40,050 and
$50,000; $25,050 for a single individual, with a phase-out for adjusted gross
income between $25,050 and $35,000). However, an individual not permitted to
make a deductible contribution to an IRA for any such taxable year may
nonetheless make nondeductible contributions up to $2,000 to an IRA (up to
$2,000 per individual for married couples if only one spouse has earned income)
for that year. There are special rules for determining how withdrawals are to be
taxed if an IRA contains both deductible and nondeductible amounts. In general,
a proportionate amount of each withdrawal will be deemed to be made from
nondeductible contributions; amounts treated as a return of nondeductible
contributions will not be taxable. Also, annual contributions may be made to a
spousal IRA even if the spouse has earnings in a given year if the spouse elects
to be treated as having no earnings (for IRA contribution purposes) for the
year.
Distributions by the Fund result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will then receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.
The Fund intends to qualify for and may make the election permitted
under Section 853 of the Code so that shareholders may (subject to limitations)
be able to claim a credit or deduction on their federal income tax returns for,
and will be required to treat as part of the amounts distributed to them, their
pro rata portion of qualified taxes paid by the Fund to foreign countries (which
taxes relate primarily to investment income). The Fund may make an election
under Section 853 of the Code, provided that more than 50% of the value of the
total assets of the Fund at the close of the taxable year consists of securities
in foreign corporations. The foreign tax credit available to shareholders is
subject to certain limitations imposed by the Code.
If the Fund does not make the election permitted under section 853 any
foreign taxes paid or accrued will represent an expense to the Fund which will
reduce its investment company taxable income. Absent this election, shareholders
will not be able to claim either a credit or a deduction for their pro rata
portion of such taxes paid by the Fund, nor will shareholders be required to
treat as part of the amounts distributed to them their pro rata portion of such
taxes paid.
Equity options (including covered call options written on portfolio
stock) and over-the-counter options on debt securities written or purchased by
the Fund will be subject to tax under Section 1234 of the Code. In general, no
loss will be recognized by the Fund upon payment of a premium in connection with
the purchase of a put or call option. The character of any gain or loss
recognized (i.e. long-term or short-term) will generally depend, in the case of
a lapse or sale of the option, on the Fund's holding period for the option, and
in the case of the exercise of a put option, on the Fund's holding period for
the underlying property. The purchase of a put option may constitute a short
sale for federal income tax purposes, causing an adjustment in the holding
period of any stock in the Fund's portfolio similar to the stocks on which the
index is based. If the Fund writes an option, no gain is recognized upon its
receipt of a premium. If the option lapses or is closed out, any gain or loss is
treated as short-term capital gain or loss. If a call option is exercised, the
character of the gain or loss depends on the holding period of the underlying
stock.
Positions of the Fund which consist of at least one stock and at least
one stock option or other position with respect to a related security which
substantially diminishes the Fund's risk of loss with respect to such stock
could be treated as a "straddle" which is governed by Section 1092 of the Code,
the operation of which may cause deferral of losses, adjustments in the holding
periods of stocks or securities and conversion of short-term capital losses into
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long-term capital losses. An exception to these straddle rules exists for
certain "qualified covered call options" on stock written by the Fund.
Many futures and forward contracts entered into by the Fund and listed
nonequity options written or purchased by the Fund (including options on debt
securities, options on futures contracts, options on securities indices and
options on currencies), will be governed by Section 1256 of the Code. Absent a
tax election to the contrary, gain or loss attributable to the lapse, exercise
or closing out of any such position generally will be treated as 60% long-term
and 40% short-term, and on the last trading day of the Fund's fiscal year, all
outstanding Section 1256 positions will be marked to market (i.e., treated as if
such positions were closed out at their closing price on such day), with any
resulting gain or loss recognized as 60% long-term and 40% short-term. Under
Section 988 of the Code, discussed below, foreign currency gain or loss from
foreign currency-related forward contracts, certain futures and options and
similar financial instruments entered into or acquired by the Fund will be
treated as ordinary income or loss.
Subchapter M of the Code requires the Fund to realize less than 30% of
its annual gross income from the sale or other disposition of stock, securities
and certain options, futures and forward contracts held for less than three
months. The Fund's options, futures and forward transactions may increase the
amount of gains realized by the Fund that are subject to this 30% limitation.
Accordingly, the amount of such transactions that the Fund may undertake may be
limited.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues receivables or
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables or pays such liabilities generally are treated as
ordinary income or ordinary loss. Similarly, on disposition of debt securities
denominated in a foreign currency and on disposition of certain options, futures
and forward contracts, gains or losses attributable to fluctuations in the value
of foreign currency between the date of acquisition of the security or contract
and the date of disposition are also treated as ordinary gain or loss. These
gains or losses, referred to under the Code as "Section 988" gains or losses,
may increase or decrease the amount of the Fund's investment company taxable
income to be distributed to its shareholders as ordinary income.
If the Fund invests in stock of certain foreign investment companies,
the Fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the Fund, other than the taxable
year of the excess distribution or disposition, would be taxed to the Fund at
the highest ordinary income rate in effect for such year, and the tax would be
further increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from the ownership of the foreign company's stock. Any
amount of distribution or gain allocated to the taxable year of the distribution
or disposition would be included in the Fund's investment company taxable income
and, accordingly, would not be taxable to the Fund to the extent distributed by
the Fund as a dividend to its shareholders.
Proposed regulations have been issued which may allow the Fund to make
an election to mark to market its shares of these foreign investment companies
in lieu of being subject to U.S. federal income taxation. At the end of each
taxable year to which the election applies, the Fund would report as ordinary
income the amount by which the fair market value of the foreign company's stock
exceeds the Fund's adjusted basis in these shares. No mark to market losses
would be recognized. The effect of the election would be to treat excess
distributions and gain on dispositions as ordinary income which is not subject
to a fund level tax when distributed to shareholders as a dividend.
Alternatively, the Fund may elect to include as income and gain its share of the
ordinary earnings and net capital gain of certain foreign investment companies
in lieu of being taxed in the manner described above.
If the Fund invests in certain high yield original issue discount
obligations issued by corporations, a portion of the original issue discount
accruing on the obligation may be eligible for the deduction for dividends
received by corporations. In such event, dividends of investment company taxable
income received from the Fund by its corporate shareholders, to the extent
attributable to such portion of accrued original issue discount, may be eligible
for this deduction for dividends received by corporations if so designated by
the Fund in a written notice to shareholders.
The Fund will be required to report to the IRS all distributions of
investment company taxable income and capital gains as well as gross proceeds
from the redemption or exchange of Fund shares, except in the case of certain
exempt shareholders. Under the backup withholding provisions of Section 3406 of
the Code, distributions of investment company taxable income and capital gains
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and proceeds from the redemption or exchange of the shares of a regulated
investment company may be subject to withholding of federal income tax at the
rate of 31% in the case of non-exempt shareholders who fail to furnish the
investment company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if a Fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of the Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions of the Fund's shares.
The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of shares of the Fund, including the possibility that
such a shareholder may be subject to a U.S. withholding tax at a rate of 30% (or
at a lower rate under an applicable income tax treaty) on amounts constituting
ordinary income received by him or her, where such amounts are treated as income
from U.S. sources under the Code.
Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this statement of additional information
in light of their particular tax situations.
PORTFOLIO TRANSACTIONS
Brokerage Commissions
To the maximum extent feasible, the Adviser places orders for portfolio
transactions for the Fund through the Distributor which in turn places orders on
behalf of the Fund with issuers, underwriters or other brokers and dealers. The
Distributor receives no commissions, fees or other remuneration from the Fund
for this service. Allocation of brokerage is supervised by the Adviser.
The primary objective of the Adviser in placing orders for the purchase
and sale of securities for the Fund's portfolio is to obtain the most favorable
net results taking into account such factors as price, commission where
applicable (negotiable in the case of U.S. national securities exchange
transactions but generally fixed in the case of foreign exchange transactions)
size of order, difficulty of execution and skill required of the executing
broker/dealer. The Adviser seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through the familiarity of
the Distributor with commissions charged on comparable transactions, as well as
by comparing commissions paid by the Fund to reported commissions paid by
others. The Adviser reviews on a routine basis commission rates, execution and
settlement services performed, making internal and external comparisons.
When it can be done consistently with the policy of obtaining the most
favorable net results, it is the Adviser's practice to place such orders with
brokers and dealers who supply market quotations to the Custodian for appraisal
purposes, or who supply research, market and statistical information to the
Fund. The term "research, market and statistical information" includes advice as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; and analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts. The Adviser is not authorized when placing portfolio transactions
for the Fund to pay a brokerage commission (to the extent applicable) in excess
of that which another broker might have charged for executing the same
transaction solely on account of the receipt of research, market or statistical
information. The Adviser will not place orders with brokers or dealers on the
basis that the broker or dealer has or has not sold shares of the Fund. Except
for implementing the policy stated above, there is no intention to place
portfolio transactions with particular brokers or dealers or groups thereof. In
effecting transactions in over-the-counter securities, orders are placed with
the principal market makers for the security being traded unless, after
exercising care, it appears that more favorable results are available otherwise.
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Although certain research, market and statistical information from
brokers and dealers can be useful to the Fund and to the Adviser, it is the
opinion of the Adviser that such information will only supplement the Adviser's
own research effort since the information must still be analyzed, weighed, and
reviewed by the Adviser's staff. Such information may be useful to the Adviser
in providing services to clients other than the Fund, and not all such
information will be used by the Adviser in connection with the Fund. Conversely,
such information provided to the Adviser by brokers and dealers through whom
other clients of the Adviser effect securities transactions may be useful to the
Adviser in providing services to the Fund.
The Directors intend to review whether the recapture for the benefit of
the Fund of some portion of the brokerage commissions or similar fees paid by
the Fund on portfolio transactions is legally permissible and advisable. Within
the past three years no such recapture has been effected.
In the fiscal years ended March 31, 1997, 1996 and 1995, the Fund paid
brokerage commissions of $5,275,727, $7,301,706 and $5,463,019, respectively.
For the fiscal year ended March 31, 1997, $4,915,740 (93%) of the total
brokerage commissions paid by the Fund resulted from orders for transactions,
placed consistent with the policy of seeking to obtain the most favorable net
results, with brokers and dealers who provided supplementary research, market
and statistical information to the Fund or the Adviser. The amount of such
transactions aggregated $1,688,398,843 (92% of all brokerage transactions). The
balance of such brokerage was not allocated to particular broker or dealer with
regard to the above-mentioned or other special factors.
Portfolio Turnover
The Fund's average annual portfolio turnover rate is the ratio of the
lesser of sales or purchases to the monthly average value of the portfolio
securities owned during the year, excluding all securities with maturities or
expiration dates at the time of acquisition of one year or less. The Fund's
portfolio turnover rates for the fiscal years ended March 31, 1997 and 1996 were
35.8% and 45.2%, respectively. Purchases and sales are made for the Fund's
portfolio whenever necessary, in management's opinion, to meet the Fund's
objective.
NET ASSET VALUE
The net asset value of shares of the Fund is computed as of the close
of regular trading on the Exchange on each day the Exchange is open for trading.
The Exchange is scheduled to be closed on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. Net asset value per share is determined by dividing
the value of the total assets of the Fund, less all liabilities, by the total
number of shares outstanding.
An exchange-traded equity security is valued at its most recent sale
price. Lacking any sales, the security is valued at the calculated mean between
the most recent bid quotation and the most recent asked quotation (the
"Calculated Mean"). Lacking a Calculated Mean, the security is valued at the
most recent bid quotation. An equity security which is traded on the Nasdaq
Stock Market ("Nasdaq") is valued at its most recent sale price. Lacking any
sales, the security is valued at the most recent bid quotation. The value of an
equity security not quoted on the Nasdaq System, but traded in another
over-the-counter market, is its most recent sale price. Lacking any sales, the
security is valued at the Calculated Mean. Lacking a Calculated Mean, the
security is valued at the most recent bid quotation.
Debt securities, other than short-term securities, are valued at prices
supplied by the Fund's pricing agent(s) which reflect broker/dealer supplied
valuations and electronic data processing techniques. Short-term securities
purchased with remaining maturities of sixty days or less shall be valued by the
amortized cost method, which the Board believes approximates market value. If it
is not possible to value a particular debt security pursuant to these valuation
methods, the value of such security is the most recent bid quotation supplied by
a bona fide marketmaker. If it is not possible to value a particular debt
security pursuant to the above methods, the Adviser may calculate the price of
that debt security, subject to limitations established by the Board.
An exchange traded options contract on securities, currencies, futures
and other financial instruments is valued at its most recent sale price on such
exchange. Lacking any sales, the options contract is valued at the Calculated
Mean. Lacking any Calculated Mean, the options contract is valued at the most
recent bid quotation in the case of a purchased options contract, or the most
recent asked quotation in the case of a written options contract. An options
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contract on securities, currencies and other financial instruments traded
over-the-counter is valued at the most recent bid quotation in the case of a
purchased options contract and at the most recent asked quotation in the case of
a written options contract. Futures contracts are valued at the most recent
settlement price. Foreign currency exchange forward contracts are valued at the
value of the underlying currency at the prevailing exchange rate.
If a security is traded on more than one exchange, or upon one or more
exchanges and in the over-the-counter market, quotations are taken from the
market in which the security is traded most extensively.
If, in the opinion of the Fund's Valuation Committee, the value of a
portfolio asset as determined in accordance with these procedures does not
represent the fair market value of the portfolio asset, the value of the
portfolio asset is taken to be an amount which, in the opinion of the Valuation
Committee, represents fair market value on the basis of all available
information. The value of other portfolio holdings owned by the Fund is
determined in a manner which, in the discretion of the Valuation Committee most
fairly reflects fair market value of the property on the valuation date.
Following the valuations of securities or other portfolio assets in
terms of the currency in which the market quotation used is expressed ("Local
Currency"), the value of these portfolio assets in terms of U.S. dollars is
calculated by converting the Local Currency into U.S. dollars at the prevailing
currency exchange rate on the valuation date.
ADDITIONAL INFORMATION
Experts
The Financial Highlights of the Fund included in the prospectus and the
Financial Statements incorporated by reference in this Statement of Additional
Information have been so included or incorporated by reference in reliance on
the report of Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts 02109, independent accountants, and given on the authority of that
firm as experts in accounting and auditing.
Other Information
Many of the investment changes in the Fund will be made at prices
different from those prevailing at the time they may be reflected in a regular
report to shareholders of the Fund. These transactions will reflect investment
decisions made by the Adviser in the light of its other portfolio holdings and
tax considerations and should not be construed as recommendations for similar
action by other investors.
The CUSIP number of the Fund is 811165-10-9.
The Fund has a fiscal year end of March 31.
The Fund employs Brown Brothers Harriman and Company, 40 Water Street,
Boston, Massachusetts 02109 as Custodian for the Fund.
The law firm of Dechert Price & Rhoads is counsel to the Fund.
Scudder Service Corporation ("Service Corporation"), P.O. Box 2291,
Boston, Massachusetts, 02107-2291, a subsidiary of the Adviser, is the transfer
and dividend disbursing agent for the Fund. Service Corporation also serves as
shareholder service agent and provides subaccounting and recordkeeping services
for shareholder accounts in certain retirement and employee benefit plans. The
Fund pays Service Corporation an annual fee of $26.00 for each retail account
and $29.00 for each retirement account. Included in services to shareholders was
$3,050,321 charged to the Fund by Scudder Service Corporation during the fiscal
year ended March 31, 1997, of which $296,627 was unpaid at March 31, 1997.
Scudder Fund Accounting Corporation, Two International Place, Boston,
Massachusetts, 02110-4103, a subsidiary of the Adviser, computes net asset value
for the Fund. The Fund pays Scudder Fund Accounting Corporation an annual fee
equal to 0.065% of the first $150 million of average daily net assets, 0.040% of
such assets in excess of $150 million, 0.020% of such assets in excess of $1
billion, plus holding and transaction charges for this service. For the year
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ended March 31, 1997, Scudder Fund Accounting Corporation's fee aggregated
$795,122, of which $65,991 was unpaid at March 31, 1997.
Scudder Trust Company, an affiliate of the Adviser, provides
subaccounting and recordkeeping services for shareholder accounts in certain
retirement and employee benefit plans. Annual service fees are paid by the Fund
to Scudder Trust Company, Two International Place, Boston, Massachusetts
02110-4103, an affiliate of the Adviser, for such accounts. The Fund pays
Scudder Trust Company an annual fee of $17.55 per shareholder account. The Fund
incurred fees of $930,582, $520,034 and $351,249 during the fiscal years ended
March 31, 1997, 1996 and 1995, respectively, of which $111,209 was unpaid at
March 31, 1997 for the fiscal year ended March 31, 1997.
The Fund's prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the Fund has
filed with the Commission under the Securities Act of 1933 and reference is
hereby made to the Registration Statement for further information with respect
to the Fund and the securities offered hereby. This Registration Statement and
its amendments are available for inspection by the public at the Commission in
Washington, D.C.
FINANCIAL STATEMENTS
The financial statements, including the investment portfolio of the
Fund, together with the Report of Independent Accountants, Financial Highlights
and notes to financial statements in the Annual Report to the Shareholders of
the Fund dated March 31, 1997 are incorporated herein by reference and are
hereby deemed to be a part of this Statement of Additional Information by
reference in its entirety.
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APPENDIX
The following is a description of the ratings given by Moody's and S&P
to corporate bonds.
Ratings of Corporate Bonds
S&P: Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong. Debt rated AA has a very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree. Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to adverse conditions.
Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating. Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.
Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating. The rating CC typically is applied to debt subordinated
to senior debt that is assigned an actual or implied CCC rating. The rating C
typically is applied to debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued. The rating C1 is reserved for income bonds on which no interest
is being paid. Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period had not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Moody's: Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues. Bonds
which are rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risks appear somewhat larger than in Aaa securities. Bonds which are rated
A possess many favorable investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a susceptibility
to impairment sometime in the future.
<PAGE>
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this class. Bonds
which are rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
<PAGE>
Scudder
International
Fund
Annual Report
March 31, 1997
Pure No-Load(TM) Funds
A fund offering opportunities for long-term growth of capital primarily from
foreign equity securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
16 Financial Statements
19 Financial Highlights
20 Notes to Financial Statements
24 Report of Independent Accountants
25 Tax Information
28 Officers and Directors
29 Investment Products and Services
30 Scudder Solutions
In Brief
o For the fiscal year ended March 31, 1997, Scudder International Fund provided
a total return of 10.74%, comparing very favorably to the unmanaged MSCI EAFE
plus Canada Index as world equity markets provided mixed performance over the
period.
o We continue to see many investment opportunities in Europe, where the Fund is
focusing on companies which are restructuring to build value for their
shareholders.
o Valuations in Japan have become more favorable, and Fund holdings there are
tilted toward globally competitive technology exporters positioned to benefit
from a weak yen.
o Morningstar assigned the Fund an overall 4-star rating for its risk-adjusted
performance among 939 international equity funds as of March 31, 1997.*
* Morningstar ratings are subject to change monthly and are calculated from the
Fund's three-, five-, and ten-year average annual returns in excess of 90-day
Treasury bill returns with appropriate fee adjustments, and a risk factor that
reflects Fund performance below 90-day T-bill returns. In an investment
category, 10% of funds receive 5 stars and the next 22.5% receive 4 stars. In
the international equity category, the Fund received a 4-star rating for the
three-, five-, and ten-year periods, among 478, 219, and 79 Funds,
respectively. Past performance is no guarantee of future results.
2 - SCUDDER INTERNATIONAL FUND
<PAGE>
Letter From the Fund's Chairman
Dear Shareholders,
We are pleased to present the annual report for Scudder International Fund
for the fiscal year ended March 31, 1997. As outlined in the portfolio
management discussion that follows, the Fund provided a strong total return over
the period of 10.74%. Economic reforms, corporate restructurings, and improving
growth prospects are providing a favorable backdrop in many non-U.S. investment
venues. We believe Scudder International Fund remains an attractive alternative
for investors seeking broad-based exposure to the opportunities for capital
appreciation to be found in overseas equity markets.
We are also pleased with the recognition that the Scudder Fund family has
recently received from Morningstar. This fund rating service recently ranked the
Scudder Family of Funds in the top 4 among 20 leading mutual fund companies for
stability in management and conformity to investment style.* According to
Morningstar, these attributes "... can be hard to come by in the fund industry.
In fact, investors can't be sure who'll sign next quarter's shareholder letter,
or that this month's large-cap growth fund will still be a large-cap growth fund
next month. But a few fund families have done a better job than most at
retaining talent and keeping their funds predictable." We will seek to maintain
this track record of consistent management.
For those of you who are interested in new products and services, we
recently introduced the Scudder Pathway Series. Pathway simplifies investing
through the "fund of funds" approach offering four distinct portfolios:
Conservative, Balanced, Growth, and International. Each portfolio invests in a
select mix of Scudder Funds, providing flexibility, diversification, and
simplicity for regular and retirement plan investors. For more complete
information on Scudder products and services, please turn to page 29.
Thank you for your continued investment in Scudder International Fund. If
you have questions about your account, please call our Investor Relations
representatives at 1-800-225-2470; they will be happy to assist you. You can
also obtain information by visiting our Internet web site at
http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder International Fund
* Morningstar Investor, February 1997
3 - SCUDDER INTERNATIONAL FUND
<PAGE>
PERFORMANCE UPDATE as of March 31, 1997
- ----------------------------------------------------------------
Fund Index Comparisons
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
3/31/97 $10,000 Cumulative Annual
- --------------------------------------------
Scudder International Fund
- --------------------------------------------
1 Year $ 11,074 10.74% 10.74%
5 Year $ 17,322 73.22% 11.61%
10 Year $ 23,456 134.56% 8.90%
- --------------------------------------------
MSCI EAFE & Canada Index
- --------------------------------------------
1 Year $ 10,212 2.12% 2.12%
5 Year $ 16,493 64.93% 10.52%
10 Year $ 17,935 79.35% 6.01%
- --------------------------------------------
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
SCUDDER INTERNATIONAL FUND
Year Amount
- ----------------------
87 $10,000
88 $ 9,953
89 $11,379
90 $13,323
91 $13,517
92 $13,541
93 $14,776
94 $18,129
95 $17,763
96 $21,181
97 $23,456
MSCI EAFE & CANADA INDEX
Year Amount
- ----------------------
87 $10,000
88 $11,560
89 $12,907
90 $11,503
91 $11,784
92 $10,874
93 $12,068
94 $14,710
95 $15,593
96 $17,563
97 $17,935
Yearly periods ended March 31
The Morgan Stanley Capital International (MSCI) Europe, Australia, the Far
East (EAFE) & Canada Index is an unmanaged capitalization-weighted measure of
stock markets in Europe, Australia, the Far East and Canada. Index returns
assume dividends reinvested net of withholding tax and, unlike Fund returns, do
not reflect any fees or expenses.
- -----------------------------------------------------------------
Returns and Per Share Information
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly Periods Ended March 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
------------------------------------------------------------------------------------------------
NET ASSET VALUE... $ 33.43 $ 34.79 $ 37.00 $ 34.69 $ 34.36 $ 35.69 $ 42.96 $ 39.72 $ 45.71 $ 48.07
INCOME DIVIDENDS.. $ .82 $ .13 $ .43 $ .74 $ - $ .83 $ .69 $ - $ .40 $ 1.28
CAPITAL GAINS
DISTRIBUTIONS..... $ 9.39 $ 3.06 $ 3.15 $ 1.98 $ .40 $ .86 $ .09 $ 2.42 $ 1.18 $ 1.19
FUND TOTAL
RETURN (%)........ -.47 14.34 17.08 1.46 .18 9.12 22.69 -2.02 19.25 10.74
INDEX TOTAL
RETURN (%)........ 15.60 11.64 -10.87 2.44 -7.73 10.99 21.87 6.02 12.62 2.12
</TABLE>
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.
4 - SCUDDER INTERNATIONAL FUND
<PAGE>
PORTFOLIO SUMMARY as of March 31, 1997
- ---------------------------------------------------------------------------
Geographical
(Excludes 7% Cash Equivalents)
- ---------------------------------------------------------------------------
Europe 61%
Japan 15%
Pacific Basin 13%
Latin America 9%
Canada 2%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The portfolio is overweighted in
Europe, where we see many
opportunities, at the expense of
Japan.
- --------------------------------------------------------------------------
Sectors
(Excludes 7% Cash Equivalents)
- --------------------------------------------------------------------------
Manufacturing 24%
Financial 14%
Durables 8%
Utilities 7%
Communications 6%
Energy 6%
Health 6%
Service Industries 5%
Media 4%
Other 20%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Many overseas manufacturing and
financial companies are
beneficiaries of corporate
restructuring and economic reform.
- --------------------------------------------------------------------------
Ten Largest Equity Holdings
(14% of Portfolio)
- --------------------------------------------------------------------------
1. TELECOMUNICACOES BRASILEIRAS S.A.
Telecommunication services
2. AEGON INSURANCE GROUP NV
Insurance company
3. BAYER AG CHEMICAL PRODUCER
4. ZENECA GROUP PLC
Pharmaceuticals and agrochemicals
holding company
5. L.M. ERICSSON TELEPHONE CO.
Manufacturer of cellular telephone
equipment
6. SMITHKLINE BEECHAM PLC
Maker of ethical drugs and healthcare products
7. VEBA AG
Electric utility, oil and chemical distributor
8. CENTRAIS ELECTRICAS BRASILEIRAS S/A
Electric Utility
9. DAIMLER-BENZ AG
Automobile and truck manufacturer
10. BRITISH PETROLEUM PLC
International petroleum company
Top holdings include Brazilian
telecommunications and utility
companies in the process of
being privatized.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio, see page
10. A monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - SCUDDER INTERNATIONAL FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
For the fiscal year ended March 31, 1997, Scudder International Fund provided a
strong total return of 10.74%. The Fund's performance over the period compares
very favorably to the 2.12% return of the unmanaged MSCI Europe, Australia, and
Far East plus Canada Index, the Fund's benchmark.
European Equities Lead Major
Markets
The period covered by this report saw mixed performance in the world equity
markets. Japanese equities remained under pressure for much of the period, as
problems in the banking sector, lackluster growth, the selling of
cross-holdings, and the absence of domestic retail investors continued to create
uncertainty. Weakness in Japan was offset by strong performance from most
European markets. Fund performance relative to the benchmark MSCI index
benefited over the period from an overweighting of Europe at the expense of
Japan. European and Japanese holdings stood at 61% and 15% of equity assets,
respectively, as of March 31.
The developments fueling stock prices in Continental Europe were both cyclical
and structural. While European fiscal policy remains tight in advance of the
Maastricht deadline, falling interest rates and weaker currencies are providing
slightly higher-than-expected growth. Ongoing corporate restructuring provided
an additional impetus and was reflected in strong performance from core markets
such as Germany and France. Smaller European markets fared best led by Finland,
where equities were driven up by falling interest rates and excellent
performance from Nokia, a portfolio holding and substantial part of that
country's market. Despite uncertainty in the first quarter of 1997 over European
Monetary Union (EMU), peripheral markets Spain and Portugal turned in excellent
performance over the 12-month period, supported by falling interest rates and
the expectation that these countries would form part of the first round of EMU.
Emerging markets were mixed, as most Asian countries faltered. Korea and
Thailand were particularly hard hit by problems in the banking sector. Hong
Kong's market, after excellent performance in 1996, became unsettled in the
first quarter of 1997 by an upward trend in U.S. interest rates, local
government moves to dampen the property market, and renewed uncertainty over the
upcoming transition to Chinese sovereignty. Brazil continued to deliver
spectacular returns, propelled by positive news on deregulation and economic
reform.
Economic Reforms, Improved Growth Brighten Investment Outlook
Europe today offers investors a number of opportunities and challenges. From a
cyclical standpoint, the combination of low interest rates and weakening
currencies is leading to upward revisions in economic growth and corporate
earnings forecasts. In addition, there are important structural changes taking
place which we believe should have long term benefits to shareholders in
European companies. Long-standing political and economic structures are losing
viability due to the pressure of global competition, aging dependent
6 - SCUDDER INTERNATIONAL FUND
<PAGE>
populations, and the limits of fiscal support. There is widespread recognition
of the imperative to change -- to deregulate, to privatize, to reduce labor
costs, to cut social welfare spending. It will not be an easy evolution and
investors may be shaken by transitional jitters from time to time, but the
potential rewards are exciting.
The last 12 months marked an important transition point in the development of an
equity culture in Continental Europe, as governments pushed ahead with the
privatization process. The flotation of Deutsche Telecom in late 1996 was a
signal event as the largest single privatization in European stock market
history. While the German equity market is among the larger European markets, it
is still underdeveloped by international standards. The Deutsche Telecom issue
was widely publicized by the government and attracted broad domestic interest.
Given the success of the offering, German investors may well be encouraged to
consider placing more of their large savings in equities. Elsewhere, the very
successful privatization of the final government stake in Telefonica de Espana
was recently heralded as the arrival of popular capitalism in Spain, with demand
from domestic retail investors far exceeding supply. Emerging market Portugal
has made remarkable strides towards the European mainstream, with a virtual
doubling of its market capitalization over a four-year period through the
privatization process.
In Japan, a falling currency and low interest rates provided critical support
for an economy faced with an increase in the consumption tax and ongoing
problems in the banking system. Japanese authorities have announced additional
measures to deregulate the economy and financial system, most notably plans to
remove restrictions on foreign exchange. Economic recovery is forecast for 1997
with an acceleration of growth for 1998. Corporate earnings should improve in a
more positive growth environment, with a weaker yen and historically low
interest rates providing additional impetus.
The Japanese market is undergoing a secular transition to a valuation structure
more in keeping with global standards. While the transition may be a slow one, a
greater focus on international accounting standards together with increased
consolidation of disclosure from fiscal 1998 forward should bring Japanese
corporate accounting closer to that of its global peers. Though deregulation and
reform are ongoing and are as important to Japan as to Europe, Japan's pace
today is slower and there is further to go.
Smaller Asian equity markets have suffered in recent years as a combination of
cyclical forces have slowed growth: restrictive Asian central bank policy,
economic weakness in the major export markets of Europe and Japan, and a plunge
in the electronics and textile sectors. Looking forward, the outlook varies by
market. Thailand and Korea face banking and structural adjustments, while Hong
Kong has the special issue of the transition to Chinese sovereignty. In general,
though, valuations reflect these uncertainties.
7 - SCUDDER INTERNATIONAL FUND
<PAGE>
Focus on European
Restructuring Beneficiaries,
Japanese Global Competitors
In Europe, we have emphasized companies which are restructuring and focusing on
building value for shareholders, such as Daimler Benz in Germany and Alcatel
Alsthom and Generale des Eaux in France. The restructuring theme is also evident
in the purchase of VW, which is realizing substantial cost savings by trimming
production platforms from 16 to four. We are also positioned in European
companies with effective strategies and products in growth markets. These
include telecommunication infrastructure provider Nokia in Finland and
information technology leader SAP in Germany. A focus on telecommunications
stocks in Southern Europe, where restructuring, improved financials, and
developing market opportunities have had a positive impact on the bottom line,
has been rewarded by excellent stock performance from holdings in Portugal
Telecom, Telecom Italia Mobile, and Telefonica de Espana.
Industry consolidation is another theme central to the portfolio. Pharmaceutical
holdings Schering, Novartis, Zeneca, and SmithKline Beecham have benefited from
merger activity designed to cut costs and to achieve economies of scale in view
of global competition. With the German banking sector undergoing fundamental
structural change driven by deregulation, technology, and increasing foreign
competition, we have taken positions in Commerzbank and Bayerische Vereinsbank,
companies we perceive as likely winners in this sector.
Valuations in Japan have become more favorable, but there remains a dichotomy
between those companies which have not moved beyond the local economy and those
companies which are successful global competitors. We have maintained a
portfolio tilt toward high quality technology exporters such as Sony, Canon and
Hitachi. We believe that share prices in this group do not fully reflect the
increasingly competitive position of these global companies arising from a weak
yen, the recovery in semiconductors, and new products. Honda Motors turned in
excellent performance over the period as a result of strong demand at home and
abroad, including a booming recreational vehicle market. Bridgestone has a
strong global position in tires and is a beneficiary of growing demand for cars
in Asia. Among domestically-oriented holdings in Japan, telecommunications
company DDI is benefiting from high traffic growth in mobile and data
communications, has a relatively low investment burden, and is attractively
valued by global standards.
Turning to less-developed investment venues, while improving profitability
combined with attractive stock valuations following three years of market
stagnation may lead to a rebound in selected markets, we remain generally
cautious on the smaller bourses in the Pacific Rim. However, despite weakness in
the region, several of our holdings turned in excellent performance over the
period. Positions such as China Development and Far Eastern Department Store in
Taiwan were amply rewarded as the Taiwanese market bucked the regional trend,
helped by easier liquidity, relaxed criteria for government pension plan
investments, and expectations for stronger growth. In Hong Kong, market jitters
8 - SCUDDER INTERNATIONAL FUND
<PAGE>
were offset in the portfolio by positive stock selection.
Brazil remains our preferred market in Latin America, as lower inflation and
ongoing deregulation have translated into spectacular share price performance.
Our focus in Brazil has largely been on a small number of government-controlled
companies which are in the process of being restructured prior to their eventual
privatization: telecommunications company Telebras, utility Electrobras, and oil
company Petrobras. Though we remain cautious on the broader Mexican market, our
one position there, Telmex, has performed well. When purchased, the company was
one of the few value stories in a market dominated by growth stocks. Telmex has
the potential for aggressive cost cutting and is using its large cash reserves
to repurchase shares.
Going forward, we will continue to seek opportunities presented by the
structural changes well underway in Europe, globally competitive companies in
Japan, and select emerging markets. We believe Scudder International Fund
remains an appropriate vehicle for investors seeking valuable exposure to
overseas equity markets, and we thank you for your continued investment.
Sincerely,
Your Portfolio Management Team
/s/Carol L. Franklin /s/Nicholas Bratt
Carol L. Franklin Nicholas Bratt
/s/Irene T. Cheng /s/Joan R. Gregory
Irene T. Cheng Joan R. Gregory
/s/Francisco S. Rodrigo III
Francisco S. Rodrigo III
Scudder International Fund:
A Team Approach to Investing
Scudder International Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management
process. Team members work together to develop investment strategies and
select securities for the Fund's portfolio. They are supported by Scudder's
large staff of economists, research analysts, traders, and other investment
specialists who work in Scudder's offices across the United States and abroad.
Lead Portfolio Manager Carol L. Franklin joined Scudder International Fund's
portfolio management team in 1986 and has been responsible for setting the
Fund's investment strategy and overseeing security selection since 1992.
Carol, who has 19 years of experience in finance and investing, joined Scudder
in 1981. Nicholas Bratt, portfolio manager, directs Scudder's overall global
equity investment strategies. Nick joined Scudder and the team in 1976. Irene
T. Cheng joined Scudder and the team in 1993 as a portfolio manager, and has
12 years of experience in finance and investing. Joan R. Gregory, portfolio
manager, focuses on stock selection, a role she has played since she joined
Scudder in 1992. Joan, who joined the team in 1994, has been involved with
investment in global and international stocks since 1989. Francisco S. Rodrigo
III, portfolio manager, joined Scudder and the team in 1994. Francisco has
been involved with investment in global and international stocks and bonds as
a portfolio manager and analyst since 1989.
9 - SCUDDER INTERNATIONAL FUND
<PAGE>
<PAGE>
Investment Portfolio as of March 31, 1997
<TABLE>
<CAPTION>
Principal Market
Amount (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 1.5%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 3/31/97 at 6.375%, to be repurchased at
$38,943,895 on 4/1/97, collateralized by a
$39,800,000 U.S. Treasury
----------
Note, 6.375%, 3/31/01 (Cost $38,937,000) ........................................... 38,937,000 38,937,000
----------
Commercial Paper 5.7%
- ------------------------------------------------------------------------------------------------------------------------------
Deutsche Bank Financial Inc. Discount Note, 4/2/97 ................................... 20,000,000 19,996,822
Dresdner US Finance Inc. Discount Note, 4/3/97 ....................................... 15,000,000 14,995,508
Ford Motor Credit Co. Discount Note, 4/2/97 .......................................... 17,000,000 16,997,497
General Electric Capital Corp. Discount Note, 4/3/97 ................................. 45,000,000 44,986,717
Sun Trust Bank Discount Note, 4/3/97 ................................................. 20,000,000 19,993,744
Texaco Inc. Discount Note, 4/2/97 .................................................... 30,000,000 29,995,600
- ------------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper (Cost $146,965,888) 146,965,888
- ------------------------------------------------------------------------------------------------------------------------------
Convertible Bonds 0.8%
- ------------------------------------------------------------------------------------------------------------------------------
Japan 0.5%
Softbank Corp., 0.5%, 3/29/02 .................................................. JPY 1,500,000,000 12,929,571
----------
Malaysia 0.0%
Renong Berhad ICULS, 4%, 5/21/01 ............................................... MYR 1,620,000 666,761
----------
Philippines 0.3%
International Container Terminal, Inc., 1.75%, 3/13/04 ......................... 7,515,000 7,477,425
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $23,114,612) 21,073,757
- ------------------------------------------------------------------------------------------------------------------------------
Shares
==============================================================================================================================
Common Stocks 92.0%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 0.8%
YPF S.A. "D" (ADR) (Petroleum company) ............................................... 785,000 20,802,500
----------
Australia 1.1%
National Australia Bank, Ltd. (Commercial bank) ...................................... 1,141,784 14,455,885
Woodside Petroleum Ltd. (Major oil and gas producer) ................................. 1,814,600 13,363,484
----------
27,819,369
----------
Brazil 6.9%
Centrais Eletricas Brasileiras S/A "B" (pfd.) (Electric utility) ..................... 81,586,227 35,122,322
Companhia Energetica de Minas Gerais (pfd.) (Electric power utility) ................. 673,000,000 27,701,487
Companhia Vale do Rio Doce (pfd.) (Diverse mining and industrial complex) ............ 710,000 16,187,397
Petroleo Brasileiro S/A (pfd.) (Petroleum company) ................................... 139,000,000 27,622,846
Telecomunicacoes Brasileiras S.A. (pfd.) (Telecommunication services) ................ 420,000,000 43,457,163
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Usinas Siderurgicas de Minas Gerais S/A (pfd.) (Non-coated flat
products and electrolytic galvanized products) ...................................... 24,700,000,000 27,748,879
-----------
177,840,094
-----------
Canada 1.8%
Canadian National Railway Co. (Railroad operator) .................................... 670,000 23,737,585
Canadian Pacific Ltd. (Transportation and natural resource conglomerate) ............. 225,000 5,400,000
Canadian Pacific Ltd. (Ord.) ......................................................... 711,914 16,995,030
-----------
46,132,615
-----------
Finland 1.2%
Nokia AB Oy "A" (Leading manufacturer of telecommunications equipment and
cellular telephones) ............................................................... 515,000 30,772,580
-----------
France 9.1%
AXA SA (Insurance group providing insurance, finance and real estate services) ....... 302,857 20,082,583
Alcatel Alsthom (Manufacturer of transportation,
telecommunication and energy equipment) ............................................. 107,700 13,005,717
Carrefour (Hypermarket operator and food retailer) ................................... 55,800 34,695,485
Compagnie Financiere de Paribas (Finance and investment company) ..................... 309,814 21,614,417
Compagnie Generale des Eaux (Water utility) .......................................... 120,000 16,350,521
Lafarge SA (Producer of cement, concrete and aggregates) ............................. 220,000 15,274,023
Pinault-Printemps, SA (Distributor of consumer goods) ................................ 50,000 21,551,340
Rhone-Poulenc SA "A" (Medical, agricultural and consumer chemicals) .................. 681,912 23,112,985
Schneider SA (Manufacturer of electronic components and automated
manufacturing systems) .............................................................. 528,223 30,294,382
Total SA "B" (International oil and gas exploration, development and production) ..... 363,336 31,509,181
Valeo SA (Automobile and truck components manufacturer) .............................. 122,399 8,244,955
-----------
235,735,589
-----------
Germany 13.3%
BASF AG (Leading international chemical producer) .................................... 771,000 29,120,504
Bayer AG (Leading chemical producer) ................................................. 905,000 37,654,077
Bayerische Vereinsbank AG (Commercial bank) .......................................... 550,000 22,784,772
Commerzbank AG* (Worldwide multi-service bank) ....................................... 808,400 23,263,309
Daimler-Benz AG (Automobile and truck manufacturer) .................................. 437,000 34,949,520
Hoechst AG (Chemical producer) ....................................................... 804,000 32,560,072
Mannesmann AG (Bearer) (Diversified construction and technology company) ............. 83,762 32,038,463
RWE AG (pfd.) (Producer and marketer of petroleum and chemical products) ............. 846,100 30,536,703
SAP AG (pfd.) (Computer software manufacturer) ....................................... 113,000 19,375,300
Schering AG (Pharmaceutical and chemical producer) ................................... 243,000 24,518,525
VEBA AG (Electric utility, distributor of oil and chemicals) ......................... 621,500 35,192,251
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Volkswagen AG* (Leading automobile manufacturer) ..................................... 39,550 21,861,571
-----------
343,855,067
-----------
Hong Kong 5.7%
First Pacific Co., Ltd. (International management and investment company) ............ 14,387,681 18,289,346
Great Eagle Holdings Ltd. (Property development) ..................................... 2,886,000 9,534,709
Guoco Group Ltd. (Investment holding company) ........................................ 516,000 2,550,467
HSBC Holdings Ltd. (Bank) ............................................................ 1,223,831 28,350,261
Hong Kong & China Gas Co., Ltd. (Gas utility) ........................................ 9,734,408 18,278,632
Hong Kong & China Gas Co., Ltd. Warrants* ............................................ 1,027,867 464,276
Hutchison Whampoa, Ltd. (Container terminal and real estate company) ................. 3,838,584 28,979,979
Kerry Properties Ltd. (Real estate company) .......................................... 8,352,000 18,539,161
Television Broadcasts, Ltd. (Television broadcasting) ................................ 5,810,000 23,618,801
-----------
148,605,632
-----------
Hungary 0.1%
First Hungary Fund (Investment company) (b) .......................................... 3,619 3,365,670
-----------
Indonesia 1.3%
Asia Pacific Resources International Holdings Ltd.* (Manufacturer of rayon
fiber for Asian textile markets, owner of world's leading paper pulp mill) .......... 126,600 609,263
Asia Pulp & Paper Co., Ltd.* (ADR) (Producer of pulp and paper) ...................... 853,495 8,855,011
HM Sampoerna (Foreign registered) (Tobacco company) .................................. 2,400,000 11,245,314
Indah Kiat Pulp & Paper (Foreign registered) (Producer of pulp and paper) ............ 9,056,893 6,695,537
Indah Kiat Pulp & Paper Warrants* .................................................... 822,101 256,800
Pabrik Kertas Tjiwi Kimia (Operator of pulp and paper factory) ....................... 5,800,240 5,797,824
-----------
33,459,749
-----------
Italy 1.3%
Telecom Italia Mobile SpA (Ord.) (Cellular telecommunication services) ............... 11,850,000 34,116,059
-----------
Japan 13.2%
Bridgestone Corp. (Leading automobile tire manufacturer) ............................. 1,505,000 28,233,201
Canon Inc. (Leading producer of visual image and information equipment) .............. 1,488,000 31,884,855
DDI Corp. (Long distance telephone and cellular operator) ............................ 2,975 18,787,701
Hitachi Ltd. (General electronics manufacturer) ...................................... 2,981,000 26,514,919
Honda Motor Co., Ltd. (Leading automobile and motorcycle manufacturer) ............... 712,000 21,244,279
Jusco Co., Ltd. (Major supermarket operator) ......................................... 662,000 18,200,049
Keyence Corp. (Specialized manufacturer of sensors) .................................. 239,800 27,340,341
Kokuyo (Leading manufacturer of paper stationery) .................................... 580,000 12,662,731
Mabuchi Motor Co., Ltd. (Manufacturer of DC motors) .................................. 80,300 3,954,290
Matsushita Electric Industrial Co., Ltd.
(Leading manufacturer of consumer electronic products) .............................. 2,096,000 32,710,277
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Matsushita Electric Works, Inc. (Leading maker of
building materials and lighting equipment) .......................................... 1,400,000 12,792,108
Nichiei Co., Ltd. (Finance company for small- and medium-sized firms) ................ 255,500 19,833,428
Pioneer Electronics Corp. (Leading manufacturer of audio equipment) .................. 750,000 12,250,344
Ricoh Co., Ltd. (Leading maker of copiers and information equipment) ................. 2,130,000 24,284,790
Shiseido Co., Ltd. (Leading cosmetic producer) ....................................... 467,000 6,041,886
Sony Corp. (Consumer electronic products manufacturer) ............................... 366,400 25,627,557
Sumitomo Metal Industries, Ltd. (Leading integrated crude steel producer) ............ 7,650,000 17,320,288
Sumitomo Metal Mining Co., Ltd. (Leading gold, nickel and
copper mining company) .............................................................. 480,000 2,899,329
-----------
342,582,373
-----------
Korea 0.3%
Pohang Iron & Steel Co., Ltd. (Leading steel producer) (b) ........................... 7,030 439,856
Pohang Iron & Steel Co., Ltd. (ADR) .................................................. 292,900 6,956,375
-----------
7,396,231
-----------
Malaysia 1.4%
Malayan Banking Berhad (Leading banking and financial services group) ................ 1,350,000 15,388,883
Malaysian Airline System Berhad* (Air transportation and related services) ........... 2,481,000 6,607,324
Renong Berhad (Holding company involved in engineering, construction,
financial services, telecommunication and information technology) ................... 8,100,000 13,727,429
-----------
35,723,636
-----------
Mexico 0.6%
Telefonos de Mexico S.A. de C.V. "L" (ADR) (Telecommunication services) .............. 375,000 14,437,500
-----------
Netherlands 5.6%
AEGON Insurance Group NV (Insurance company) ......................................... 537,500 37,859,580
Akzo-Nobel NV (Chemical producer) .................................................... 120,000 17,237,463
Elsevier NV (International publisher of scientific, professional,
business, and consumer information books) ......................................... 1,676,000 27,256,392
Heineken Holdings NV "A" (Brewery) ................................................... 160,000 24,143,539
Philips Electronics NV (Leading manufacturer of electrical equipment) ................ 447,000 20,854,995
Wolters Kluwer CVA (Publisher) ....................................................... 154,963 18,665,463
-----------
146,017,432
-----------
New Zealand 0.0%
Telecom Corp. of New Zealand (Telecommunication services) ............................ 64,950 295,541
-----------
Norway 0.7%
Saga Petroleum AS "A" (Oil and gas exploration and production) ....................... 1,023,200 17,590,566
-----------
Philippines 1.6%
C & P Homes, Inc.* (Home construction company) ....................................... 30,477,000 14,449,554
Manila Electric Co. "B" (Electric utility) ........................................... 2,275,000 18,120,614
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SM Prime Holdings Corp. (Leader in commercial center operations) ..................... 30,000,000 8,761,616
-----------
41,331,784
-----------
Portugal 0.7%
Cimentos de Portugal SA (Manufacturer of cement, ready mix concrete and aggregates) .. 405,015 8,449,380
Portugal Telecom SA (Telecommunication services) ..................................... 239,300 8,907,603
-----------
17,356,983
-----------
Spain 2.5%
Acerinox, S.A. (Stainless steel producer) ............................................ 147,800 20,871,421
Banco Popular Espanol, S.A. (Retail bank) ............................................ 90,983 16,370,822
Compania Telefonica Nacional de Espana SA (ADR) (Telecommunication services) ......... 381,000 27,336,750
-----------
64,578,993
-----------
Sweden 3.9%
AGA AB "B" (Free) (Producer and distributor of industrial and medical gases) ......... 766,600 11,606,821
L.M. Ericsson Telephone Co. "B" (ADR) (Leading manufacturer of cellular
telephone equipment) ............................................................... 1,075,000 36,348,438
S.K.F. AB "B" (Free) (Manufacturer of roller bearings) ............................... 750,000 19,722,687
Skandia Foersaekrings AB (Free) (Financial conglomerate) ............................. 1,040,000 32,804,739
-----------
100,482,685
-----------
Switzerland 5.9%
ABB AG (Bearer) (Manufacturer of electrical equipment) ............................... 21,110 25,375,417
Credit Suisse Group (Registered) (Provider of bank services,
management services and life insurance) ............................................. 250,000 30,007,991
Ciba Specialty Chemical* (Registered) (Manufacturer of
chemical products for plastics, coatings, fibers and fabrics) ....................... 135,901 11,236,950
Clariant AG* (Registered) (Manufacturer of color chemicals) .......................... 48,447 23,881,457
Novartis AG* (Bearer) (Pharmaceutical company) ....................................... 18,773 23,387,986
Roche Holdings AG* (PC) (Producer of drugs and medicines) ............................ 2,960 25,595,609
SGS Holdings SA (Bearer) (Trade inspection company) .................................. 5,755 11,796,310
-----------
151,281,720
-----------
Taiwan 0.7%
China Development Corp. (Provider of loan and guarantee
services to manufacturing and service industries) ................................... 2,587,500 10,522,876
Far Eastern Department Store (Department store chain) ................................ 5,601,750 8,278,548
-----------
18,801,424
-----------
United Kingdom 12.3%
BOC Group PLC (Producer of industrial gases) ......................................... 863,709 13,611,271
British Petroleum PLC (Major integrated world oil company) ........................... 3,005,199 34,901,464
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Carlton Communications PLC (Television post production products and services) ........ 3,487,500 29,832,062
General Electric Co., PLC (Manufacturer of power, communications and
defense equipment and other various electrical components) .......................... 4,450,000 27,377,723
Glaxo Wellcome PLC (Pharmaceutical company) .......................................... 1,095,000 20,102,220
Pearson PLC (Diversified media and entertainment holding company) .................... 1,619,000 19,521,651
PowerGen PLC (Electric utility) ...................................................... 2,538,059 24,800,125
RTZ Corp., PLC (Mining and finance company) .......................................... 1,688,460 26,747,474
Reuters Holdings PLC (International news agency) ..................................... 2,219,600 22,637,691
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) ....... 2,383,476 35,444,179
WPP Group PLC (Advertising agency) ................................................... 6,215,000 26,070,360
Zeneca Group PLC (Holding company: manufacturing and marketing of
pharmaceutical and agrochemical products and specialty chemicals) ................... 1,285,000 37,266,716
-----------
318,312,936
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,716,243,233) 2,378,694,728
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $1,925,260,733) (a) 2,585,671,373
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $1,935,783,363. At March 31,
1997, net unrealized appreciation for all securities based on tax cost was
$649,888,010. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $686,152,816 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$36,264,806.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $3,805,526 (.15% of net assets). Their
values have been estimated by the Valuation Committee in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of
these securities at March 31, 1997 aggregated $4,402,614. These securities
may also have certain restrictions as to resale.
(c) Principal amount is stated in U.S. dollars unless otherwise specified.
Currency Abbreviations: JPY Japanese Yen MYR Malaysian Ringgit
Transactions in written call options during the year ended March 31, 1997
were:
Premiums
Principal Amount Received ($)
-----------------------------------------
Outstanding at
March 31, 1996 ............. JPY 32,532,000,000 12,317,038
Contracts written .......... JPY 34,500,000,000 5,801,750
Contracts closed ........... JPY (53,852,000,000) (13,849,598)
Contracts expired .......... JPY (13,180,000,000) (4,269,190)
-----------------------------------------
Outstanding at
March 31, 1997 ............. JPY -- --
=============== ===========
The accompanying notes are an integral part of the financial statements.
15 -- SCUDDER INTERNATIONAL FUND
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of March 31, 1997
<TABLE>
<CAPTION>
Assets
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $1,925,260,733) ............... $2,585,671,373
Foreign currency holdings, at market (identified cost $661,283) ....... 644,512
Receivable on investments sold ........................................ 22,346,663
Receivable on Fund shares sold ........................................ 427,141
Dividends and interest receivable ..................................... 7,588,958
Foreign taxes recoverable ............................................. 1,802,579
Other assets .......................................................... 65,085
--------------
Total assets .......................................................... 2,618,546,311
Liabilities
- ----------------------------------------------------------------------------------------------------------
Payable for investments purchased ..................................... 28,939,107
Due to custodian bank ................................................. 891,121
Payable for Fund shares redeemed ...................................... 2,910,287
Accrued management fee ................................................ 1,752,228
Other payables and accrued expenses ................................... 1,022,882
--------------
Total liabilities ..................................................... 35,515,625
----------------------------------------------------------------------------------------
Net assets, at market value $2,583,030,686
----------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................... 1,417,347
Unrealized appreciation (depreciation) on:
Investments ........................................................ 660,410,640
Foreign currency related transactions .............................. (89,236)
Accumulated net realized gain ......................................... 249,360
Paid-in capital ....................................................... 1,921,042,575
----------------------------------------------------------------------------------------
Net assets, at market value $2,583,030,686
----------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($2,583,030,686/53,734,143 shares of capital stock outstanding, --------------
$.01 par value, 200,000,000 shares authorized) ...................... $ 48.07
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 -- SCUDDER INTERNATIONAL FUND
<PAGE>
Statement of Operations
year ended March 31, 1997
<TABLE>
<CAPTION>
Investment Income
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Interest (net of foreign taxes withheld of $10,018) ................... 7,385,262
-------------
45,699,933
-------------
Expenses:
Management fee ........................................................ 20,989,160
Services to shareholders .............................................. 4,647,354
Custodian and accounting fees ......................................... 2,741,989
Directors' fees and expenses .......................................... 61,815
Reports to shareholders ............................................... 464,757
Auditing .............................................................. 138,975
Legal ................................................................. 57,268
Registration fees ..................................................... 64,044
Other ................................................................. 230,086
-------------
29,395,448
----------------------------------------------------------------------------------------
Net investment income 16,304,485
----------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------
Net realized gain from:
Investments ........................................................... 61,540,056
Written options ....................................................... 15,862,488
Foreign currency related transactions ................................. 27,424,026
-------------
104,826,570
-------------
Net unrealized appreciation (depreciation) during the period on:
Investments ........................................................... 152,717,827
Written options ....................................................... (12,108,301)
Foreign currency related transactions ................................. (36,175)
-------------
140,573,351
----------------------------------------------------------------------------------------
Net gain on investment transactions 245,399,921
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 261,704,406
----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 -- SCUDDER INTERNATIONAL FUND
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended March 31,
Increase (Decrease) in Net Assets 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 16,304,485 $ 20,332,419
Net realized gain from investment transactions ......... 104,826,570 97,431,462
Net unrealized appreciation on investment transactions
during the period ................................... 140,573,351 293,552,612
--------------- ---------------
Net increase in net assets resulting from operations ... 261,704,406 411,316,493
--------------- ---------------
Distributions to shareholders from:
Net investment income .................................. (68,670,750) (20,899,123)
--------------- ---------------
Net realized gains ..................................... (64,600,067) (61,655,254)
--------------- ---------------
Fund share transactions:
Proceeds from shares sold .............................. 563,459,224 566,171,226
Net asset value of shares issued to shareholders in
reinvestment of distributions ........................ 117,795,156 75,365,736
Cost of shares redeemed ................................ (741,611,600) (647,503,731)
--------------- ---------------
Net decrease in net assets from Fund share transactions (60,357,220) (5,966,769)
--------------- ---------------
Increase in net assets ................................. 68,076,369 322,795,347
Net assets at beginning of period ...................... 2,514,954,317 2,192,158,970
Net assets at end of period (including undistributed net
investment income of $1,417,347 and accumulated
distributions in excess of net investment income of
--------------- ---------------
($14,026,160), respectively) .......................... $ 2,583,030,686 $ 2,514,954,317
--------------- ---------------
Other Information
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .............. 55,022,967 55,183,581
--------------- ---------------
Shares sold ............................................ 11,978,853 12,911,834
Shares issued to shareholders in reinvestment of
distributions .......................................... 2,508,054 1,726,196
Shares redeemed ........................................ (15,775,731) (14,798,644)
--------------- ---------------
Net decrease in Fund shares ............................ (1,288,824) (160,614)
--------------- ---------------
Shares outstanding at end of period .................... 53,734,143 55,022,967
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18---SCUDDER INTERNATIONAL FUND
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Years Ended March 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
---------------------------------------------------------------------------------------
period ........................ $45.71 $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $33.43 $44.05
---------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ............ .30 .38 .21 .31 .38 .44 .80 .49 .40 .45
Net realized and unrealized gain
(loss) on investment
transactions .................. 4.53 7.19 (1.03) 7.74 2.64 (.37) (.39) 5.30 4.15 (.86)
Total from investment
---------------------------------------------------------------------------------------
operations .................... 4.83 7.57 (.82) 8.05 3.02 .07 .41 5.79 4.55 (.41)
---------------------------------------------------------------------------------------
Less distributions:
From net investment income ....... (1.28) (.40) -- (.63) (.83) -- (.74) (.43) (.13) (.82)
In excess of net investment income -- -- -- (.06) -- -- -- -- -- --
From net realized gains on
investment transactions ....... (1.19) (1.18) (2.42) (.09) (.86) (.40) (1.98) (3.15) (3.06) (9.39)
---------------------------------------------------------------------------------------
Total distributions .............. (2.47) (1.58) (2.42) (.78) (1.69) (.40) (2.72) (3.58) (3.19) (10.21)
---------------------------------------------------------------------------------------
Net asset value, end of
---------------------------------------------------------------------------------------
period ........................ $48.07 $45.71 $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $33.43
- ---------------------------------------------------------------------------------------------------------------------------
Total Return (%) ................. 10.74 19.25 (2.02) 22.69 9.12 .18 1.46 17.08 14.34 (.47)
Ratios and Supplemental Data
Net assets, end of period
($ millions) .................... 2,583 2,515 2,192 2,198 1,180 933 929 783 550 559
Ratio of operating expenses to
average net assets (%) ........ 1.15 1.14 1.19 1.21 1.26 1.30 1.24 1.18 1.22 1.21
Ratio of net investment income to
average net assets (%) ........ .64 .86 .48 .75 1.13 1.25 2.22 1.33 1.20 1.16
Portfolio turnover rate (%) ...... 35.8 45.2 46.3 39.9 29.2 50.4 70.1 49.4 48.3 54.8
Average commission rate paid (b) . $.0002 -- -- -- -- -- -- -- -- --
</TABLE>
(a) Based on monthly average share Based on monthly average shares outstanding
during the period.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years ending on or after March 31, 1997.
19 -- SCUDDER INTERNATIONAL FUND
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder International Fund (the "Fund") is a diversified series of Scudder
International Fund, Inc. (the "Corporation"). The Corporation is organized as a
Maryland corporation and is registered under the Investment Company Act of 1940,
as amended, as an open-end, management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the National Association of
Securities Dealers Automatic Quotation ("NASDAQ") System, for which there have
been sales, are valued at the most recent sale price reported on such system. If
there are no such sales, the value is the high or "inside" bid quotation.
Securities which are not quoted on the NASDAQ System but are traded in another
over-the-counter market are valued at the most recent sale price on such market.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost. All other securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
Options. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period, the Fund purchased put options and wrote call options on currencies as a
hedge against potential adverse price movements in the value of portfolio
assets.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option it
would recognize a gain or loss equal to the difference between the cost of
acquiring the option and the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
20 -- SCUDDER INTERNATIONAL FUND
<PAGE>
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked price are available. Over-the-counter written or purchased options are
valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and other
liabilities at the daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on
the respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
21 -- SCUDDER INTERNATIONAL FUND
<PAGE>
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. The Fund paid
no federal income taxes and no federal income tax provision was required.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax. Earnings
and profits distributed to shareholders on redemption of Fund shares ("tax
equalization") may be utilized by the Fund, to the extent permissible, as part
of the Fund's dividends paid deduction on its federal income tax return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. The differences
primarily relate to investments in forward contracts, passive foreign investment
companies, options on currencies, and foreign denominated investments. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
For the year ended March 31, 1997, purchases and sales of investment securities
(excluding short-term investments) aggregated $874,321,294 and $1,039,474,034,
respectively.
C. Related Parties
On September 5, 1996, the Fund's Board of Directors approved a new Investment
Management Agreement (the "Management Agreement") with Scudder, Stevens & Clark,
Inc. (the "Adviser"). Under the Management Agreement the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management, the Adviser provides certain
administrative services in accordance with the Management Agreement. The
management fee payable under the Management Agreement is equal to an annual rate
of approximately 0.90% of the first $500,000,000 of average daily net assets,
0.85% of the next $500,000,000 of such net assets, 0.80% of the next
22 -- SCUDDER INTERNATIONAL FUND
<PAGE>
$1,000,000,000 of such net assets, 0.75% of the next $1,000,000,000 of such net
assets, and 0.70% of such net assets in excess of $3,000,000,000, computed and
accrued daily and payable monthly.
Under the Investment Management Agreement between the Fund and the Adviser which
was in effect prior to September 5, 1996 (the "Agreement"), the Fund agreed to
pay to the Adviser a fee equal to an annual rate of 0.90% on the first
$500,000,000 of the Fund's average daily net assets, 0.85% on the next
$500,000,000, 0.80% on the next $1,000,000,000, and 0.75% of such net assets in
excess of $2,000,000,000, computed and accrued daily and payable monthly. The
agreements also provide that if the Fund's expenses, exclusive of taxes,
interest, and extraordinary expenses, exceed specified limits, such excess, up
to the amount of the management fee, will be paid by the Adviser. For the year
ended March 31, 1997, the fee pursuant to both agreements amounted to
$20,989,160 which was equivalent to an annual effective rate of 0.82% of the
Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. Included
in services to shareholders is $3,050,321 charged to the Fund by SSC for the
year ended March 31, 1997, of which $296,627 is unpaid at March 31, 1997.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended March 31, 1997,
the amount charged to the Fund by STC aggregated $930,582, of which $111,209 is
unpaid at March 31, 1997.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
March 31, 1997, the amount charged to the Fund by SFAC aggregated $795,122, of
which $65,991 is unpaid at March 31, 1997.
The Fund pays each Director not affiliated with the Adviser $4,000 annually plus
specified amounts for attended board and committee meetings. For the year ended
March 31, 1997, Directors' fees and expenses aggregated $61,815.
D. Lines of Credit
The Fund and several affiliated Funds (the "Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
23 -- SCUDDER INTERNATIONAL FUND
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and to the
Shareholders of Scudder International Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
International Fund, including the investment portfolio, as of March 31, 1997,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the ten years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder International Fund as of March 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the ten years
in the period then ended, in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
May 16, 1997
24 -- SCUDDER INTERNATIONAL FUND
<PAGE>
Tax Information
The Fund paid distributions of $1.19 per share from net long-term capital gains
during its year ended March 31, 1997. Pursuant to Section 852 of the Internal
Revenue Code, the Fund designates $36,901,570 as capital gain dividends for its
fiscal year ended March 31, 1997.
The Fund paid foreign taxes of $5,218,633 and the Fund recognized $33,186,627 of
foreign source income during the year ended March 31, 1997. Pursuant to section
853 of the Internal Revenue Code, the Fund designates $0.097 per share of
foreign taxes paid and $0.618 of income earned from foreign sources in the year
ended March 31, 1997.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Scudder Fund account, please call a Scudder Investor Relations
Representative at 1-800-225-5163.
25 - SCUDDER INTERNATIONAL FUND
<PAGE>
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intentionally
left blank.
26 - SCUDDER INTERNATIONAL FUND
<PAGE>
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intentionally
left blank.
27 - SCUDDER INTERNATIONAL FUND
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Venture Capitalist and Consultant
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; President, Exeter Capital Management Corporation
William H. Gleysteen, Jr.
Director; Consultant; Guest Scholar, Brookings Institute
Dudley H. Ladd*
Director
William H. Luers
Director; President, The Metropolitan Museum of Art
Dr. Wilson Nolen
Director; Consultant
Kathryn L. Quirk*
Director; Vice President and Assistant Secretary
Dr. Gordon Shillinglaw
Director; Professor Emeritus of Accounting, Columbia University Graduate School
of Business
Robert W. Lear
Honorary Director
Robert G. Stone, Jr.
Honorary Director; Chairman Emeritus and Director, Kirby Corporation
Elizabeth J. Allan*
Vice President
Joyce E. Cornell*
Vice President
Edmund B. Games, Jr.*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President and Assistant Treasurer
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Carol L. Franklin*
Vice President
Richard W. Desmond*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
28 - SCUDDER INTERNATIONAL FUND
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund*
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan *+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *Not available in all
states. +++ +++A no-load variable annuity contract provided by Charter National
Life Insurance Company and its affiliate, offered by Scudder's insurance
agencies, 1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark,
Inc., are traded on various stock exchanges.
29 - SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
Scudder Solutions
Convenient ways to invest, quickly and reliably:
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan AutoBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is higher and electronically debited from that account.
fewer when it's lower, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ---------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ---------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan AutoSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ---------------------------------------------------------------------------------------------------------------------------------
30 - SCUDDER INTERNATIONAL FUND
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ---------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder Developed for investors who prefer the benefits of no-load
shareholders can take advantage of a Scudder Scudder funds but want ongoing professional assistance in
Brokerage account already reserved for them, with managing a portfolio. Personal Counsel(SM) is a highly
no minimum investment. For information about customized, fee-based asset management service for
Scudder Brokerage Services, call 1-800-700-0820. individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Service, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ---------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ---------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Funds Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Funds Centers. Check for a Funds Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
New From Scudder: Pathway Series
In a complex financial world, Scudder Pathway Series is a refreshingly simple concept. With one
investment, Pathway gives you instant access to broad diversification in U.S. markets and
across the globe. Select from four Portfolios -- Growth, Balanced, Conservative, or
International -- each with a distinct investment objective that can match your goals. Each
Portfolio, rather than investing in individual securities, invests in carefully selected
Scudder mutual funds.
The share price of each Pathway Series portfolio will fluctuate and the risk associated with
each portfolio is determined by the securities held in each underlying Scudder fund. Contact
Scudder Investor Services, Inc., Distributor, for a prospectus which contains more complete
information, including management fees and other expenses. Please read it carefully before you
invest or send money.
</TABLE>
31 - SCUDDER INTERNATIONAL FUND
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven Clark,
Scudder, Stevens & Clark was the first independent investment counsel firm in
the United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the investment
industry. In 1928, we introduced the nation's first no-load mutual fund. Today
we offer over 40 pure no load(TM) funds, including the first international
mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
<PAGE>
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
<S> <C>
a. Financial Statements
Included in Part A of this Registration Statement:
For Scudder International Fund:
Financial highlights for the ten fiscal years ended
March 31, 1997
For Scudder Latin America Fund:
Financial highlights for the period December 8, 1992
(commencement of operations) to October 31, 1993
and for the three fiscal years ended October 31,
1996
(Incorporated by reference to Post-Effective
Amendment No. 52 to the Registration Statement.)
For Scudder Pacific Opportunities Fund:
Financial highlights for the period December 8, 1992
(commencement of operations) to October 31, 1993
and for the three fiscal years ended October 31,
1996
(Incorporated by reference to Post-Effective
Amendment No. 52 to the Registration Statement.)
For Scudder Greater Europe Growth Fund:
Financial highlights for the period October 10,
1994
(commencement of operations) to October 31, 1994
and for the two fiscal years ended October 31, 1996
(Incorporated by reference to Post-Effective
Amendment No. 52 to the Registration Statement.)
For Scudder Emerging Markets Growth Fund:
Financial highlights for the period May 8, 1996
(commencement of operations) to October 31, 1996
(Incorporated by reference to Post-Effective
Amendment No. 52 to the Registration Statement.)
For Scudder International Growth and Income Fund:
Financial highlights to be filed by amendment
Included in Part B of this Registration Statement:
For Scudder International Fund:
Investment Portfolio as of March 31, 1997
Statement of Assets and Liabilities as of March 31,
1997
Statement of Operations for the fiscal year ended
March 31, 1997
Statements of Changes in Net Assets for the two
fiscal years ended March 31, 1997
Part C - Page 1
<PAGE>
Financial Highlights for the ten fiscal years ended
March 31, 1997
Notes to Financial Statements
Report of Independent Accountants
For Scudder Latin America Fund:
Investment Portfolio as of October 31, 1996
Statement of Assets and Liabilities as of October
31, 1996
Statement of Operations for the fiscal year ended
October 31, 1996
Statements of Changes in Net Assets for the three
fiscal years ended October 31, 1996
Financial Highlights for the period December 8, 1992
(commencement of operations) to October 31, 1993
and for the three fiscal years ended October 31,
1996
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective
Amendment No. 52 to the Registration Statement.)
For Scudder Pacific Opportunities Fund:
Investment Portfolio as of October 31, 1996
Statement of Assets and Liabilities as of October
31, 1996
Statement of Operations for the fiscal year ended
October 31, 1996
Statements of Changes in Net Assets for the three
fiscal years ended October 31, 1996
Financial Highlights for the period December 8, 1992
(commencement of operations) to October 31, 1993
and for the three fiscal years ended October 31,
1996
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective
Amendment No. 52 to the Registration Statement.)
For Scudder Greater Europe Growth Fund:
Investment Portfolio as of October 31, 1996
Statement of Assets and Liabilities as of October
31, 1996
Statement of Operations for the fiscal year ended
October 31, 1996
Statement of Changes in Net Assets for the period
October 10, 1994 (commencement of operations) to
October 31, 1994 and for the two fiscal years ended
October 31, 1996
Financial Highlights for the period October 10,
1994 (commencement of operations) to October 31,
1994 and for the two fiscal years ended October 31,
1996
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective
Amendment No. 52 to the Registration Statement.)
For Scudder Emerging Markets Growth Fund:
Investment Portfolio as of October 31, 1996
Statement of Assets and Liabilities as of October
31, 1996
Statement of Operations for the period May 8, 1996
(commencement of operations) to October 31, 1996
Part C - Page 2
<PAGE>
Statement of Changes in Net Assets for the period
May 8, 1996 (commencement of operations) to October
31, 1996
Financial Highlights for the period May 8, 1996
(commencement of operations) to October 31, 1996
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective
Amendment No. 52 to the Registration Statement.)
For Scudder International Growth and Income Fund:
Statement of Assets and Liabilities as of May 23,
1997 and related notes
(Incorporated by reference to Post-Effective
Amendment No. 55 to the Registration Statement.)
b. Exhibits:
1. (a) Articles of Amendment and Restatement of the Registrant as of
January 24, 1991 are filed herein.
(b) Articles Supplementary dated September 17, 1992 are filed herein.
(c) Articles Supplementary dated December 1, 1992 are filed herein.
(d) Articles Supplementary dated August 3, 1994 are filed herein.
(e) Articles Supplementary dated February 20, 1996.
(Incorporated by reference to Exhibit 1(e) to Post-Effective
Amendment No. 46 to the Registration Statement.)
(f) Articles Supplementary dated September 5, 1996.
(Incorporated by reference to Exhibit 1(f) to Post-Effective
Amendment No. 52 to the Registration Statement.)
(g) Articles Supplementary dated December 12, 1996.
(Incorporated by reference to Post-Effective Amendment No. 55 to
the Registration Statement.)
(h) Articles Supplementary dated March 3, 1997.
(Incorporated by reference to Post-Effective Amendment No. 55 to
the Registration Statement.)
2. (a) Amended and Restated By-Laws of the Registrant dated March 4, 1991
are filed herein.
(b) Amended and Restated By-Laws of the Registrant dated September 20,
1991 are filed herein.
(c) Amended and Restated By-Laws of the Registrant dated December 12,
1991 are filed herein.
(d) Amended and Restated By-Laws of the Registrant dated September 4,
1996.
(Incorporated by reference to Post-Effective Amendment No. 55 to
the Registration Statement.)
Part C - Page 3
<PAGE>
3. Inapplicable.
4. Specimen certificate representing shares of Common Stock ($.01 par
value) for Scudder International Fund.
(Incorporated by reference to Exhibit 4 to Post-Effective
Amendment No. 31 to the Registration Statement.)
5. (a) Investment Management Agreement between the Registrant, on behalf
of Scudder International Fund, and Scudder, Stevens & Clark, Inc.
dated December 14, 1990 is filed herein.
(b) Investment Management Agreement between the Registrant, on behalf
of Scudder Latin America Fund, and Scudder, Stevens & Clark, Inc.
dated December 7, 1992 is filed herein.
(c) Investment Management Agreement between the Registrant, on behalf
of Scudder Pacific Opportunities Fund, and Scudder, Stevens &
Clark, Inc. dated December 7, 1992 is filed herein.
(d) Investment Management Agreement between the Registrant, on behalf
of Scudder Greater Europe Growth Fund, and Scudder, Stevens &
Clark, Inc. dated October 10, 1994.
(Incorporated by reference to Post-Effective Amendment No. 44 to
the Registration Statement.)
(e) Investment Management Agreement between the Registrant on behalf
of Scudder International Fund, and Scudder, Stevens & Clark, Inc.
dated September 8, 1994.
(Incorporated by reference to Post-Effective Amendment No. 45 to
the Registration Statement.)
(f) Investment Management Agreement between the Registrant on behalf
of Scudder Emerging Markets Growth Fund and Scudder, Stevens &
Clark, Inc. dated May 8, 1996.
(Incorporated by reference to Post-Effective Amendment No. 48 to
the Registration Statement.)
(g) Investment Management Agreement between the Registrant, on behalf
of Scudder International Growth and Income Fund, and Scudder,
Stevens & Clark, Inc. dated June 10, 1997 is filed herein.
(h) Investment Management Agreement between the Registrant, on behalf
of Scudder International Fund, and Scudder, Stevens & Clark, Inc.
dated September 5, 1996.
(Incorporated by reference to Post-Effective Amendment No. 55 to
the Registration Statement.)
6. (a) Underwriting Agreement between the Registrant and Scudder Investor
Services, Inc., formerly Scudder Fund Distributors, Inc., dated
July 15, 1985 is filed herein.
(b) Underwriting Agreement between the Registrant and Scudder Investor
Services, Inc. dated September 17, 1992 is filed herein.
7. Inapplicable.
Part C - Page 4
<PAGE>
8. (a)(1) Custodian Contract between the Registrant and Brown Brothers
Harriman & Co. dated April 14, 1986 is filed herein.
(a)(2) Custodian Contract between the Registrant, on behalf of Scudder
Latin America Fund, and Brown Brothers Harriman & Co. dated
November 25, 1992 is filed herein.
(a)(3) Custodian Contract between the Registrant, on behalf of Scudder
Pacific Opportunities Fund, and Brown Brothers Harriman & Co.
dated November 25, 1992 is filed herein.
(a)(4) Custodian Contract between the Registrant, on behalf of Scudder
Greater Europe Growth Fund, and Brown Brothers Harriman & Co.
dated October 10, 1994.
(Incorporated by reference to Post-Effective Amendment No. 44 to
the Registration Statement.)
(a)(5) Fee schedule for Exhibit 8(a)(1) is filed herein.
(a)(6) Revised fee schedule for Exhibit 8(a)(1).
(Incorporated by reference to Post-Effective Amendment No. 45 to
the Registration Statement.)
(a)(7) Custodian Contract between the Registrant and Brown Brothers
Harriman & Co. dated March 7, 1995.
(Incorporated by reference to Post-Effective Amendment No. 55 to
the Registration Statement.)
(a)(8) Fee schedule for Exhibit 8(a)(7).
(Incorporated by reference to Post-Effective Amendment No. 55 to
the Registration Statement.)
(b)(1) Master Subcustodian Agreement between Brown Brothers Harriman &
Co. and Morgan Guaranty Trust Company of New York, Tokyo office,
dated November 8, 1976 is filed herein.
(b)(2) Fee schedule for Exhibit 8(b)(1) is filed herein.
(c)(1) Master Subcustodian Agreement between Brown Brothers Harriman &
Co. and Morgan Guaranty Trust Company of New York, Brussels
office, dated November 15, 1976 is filed herein.
(c)(2) Fee schedule for Exhibit 8(c)(l) is filed herein.
(d)(1) Subcustodian Agreement between Brown Brothers Harriman & Co. and
The Bank of New York, London office, dated January 30, 1979 is
filed herein.
(d)(2) Fee schedule for Exhibit 8(d)(1) is filed herein.
(e)(1) Master Subcustodian Agreement between Brown Brothers Harriman &
Co. and The Chase Manhattan Bank, N.A., Singapore office, dated
June 9, 1980 is filed herein.
(e)(2) Fee schedule for Exhibit 8(e)(1) is filed herein.
Part C - Page 5
<PAGE>
(f)(1) Master Subcustodian Agreement between Brown Brothers Harriman &
Co. and The Chase Manhattan Bank, N.A., Hong Kong office, dated
June 4, 1979 is filed herein.
(f)(2) Fee schedule for Exhibit 8(f)(1) is filed herein.
(g)(1) Master Subcustodian Agreement between Brown Brothers Harriman &
Co. and Citibank, N.A. New York office, dated July 16, 1981 is
filed herein.
(g)(2) Fee schedule for Exhibit 8(g)(1) is filed herein.
9. (a)(1) Transfer Agency and Service Agreement between the Registrant and
Scudder Service Corporation dated October 2, 1989 is filed herein.
(a)(2) Fee schedule for Exhibit 9(a)(1) is filed herein.
(a)(3) Service Agreement between Copeland Associates, Inc. and Scudder
Service Corporation dated June 8, 1995.
(Incorporated by reference to Post-Effective Amendment No. 45 to
the Registration Statement.)
(b) Letter Agreement between the Registrant and Cazenove, Inc. dated
January 23, 1978, with respect to the pricing of securities is
filed herein.
(c)(1) COMPASS Service Agreement between the Registrant and Scudder Trust
Company dated January 1, 1990 is filed herein.
(c)(2) Fee schedule for Exhibit (9)(c)(1) is filed herein.
(c)(3) COMPASS and TRAK 2000 Service Agreement between the Registrant and
Scudder Trust Company dated October 1, 1995.
(Incorporated by reference to Exhibit 9(c)(3) to Post-Effective
Amendment No. 47 to the Registration Statement.)
(d)(1) Shareholder Services Agreement between the Registrant and Charles
Schwab & Co., Inc. dated June 1, 1990 is filed herein.
(d)(2) Administrative Services Agreement between the Registrant and
McGladrey & Pullen, Inc. dated September 30, 1995.
(Incorporated by reference to Exhibit 9(d)(2) to Post-Effective
Amendment No. 47 to the Registration Statement.)
(e)(1) Fund Accounting Services Agreement between the Registrant, on
behalf of Scudder Greater Europe Growth Fund, and Scudder Fund
Accounting Corporation dated October 10, 1994.
(Incorporated by reference to Post-Effective Amendment No. 44 to
the Registration Statement.)
(e)(2) Fund Accounting Services Agreement between the Registrant, on
behalf of Scudder International Fund, and Scudder Fund Accounting
Corporation dated April 12, 1995 is filed herein.
(Incorporated by reference to Post-Effective Amendment No. 45 to
the Registration Statement.)
Part C - Page 6
<PAGE>
(e)(3) Fund Accounting Services Agreement between the Registrant, on
behalf of Scudder Latin America Fund, dated May 17, 1995.
(Incorporated by reference to Exhibit 9(e)(3) to Post-Effective
Amendment No. 47 to the Registration Statement.)
(e)(4) Fund Accounting Services Agreement between the Registrant, on
behalf of Scudder Pacific Opportunities Fund, dated May 5, 1995.
(Incorporated by reference to Exhibit 9(e)(4) to Post-Effective
Amendment No. 47 to the Registration Statement.)
(e)(5) Fund Accounting Services Agreement between the Registrant, on
behalf of Scudder Emerging Markets Growth Fund dated May 8, 1996.
(Incorporated by reference to Exhibit 9(e)(5) to Post-Effective
Amendment No. 49 to the Registration Statement.)
(e)(6) Fund Accounting Services Agreement between the Registrant, on
behalf of Scudder International Growth and Income Fund dated June
3, 1997 is filed herein.
10. Opinion and Consent of Counsel is filed herein.
11. Consent of Independent Accountants is filed herein.
12. Inapplicable.
13. Inapplicable.
14. (a) Scudder Flexi-Plan for Corporations and Self-Employed Individuals
is filed herein.
(b) Scudder Individual Retirement Plan is filed herein.
(c) Scudder Funds 403(b) Plan is filed herein.
(d) Scudder Employer - Select 403(b) Plan is filed herein.
(e) Scudder Cash or Deferred Profit Sharing Plan under Section 401(k)
is filed herein.
15. Inapplicable.
16. Schedule for Computation of Performance Quotations is filed herein.
17. Financial Data Schedule for Scudder International Fund is filed
herein.
18. Inapplicable.
</TABLE>
Power of Attorney for Nicholas Bratt, Paul Bancroft III,
Thomas J. Devine, William H. Gleysteen, Jr., William H. Luers,
Wilson Nolen, Juris Padegs, Daniel Pierce, and Gordon
Shillinglaw is incorporated by reference to the signature page
of Post-Effective Amendment No. 35.
Part C - Page 7
<PAGE>
Power of Attorney for Keith R. Fox is incorporated by
reference to the Signature Page of Post-Effective Amendment
No. 47.
Power of Attorney for Kathryn L. Quirk is incorporated by
reference to the signature page of Post-Effective Amendment
No. 54.
Power of Attorney for David S. Lee is incorporated by
reference to the signature page of Post-Effective Amendment
No. 56.
Item 25. Persons Controlled by or under Common Control with Registrant.
- -------- --------------------------------------------------------------
None
Item 26. Number of Holders of Securities (as of July 1, 1997).
- -------- -----------------------------------------------------
<TABLE>
<CAPTION>
(1) (2)
--- ---
<S> <C>
Title of Class Number of Shareholders
-------------- ----------------------
Capital Stock ($.01 par value per share)
Scudder International Fund 113,343
Scudder Latin America Fund 74,257
Scudder Pacific Opportunities Fund 29,808
Scudder Greater Europe Growth Fund 13,943
Scudder Emerging Markets Growth Fund 14,737
</TABLE>
Item 27. Indemnification.
- -------- ----------------
A policy of insurance covering Scudder, Stevens & Clark, Inc.,
its affiliates including Scudder Investor Services, Inc., and
all of the registered investment companies advised by Scudder,
Stevens & Clark, Inc. insures the Registrant's directors 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 Tenth of Registrant's Articles of Incorporation state
as follows:
TENTH: Liability and Indemnification
To the fullest extent permitted by the Maryland
General Corporation Law and the Investment Company Act of
1940, no director or officer of the Corporation shall be
liable to the Corporation or to its stockholders for damages.
The limitation on liability applies to events occurring at the
time a person serves as a director or officer of the
Corporation, whether or not such person is a director or
officer at the time of any proceeding in which liability is
asserted. No amendment to these Articles of Amendment and
Restatement or repeal of any of its provisions shall limit or
eliminate the benefits provided to directors and officers
under this provision with respect to any act or omission which
occurred prior to such amendment or repeal.
The Corporation, including its successors and
assigns, shall indemnify its directors and officers and make
advance payment of related expenses to the fullest extent
permitted, and in accordance with the procedures required by
Maryland law, including Section 2-418 of the Maryland General
Corporation law, as may be amended from time to time, and the
Investment Company Act of 1940. The By-Laws may provide that
the Corporation shall indemnify its employees and/or agents in
any manner and within such limits as permitted by applicable
law. Such indemnification shall be in addition to any other
right or claim to which any director, officer, employee or
agent may otherwise be entitled.
Part C - Page 8
<PAGE>
The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer,
employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or
other enterprise or employee benefit plan against any
liability asserted against and incurred by such person in any
such capacity or arising out of such person's position,
whether or not the Corporation would have had the power to
indemnify against such liability.
The rights provided to any person by this Article
shall be enforceable against the Corporation by such person
who shall be presumed to have relied upon such rights in
serving or continuing to serve in the capacities indicated
herein. No amendment of these Articles of Amendment and
Restatement shall impair the rights of any person arising at
any time with respect to events occurring prior to such
amendment.
Nothing in these Articles of Amendment and
Restatement shall be deemed to (i) require a waiver of
compliance with any provision of the Securities Act of 1933,
as amended, or the Investment Company Act of 1940, as amended,
or of any valid rule, regulation or order of the Securities
and Exchange Commission under those Acts or (ii) protect any
director or officer of the Corporation against any liability
to the Corporation or its stockholders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of his or her
duties or by reason of his or her reckless disregard of his or
her obligations and duties hereunder.
Article V of Registrant's Amended and Restated By-Laws states
as follows:
ARTICLE V
---------
INDEMNIFICATION AND INSURANCE
-----------------------------
SECTION 1. Indemnification of Directors and Officers. Any person who
was or is a party or is threatened to be made a party in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is a current or former
Director or officer of the Corporation, or is or was serving while a Director or
officer of the Corporation at the request of the Corporation as a Director,
officer, partner, trustee, employee, agent or fiduciary or another corporation,
partnership, joint venture, trust, enterprise or employee benefit plan, shall be
indemnified by the Corporation against judgments, penalties, fines, excise
taxes, settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding to
the fullest extent permissible under the Maryland General Corporation Law, the
Securities Act of 1933 and the 1940 Act, as such statutes are now or hereafter
in force, except that such indemnity shall not protect any such person against
any liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office ("disabling conduct").
SECTION 2. Advances. Any current or former Director or officer of the
Corporation claiming indemnification within the scope of this Article V shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the fullest extent permissible under the Maryland General
Corporation Law, the Securities Act of 1933 and the 1940 Act, as such statutes
are now or hereafter in force; provided however, that the person seeking
indemnification shall provide to the Corporation a written affirmation of his
good faith belief that the standard of conduct necessary for indemnification by
the Corporation has been met and a written undertaking by or on behalf of the
Director to repay any such advance if it is ultimately determined that he is not
entitled to indemnification, and provided further that at least one of the
following additional conditions is met: (1) the person seeking indemnification
shall provide a security in form and amount acceptable to the Corporation for
his undertaking; (2) the Corporation is insured against losses arising by reason
of the advance; or (3) a majority of a quorum of Directors of the Corporation
who are neither "interested persons" as defined in Section 2(a)(19) of the 1940
Act, as amended, nor parties to the proceeding ("disinterested non-party
Directors") or independent legal counsel, in a written opinion, shall determine,
Part C - Page 9
<PAGE>
based on a review of facts readily available to the Corporation at the time the
advance is proposed to be made, that there is reason to believe that the person
seeking indemnification will ultimately be found to be entitled to
indemnification.
SECTION 3. Procedure. At the request of any current or former Director
or officer, or any employee or agent whom the Corporation proposes to indemnify,
the Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the Securities Act of 1933
and the 1940 Act, as such statutes are now or hereafter in force, whether the
standards required by this Article V have been met; provided, however, that
indemnification shall be made only following: (1) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct or (2) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the person to be indemnified was not liable by reason of
disabling conduct, by (a) the vote of the majority of a quorum of disinterested
non-party Directors or (b) an independent legal counsel in a written opinion.
SECTION 4. Indemnification of Employees and Agents. Employees and
agents who are not officers or Directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such employees or agents, in
accordance with the procedures set forth in this Article V to the extent
permissible under the Maryland General Corporation Law, the Securities Act of
1933 and the 1940 Act, as such statutes are now or hereafter in force, and to
such further extent, consistent with the foregoing, as may be provided by action
of the Board of Directors or by contract.
SECTION 5. Other Rights. The indemnification provided by this Article V
shall not be deemed exclusive of any other right, in respect of indemnification
or otherwise, to which those seeking such indemnification may be entitled under
any insurance or other agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action by a Director or officer of the
Corporation in his official capacity and as to action by such person in another
capacity while holding such office or position, and shall continue as to a
person who has ceased to be a Director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
SECTION 6. Constituent, Resulting or Surviving Corporations. For the
purposes of this Article V, references to the "Corporation" shall include all
constituent corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation so that any person who is or was a Director,
officer, employee or agent of a constituent corporation or is or was serving at
the request of a constituent corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under this Article V with respect to
the resulting or surviving corporation as he would if he had served the
resulting or surviving corporation in the same capacity.
Item 28. Business or Other Connections of Investment Adviser
- -------- ---------------------------------------------------
The Adviser has stockholders and employees who are denominated
officers but do not as such have corporation-wide
responsibilities. Such persons are not considered officers for
the purpose of this Item 28.
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------
<S> <C>
Stephen R. Beckwith Director, Vice President, Treasurer, Chief Operating Officer & Chief Financial Officer,
Scudder, Stevens & Clark, Inc. (investment adviser)**
Lynn S. Birdsong Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President & Director, The Latin America Dollar Income Fund, Inc. (investment company)**
President & Director, Scudder World Income Opportunities Fund, Inc. (investment
company)**
President, The Japan Fund, Inc. (investment company)**
Part C - Page 10
<PAGE>
Supervisory Director, The Latin America Income and Appreciation Fund N.V. (investment
company) +
Supervisory Director, The Venezuela High Income Fund N.V. (investment company) xx
Supervisory Director, Scudder Mortgage Fund (investment company)+
Supervisory Director, Scudder Floating Rate Funds for Fannie Mae Mortgage Securities I
& II (investment company) +
Director, Canadian High Income Fund (investment company)#
Director, Hot Growth Companies Fund (investment company)#
Director, Sovereign High Yield Investment Company (investment company)+
Director, Scudder, Stevens & Clark (Luxembourg) S.A. (investment manager) #
Nicholas Bratt Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President & Director, Scudder New Europe Fund, Inc. (investment company)**
President & Director, The Brazil Fund, Inc. (investment company)**
President & Director, The First Iberian Fund, Inc. (investment company)**
President & Director, Scudder International Fund, Inc. (investment company)**
President & Director, Scudder Global Fund, Inc. (President on all series except Scudder
Global Fund) (investment company)**
President & Director, The Korea Fund, Inc. (investment company)**
President & Director, Scudder New Asia Fund, Inc. (investment company)**
President, The Argentina Fund, Inc. (investment company)**
Vice President, Scudder, Stevens & Clark Corporation (Delaware) (investment adviser)**
Vice President, Scudder, Stevens & Clark Japan, Inc. (investment adviser)###
Vice President, Scudder, Stevens & Clark of Canada Ltd. (Canadian investment adviser)
Toronto, Ontario, Canada
Vice President, Scudder, Stevens & Clark Overseas Corporation oo
E. Michael Brown Director, Chief Administrative Officer, Scudder, Stevens & Clark, Inc. (investment
adviser)**
Trustee, Scudder GNMA Fund (investment company)*
Trustee, Scudder Portfolio Trust (investment company)*
Trustee, Scudder U.S. Treasury Fund (investment company)*
Trustee, Scudder Tax Free Money Fund (investment company)*
Trustee, Scudder State Tax Free Trust (investment company)*
Trustee, Scudder Cash Investment Trust (investment company)*
Assistant Treasurer, Scudder Investor Services, Inc. (broker/dealer)*
Director & President, Scudder Realty Holding Corporation (a real estate holding
company)*
Director & President, Scudder Trust Company (a trust company)+++
Director, Scudder Trust (Cayman) Ltd.
Mark S. Casady Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Director & Vice President, Scudder Investor Services, Inc. (broker/dealer)*
Director & Vice President, Scudder Service Corporation (in-house transfer agent)*
Director, SFA, Inc. (advertising agency)*
Linda C. Coughlin Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Chairman & Trustee, AARP Cash Investment Funds (investment company)**
Chairman & Trustee, AARP Growth Trust (investment company)**
Chairman & Trustee, AARP Income Trust (investment company)**
Chairman & Trustee, AARP Tax Free Income Trust (investment company)**
Chairman & Trustee, AARP Managed Investment Portfolios Trust (investment company)**
Director & Senior Vice President, Scudder Investor Services, Inc. (broker/dealer)*
Director, SFA, Inc. (advertising agency)*
Part C - Page 11
<PAGE>
Margaret D. Hadzima Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Assistant Treasurer, Scudder Investor Services, Inc. (broker/dealer)*
Jerard K. Hartman Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Scudder California Tax Free Trust (investment company)*
Vice President, Scudder Equity Trust (investment company)**
Vice President, Scudder Cash Investment Trust (investment company)*
Vice President, Scudder Fund, Inc. (investment company)**
Vice President, Scudder Global Fund, Inc. (investment company)**
Vice President, Scudder GNMA Fund (investment company)*
Vice President, Scudder Portfolio Trust (investment company)*
Vice President, Scudder Institutional Fund, Inc. (investment company)**
Vice President, Scudder International Fund, Inc. (investment company)**
Vice President, Scudder Investment Trust (investment company)*
Vice President, Scudder Municipal Trust (investment company)*
Vice President, Scudder Mutual Funds, Inc. (investment company)**
Vice President, Scudder New Asia Fund, Inc. (investment company)**
Vice President, Scudder New Europe Fund, Inc. (investment company)**
Vice President, Scudder Securities Trust (investment company)*
Vice President, Scudder State Tax Free Trust (investment company)*
Vice President, Scudder Funds Trust (investment company)**
Vice President, Scudder Tax Free Money Fund (investment company)*
Vice President, Scudder Tax Free Trust (investment company)*
Vice President, Scudder U.S. Treasury Money Fund (investment company)*
Vice President, Scudder Pathway Series (investment company)*
Vice President, Scudder Variable Life Investment Fund (investment company)*
Vice President, The Brazil Fund, Inc. (investment company)**
Vice President, The Korea Fund, Inc. (investment company)**
Vice President, The Argentina Fund, Inc. (investment company)**
Vice President & Director, Scudder, Stevens & Clark of Canada, Ltd. (Canadian
investment adviser) Toronto, Ontario, Canada
Vice President, The First Iberian Fund, Inc. (investment company)**
Vice President, The Latin America Dollar Income Fund, Inc. (investment company)**
Vice President, Scudder World Income Opportunities Fund, Inc. (investment company)**
Richard A. Holt Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Scudder Variable Life Investment Fund (investment company)*
John T. Packard Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President, Montgomery Street Income Securities, Inc. (investment company) o
Chairman, Scudder Realty Advisors, Inc. (realty investment adviser) x
Daniel Pierce Chairman & Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Chairman, Vice President & Director, Scudder Global Fund, Inc. (investment company)**
Chairman & Director, Scudder New Europe Fund, Inc. (investment company)**
Chairman & Director, The First Iberian Fund, Inc. (investment company)**
Chairman & Director, Scudder International Fund, Inc. (investment company)**
Chairman & Director, Scudder New Asia Fund, Inc. (investment company)**
President & Trustee, Scudder Equity Trust (investment company)**
President & Trustee, Scudder GNMA Fund (investment company)*
President & Trustee, Scudder Portfolio Trust (investment company)*
President & Trustee, Scudder Funds Trust (investment company)**
President & Trustee, Scudder Securities Trust (investment company)*
Part C - Page 12
<PAGE>
President & Trustee, Scudder Investment Trust (investment company)*
President & Director, Scudder Institutional Fund, Inc. (investment company)**
President & Director, Scudder Fund, Inc. (investment company)**
President & Director, Scudder Mutual Funds, Inc. (investment company)**
Vice President & Trustee, Scudder Municipal Trust (investment company)*
Vice President & Trustee, Scudder Variable Life Investment Fund (investment company)*
Vice President & Trustee, Scudder Pathway Series (investment company)*
Trustee, Scudder California Tax Free Trust (investment company)*
Trustee, Scudder State Tax Free Trust (investment company)*
Vice President, Montgomery Street Income Securities, Inc. (investment company) o
Chairman & President, Scudder, Stevens & Clark of Canada, Ltd. (Canadian investment
adviser), Toronto, Ontario, Canada
Chairman & Director, Scudder Global Opportunities Funds (investment company) Luxembourg
Chairman, Scudder, Stevens & Clark, Ltd. (investment adviser) London, England
President & Director, Scudder Precious Metals, Inc. xxx
Vice President, Director & Assistant Secretary, Scudder Realty Holdings Corporation
(a real estate holding company)*
Vice President, Director & Assistant Treasurer, Scudder Investor Services, Inc.
(broker/dealer)*
Director, Scudder Latin America Investment Trust PLC (investment company)@
Director, Fiduciary Trust Company (banking & trust company) Boston, MA
Director, Fiduciary Company Incorporated (banking & trust company) Boston, MA
Trustee, New England Aquarium, Boston, MA
Incorporator, Scudder Trust Company (a trust company)+++
Kathryn L. Quirk Director, Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder, Stevens
& Clark, Inc. (investment adviser)**
Director, Vice President & Assistant Secretary, The Argentina Fund, Inc. (investment
company)**
Director, Vice President & Assistant Secretary, Scudder International Fund, Inc.
(investment company)**
Director, Vice President & Assistant Secretary, Scudder New Asia Fund (investment
company)**
Director, Vice President & Assistant Secretary, Scudder Global Fund, Inc. (investment
company)**
Trustee, Vice President & Assistant Secretary, Scudder Equity Trust (investment
company)**
Trustee, Vice President & Assistant Secretary, Scudder Securities Trust (investment
company)*
Trustee, Vice President & Assistant Secretary, Scudder Funds Trust (investment
company)**
Trustee, Scudder Investment Trust (investment company)*
Trustee, Scudder Municipal Trust (investment company)*
Vice President & Trustee, Scudder Cash Investment Trust (investment company)*
Vice President & Trustee, Scudder Tax Free Money Fund (investment company)*
Vice President & Trustee, Scudder Tax Free Trust (investment company)*
Vice President & Secretary, AARP Growth Trust (investment company)**
Vice President & Secretary, AARP Income Trust (investment company)**
Vice President & Secretary, AARP Tax Free Income Trust (investment company)**
Vice President & Secretary, AARP Cash Investment Funds (investment company)**
Vice President & Secretary, AARP Managed Investment Portfolios Trust (investment
company)**
Vice President & Secretary, The Japan Fund, Inc. (investment company)**
Part C - Page 13
<PAGE>
Vice President & Assistant Secretary, Scudder World Income Opportunities Fund, Inc.
(investment company)**
Vice President & Assistant Secretary, The Korea Fund, Inc. (investment company)**
Vice President & Assistant Secretary, The Brazil Fund, Inc. (investment company)**
Vice President & Assistant Secretary, Montgomery Street Income Securities, Inc.
(investment company)o
Vice President & Assistant Secretary, Scudder Mutual Funds, Inc. (investment company)**
Vice President & Assistant Secretary, Scudder Pathway Series (investment company)*
Vice President & Assistant Secretary, Scudder New Europe Fund, Inc. (investment
company)**
Vice President & Assistant Secretary, Scudder Variable Life Investment Fund (investment
company)*
Vice President & Assistant Secretary, The First Iberian Fund, Inc. (investment
company)**
Vice President & Assistant Secretary, The Latin America Dollar Income Fund, Inc.
(investment company)**
Vice President, Scudder Fund, Inc. (investment company)**
Vice President, Scudder Institutional Fund, Inc. (investment company)**
Vice President, Scudder GNMA Fund (investment company)*
Director, Senior Vice President & Clerk, Scudder Investor Services, Inc.
(broker/dealer)*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation (in-house
fund accounting agent)*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation (a real
estate holding company)*
Director & Clerk, Scudder Service Corporation (in-house transfer agent)*
Director, SFA, Inc. (advertising agency)*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc. xxx
Cornelia M. Small Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President, AARP Cash Investment Funds (investment company)**
President, AARP Growth Trust (investment company)**
President, AARP Income Trust (investment company)**
President, AARP Tax Free Income Trust (investment company)**
President, AARP Managed Investment Portfolio Trust (investment company)**
Edmond D. Villani Director, President & Chief Executive Officer, Scudder, Stevens & Clark, Inc.
(investment adviser)**
Chairman & Director, The Argentina Fund, Inc. (investment company)**
Chairman & Director, The Latin America Dollar Income Fund, Inc. (investment company)**
Chairman & Director, Scudder World Income Opportunities Fund, Inc. (investment
company)**
Supervisory Director, Scudder Mortgage Fund (investment company) +
Supervisory Director, Scudder Floating Rate Funds for Fannie Mae Mortgage Securities I
& II (investment company)+
Director, Scudder, Stevens & Clark Japan, Inc. (investment adviser)###
Director, The Brazil Fund, Inc. (investment company)**
Director, Indosuez High Yield Bond Fund (investment company) Luxembourg
President & Director, Scudder, Stevens & Clark Overseas Corporation oo
President & Director, Scudder, Stevens & Clark Corporation (Delaware) (investment
adviser)**
Director, Scudder Realty Advisors, Inc. (realty investment adviser) x
Director, IBJ Global Investment Management S.A., (Luxembourg investment management
company) Luxembourg, Grand-Duchy of Luxembourg
Part C - Page 14
<PAGE>
Stephen A. Wohler Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Montgomery Street Income Securities, Inc. (investment company) o
</TABLE>
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
++ Two Prudential Plaza, 180 N. Stetson Avenue, Chicago, IL
+++ 5 Industrial Way, Salem, NH
o 101 California Street, San Francisco, CA
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C.
Luxembourg B 34.564
+ John B. Gorsiraweg 6, Willemstad Curacao, Netherlands Antilles
xx De Ruyterkade 62, P.O. Box 812, Willemstad Curacao,
Netherlands Antilles
## 2 Boulevard Royal, Luxembourg
*** B1 2F3F 248 Section 3, Nan King East Road, Taipei, Taiwan
xxx Grand Cayman, Cayman Islands, British West Indies
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
@ c/o Sinclair Hendersen Limited, 23 Cathedral Yard, Exeter,
Devon, U.K.
Item 29. Principal Underwriters.
- -------- -----------------------
(a) Scudder California Tax Free Trust
Scudder Cash Investment Trust
Scudder Equity Trust
Scudder Fund, Inc.
Scudder Funds Trust
Scudder Global Fund, Inc.
Scudder GNMA Fund
Scudder Institutional Fund, Inc.
Scudder International Fund, Inc.
Scudder Investment Trust
Scudder Municipal Trust
Scudder Mutual Funds, Inc.
Scudder Pathway Series
Scudder Portfolio Trust
Scudder Securities Trust
Scudder State Tax Free Trust
Scudder Tax Free Money Fund
Scudder Tax Free Trust
Scudder U.S. Treasury Money Fund
Scudder Variable Life Investment Fund
AARP Cash Investment Funds
AARP Growth Trust
AARP Income Trust
AARP Tax Free Income Trust
AARP Managed Investment Portfolios Trust
The Japan Fund, Inc.
Part C - Page 15
<PAGE>
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
<S> <C> <C>
Lynn S. Birdsong Senior Vice President None
345 Park Avenue
New York, NY 10154
E. Michael Brown Assistant Treasurer None
Two International Place
Boston, MA 02110
Mark S. Casady Director and Vice President None
Two International Place
Boston, MA 02110
Linda Coughlin Director and Senior Vice President None
Two International Place
Boston, MA 02110
Richard W. Desmond Vice President Assistant Secretary
345 Park Avenue
New York, NY 10154
Paul J. Elmlinger Senior Vice President and Assistant None
345 Park Avenue Clerk
New York, NY 10154
Margaret D. Hadzima Assistant Treasurer None
Two International Place
Boston, MA 02110
Thomas W. Joseph Director, Vice President, Vice President
Two International Place Treasurer and Assistant Clerk
Boston, MA 02110
David S. Lee Director, President and Assistant Director, Vice President
Two International Place Treasurer and Assistant Treasurer
Boston, MA 02110
Thomas F. McDonough Clerk Vice President and
Two International Place Secretary
Boston, MA 02110
Thomas H. O'Brien Assistant Treasurer None
345 Park Avenue
New York, NY 10154
Edward J. O'Connell Assistant Treasurer Vice President and
345 Park Avenue Assistant Treasurer
New York, NY 10154
Part C - Page 16
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
Daniel Pierce Director, Vice President Chairman of the Board and
Two International Place and Assistant Treasurer Director
Boston, MA 02110
Kathryn L. Quirk Director, Senior Vice President and Director, Vice President
345 Park Avenue Assistant Clerk and Assistant Secretary
New York, NY 10154
Robert A. Rudell Vice President None
Two International Place
Boston, MA 02110
Edmund J. Thimme Vice President None
345 Park Avenue
New York, NY 10154
Benjamin Thorndike Vice President None
Two International Place
Boston, MA 02110
Sydney S. Tucker Vice President None
Two International Place
Boston, MA 02110
David B. Watts Assistant Treasurer None
Two International Place
Boston, MA 02110
Linda J. Wondrack Vice President None
Two International Place
Boston, MA 02110
</TABLE>
The Underwriter has employees who are denominated officers of an
operational area. Such persons do not have corporation-wide
responsibilities and are not considered officers for the purpose of
this Item 29.
(c)
<TABLE>
(1) (2) (3) (4) (5)
Net Underwriting Compensation on
Name of Principal Discounts and Redemptions Brokerage Other
Underwriter Commissions and Repurchases Commissions Compensation
----------- ----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Scudder Investor None None None None
Services, Inc.
</TABLE>
Item 30. Location of Accounts and Records.
- -------- ---------------------------------
Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
promulgated thereunder are maintained by Scudder, Stevens &
Clark, Inc., 345 Park Avenue, New York, New York 10154.
Records relating to the duties of the Registrant's custodian
are maintained by Brown Brothers Harriman & Co., 40 Water
Street, Boston, Massachusetts. Records relating to the duties
Part C - Page 17
<PAGE>
of the Registrant's transfer agent are maintained by Scudder
Service Corporation, Two International Place, Boston,
Massachusetts 02110-4103.
Item 31. Management Services.
- -------- --------------------
Inapplicable.
Item 32. Undertakings
- -------- ------------
Inapplicable.
Part C - Page 18
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 14th day of July, 1997.
SCUDDER INTERNATIONAL FUND, INC.
By /s/Thomas F. McDonough
----------------------------
Thomas F. McDonough,
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
amendment to its Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Nicholas Bratt
- --------------------------------------
Nicholas Bratt* President (Principal Executive July 14, 1997
Officer) and Director
/s/Paul Bancroft, III
- --------------------------------------
Paul Bancroft, III* Director July 14, 1997
/s/Thomas J. Devine
- --------------------------------------
Thomas J. Devine* Director July 14, 1997
/s/Keith R. Fox
- --------------------------------------
Keith R. Fox* Director July 14, 1997
/s/William H. Gleysteen, Jr.
- --------------------------------------
William H. Gleysteen, Jr.* Director July 14, 1997
/s/David S. Lee
- --------------------------------------
David S. Lee* Director, Vice President and July 14, 1997
Assistant Treasurer
/s/William H. Luers
- --------------------------------------
William H. Luers* Director July 14, 1997
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
/s/Wilson Nolen
- --------------------------------------
Wilson Nolen* Director July 14, 1997
/s/Kathryn L. Quirk
- --------------------------------------
Kathryn L. Quirk* Director, Vice President and July 14, 1997
Assistant Secretary
/s/Daniel Pierce
- --------------------------------------
Daniel Pierce* Chairman of the Board and Director July 14, 1997
/s/Gordon Shillinglaw
- --------------------------------------
Gordon Shillinglaw* Director July 14, 1997
- --------------------------------------
Pamela A. McGrath Vice President and Treasurer July 14, 1997
(Principal Financial and Accounting
Officer)
</TABLE>
*By: /s/Thomas F. McDonough
-----------------------------------------------
Thomas F. McDonough,
Attorney-in-Fact pursuant to a power of attorney
contained in the signature page of Post-Effective
Amendment Nos. 35, 47, 49, 54 and 56 to the
Registration Statement, filed October 8, 1992,
February 27, 1996, July 17, 1996, June 2, 1997 and
July __, 1997, respectively.
2
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 14th day of July, 1997.
SCUDDER INTERNATIONAL FUND, INC.
By /s/Thomas F. McDonough
--------------------------
Thomas F. McDonough,
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
amendment to its Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated. By so signing, the
undersigned in his capacity as a director or officer, or both, as the case may
be of the Registrant, does hereby appoint Kathryn L. Quirk, Thomas F. McDonough
and Sheldon A. Jones and each of them, severally, or if more than one acts, a
majority of them, his true and lawful attorney and agent to execute in his name,
place and stead (in such capacity) any and all amendments to the Registration
Statement and any post-effective amendments thereto and all instruments
necessary or desirable in connection therewith, to attest the seal of the
Registrant thereon and to file the same with the Securities and Exchange
Commission. Each of said attorneys and agents shall have power to act with or
without the other and have full power and authority to do and perform in the
name and on behalf of the undersigned, in any and all capacities, every act
whatsoever necessary or advisable to be done in the premises as fully and to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and approving the act of said attorneys and agents and each of them.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/David S. Lee
- -------------------
David S. Lee Director, Vice President and July 14, 1997
Assistant Treasurer
3
<PAGE>
File No. 2-14400
File No. 811-642
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT No. 56
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 36
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
SCUDDER INTERNATIONAL FUND, INC.
<PAGE>
SCUDDER INTERNATIONAL FUND, INC.
EXHIBIT INDEX
Exhibit 1(a)
Exhibit 1(b)
Exhibit 1(c)
Exhibit 1(d)
Exhibit 2(a)
Exhibit 2(b)
Exhibit 2(c)
Exhibit 5(a)
Exhibit 5(b)
Exhibit 5(c)
Exhibit 5(g)
Exhibit 6(a)
Exhibit 6(b)
Exhibit 8(a)(1)
Exhibit 8(a)(2)
Exhibit 8(a)(3)
Exhibit 8(a)(5)
Exhibit 8(b)(1)
Exhibit 8(b)(2)
Exhibit 8(c)(1)
Exhibit 8(c)(2)
Exhibit 8(d)(1)
Exhibit 8(d)(2)
Exhibit 8(e)(1)
Exhibit 8(e)(2)
Exhibit 8(f)(1)
Exhibit 8(f)(2)
<PAGE>
Exhibit 8(g)(1)
Exhibit 8(g)(2)
Exhibit 9(a)(1)
Exhibit 9(a)(2)
Exhibit 9(b)
Exhibit 9(c)(1)
Exhibit 9(c)(2)
Exhibit 9(d)(1)
Exhibit 9(e)(6)
Exhibit 10
Exhibit 11
Exhibit 14(a)
Exhibit 14(b)
Exhibit 14(c)
Exhibit 14(d)
Exhibit 14(e)
Exhibit 16
Exhibit 17
Exhibit 1(a)
SCUDDER INTERNATIONAL FUND, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
(Under Section 206009 of Corporations and Associations Article)
Scudder International Fund, Inc., a Maryland Corporation having its
principal office in New York, New York and having The Corporation Trust
Incorporated as its resident agent located at the First Maryland Building, 32
South Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
1. The Corporation desires to amend and restate as hereinafter provided its
Charter as currently in effect. The provisions set forth in these Articles of
Amendment and Restatement are all the provisions of the Charter of the
Corporation as currently in effect.
2. The Charter of the Corporation is hereby amended, by striking Articles
Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh,
Twelfth, Thirteenth and Fourteenth in their entirety and substituting in lieu
thereof the following:
"Second: Name.
The name of the Corporation is SCUDDER INTERNATIONAL FUND, INC.
"Third: Corporate Purposes.
The purpose or purposes for which the Corporation is formed is to act as an
investment company under the federal Investment Company Act of 1940, and to
exercise and enjoy all the powers, rights and privileges granted to, or
conferred upon, corporations by the Maryland General Corporation Law. The
Corporation shall exercise and enjoy all such powers, rights and privileges to
the extent not inconsistent with these Articles of Amendment and Restatement.
"Fourth: Address and Resident Agent.
The post office address of the principal office of the Corporation in the
State of Maryland is:
c/o The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
The name and post office address of the resident agent of the Corporation
in the State of Maryland is:
The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
Such resident agent is a Maryland corporation.
"Fifth Capital Stock.
(1) Authorized Shares. The total number of shares of stock which the
Corporation shall have authority to issue is One Hundred Million
(100,000,000) shares of the par value of One Cent ($0.01) per share, such
shares having an aggregate par value of One Million Dollars ($1,000,000).
(2) Authorization of Stock Issuance. The Board of Directors may
authorize the issuance and sale of capital stock of this Corporation,
including stock of any class or series, from time to time in such amounts
and on such terms and conditions, for such purposes and for such amount or
kind of consideration as the Board of Directors shall determine, subject to
any limits required by then applicable law. All shares shall be issued on a
fully paid and non-assessable basis.
All persons who shall acquire shares of capital stock in the Corporation
shall acquire the same subject to the provisions of these Articles of Amendment
and Restatement and the By-Laws of the Corporation, as each may be amended,
supplemented and/or restated from time to time.
(3) Fractional Shares. The Corporation may issue fractional shares.
Any fractional share shall carry proportionately the rights of a whole
share, including without limitation the right to vote and the right to
receive dividends.
(4) Power to Classify. The Board of Directors may classify and
reclassify any unissued shares of capital stock into one or more additional
or other classes or series as may be established from time to time by
setting or changing in any one or more respects the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemptions of such shares
1
<PAGE>
of stock. Pursuant to such classification or reclassification, the Board of
Directors may increase or decrease the number of authorized shares of
stock, or shares of any existing class or series of stock. Except as
otherwise provided herein, all references herein to capital stock shall
apply without discrimination to the shares of each class or series of
stock. Pursuant to such power, the Board of Directors has designated one
series of shares of capital stock of the Corporation, the name of the
series is "International Fund" and the number of shares allocated to it is
100,000,000.
(5) Series-General The relative preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of each class or
series of stock of the Corporation shall be as follows, unless otherwise
provided in Articles Supplementary hereto:
(a) Assets Belonging to Class. All consideration received by the
Corporation for the issue or sale of stock of a particular class or
series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that class or series for all purposes, and shall
be so recorded on the books of account of the Corporation. Any assets,
income, earnings, profits or proceeds thereof, funds or payments which
are not readily attributable to a particular class or series shall be
allocated to and among any one or more series or classes in such
manner and on such basis as the Board of Directors, in its sole
discretion, shall deem fair and equitable, and items so allocated to a
particular series or class shall belong to that series or class. Each
such allocation shall be conclusive and binding upon the stockholders
of all classes and series for all purposes.
(b) Liabilities Belonging to Class. The assets belonging to each
class or series shall be charged with the liabilities of the
Corporation in respect of that class or series and with all expenses,
costs, charges and reserves attributable to that class or series and
shall be so recorded on the books of account of the Corporation. Any
general liabilities, expenses, costs, charges or reserves of the
Corporation which are not readily identifiable as belonging to any
particular class or series shall be allocated and charges to and among
any one or more of the classes or series in such manner and on such
basis as the Board of Directors in its sole discretion deems fair and
equitable, and any items so allocated to a particular class or series
shall be charged to, and shall be a liability belonging to, that class
or series. Each such allocation shall be conclusive and binding upon
the stockholders of all classes and series for all purposes.
(c) Income. The Board of Directors shall have full discretion, to
the extent not inconsistent with the Maryland General Corporation Law
and the Investment Company Act of 1940, to determine which items shall
be treated as income and which items shall be treated as capital. Each
such determination shall be conclusive and binding. "Income belonging
to" a class or series includes all income, earnings and profits
derived from assets belonging to that class or series, less any
expenses, costs, charges or reserves belonging to that class or
series, for the relevant time period.
(d) Dividends and Distributions. Dividends and distributions on
shares of a particular class or series may be declared and paid with
such frequency, in such form and in such amount as the Board of
Directors may from time to time determine. Dividends may be declared
daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Board of Directors may
determine, after providing for actual and accrued liabilities
belonging to that class or series.
All dividends on shares of a particular class or series shall be
paid only out of the income belonging to that class or series and
capital gains distributions on shares of the class or series shall be
only out of the capital gains belonging to the class or series. All
dividends and distributions on shares of a particular class or series
shall be distributed pro rata to the shareholders of that class or
series held by such shareholders at the date and time of record
established for the payment of such dividends or distributions, except
that in connection with any dividend or distribution program or
procedure the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the shareholder's
purchase order and/or payment have not been received by the time or
times established by the Board of Directors under such program or
procedure.
The Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains
distributions, amounts sufficient, in the opinion of the Board of
Directors, to enable the corporation or the class or series to qualify
as a regulated investment company under the Internal Revenue Code of
1988, as amended, or any successor or comparable statute thereto, and
regulations promulgated thereunder, and to
2
<PAGE>
reduce or eliminate liability of the Corporation or the class or
series for taxes, including federal income and excise taxes, but
nothing in the foregoing shall limit the authority of the Board of
Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company or to reduce or
eliminate liability of the Corporation or the class or series for any
such taxes.
Dividends and distributions may be paid in cash, property or
shares, or a combination thereof, as determined by the Board of
Directors or pursuant to any program that the Board of Directors may
have in effect at the time.
(e) Tax Elections. The Board of Directors shall have the power,
in its discretion, to make such elections as to the tax status of the
Corporation or any series or class of the Corporation as may be
permitted or required by the Internal Revenue code of 1986, as
amended, without the vote of stockholders of the Corporation or any
series or class.
(f) Liquidation. At any time there are no shares outstanding for
a particular class or series, the Board of Directors may liquidate
such class or series in accordance with applicable law. In the event
of the liquidation or dissolution of the Corporation, or of a class or
series thereof when there are shares outstanding of the Corporation
or of such class or series, as applicable, the stockholders of such,
or of each, class or series, as applicable, shall be entitled to
receive, when and as declared by the Board of Directors, the excess of
the assets of that class or series over the liabilities of that class
or series, determined as provided herein and including assets and
liabilities allocated pursuant to sections (5)(a) and (5)(b) of this
Article Fifth. Any such excess amounts will be distributed to each
stockholder of the applicable class or series in proportion to the
number of outstanding shares of that class or series held by that
stockholder and recorded on the books of the Corporation. Subject to
the requirements of applicable law, dissolution of a class or series
may be accomplished by distribution of assets to stockholders of that
class or series as provided herein, by the transfer of assets of that
class or series to another class or series of the Corporation, by the
exchange of shares of that class or series for shares of another class
or series of the Corporation, or in any other legal manner.
(g) Voting Rights. On each matter submitted to a vote of
stockholders, each holder of a share of capital stock of the
Corporation shall be entitled to one vote for each full share, and a
fractional vote for each fractional share of stock standing in such
holder's name on the books of the Corporation, irrespective of the
class or series thereof, and all shares of all classes and series
shall vote together as a single class, provided that (a) when the
Maryland General Corporation Law or the Investment Company Act of 1940
requires that a class or series vote separately with respect to a
given matter, the separate voting requirements of the applicable law
shall govern with respect to the affected classes or series and other
classes or series shall vote as a single class and (b) unless
otherwise required by those laws, no class or series shall vote on any
matter which does not affect the interest of that class or series.
(h) Quorum. The presence in person or by proxy of the holders of
one-third of the shares of stock of the Corporation entitled to vote
thereat, without regard to class, shall constitute a quorum at any
meeting of the stockholders, except with respect to any matter which,
under applicable statutes or regulatory requirements, required
approval by a separate vote of one or more classes of stock, in which
case the presence in person or by proxy of the holders of one-third of
the shares of stock of each class required to vote as a class on the
matter shall constitute a quorum. If at any meeting of the
stockholders there shall be less than a quorum present, the
stockholders present at such meeting may, without further notice,
adjourn the same from time to time until a quorum shall be present.
(6) Notwithstanding any provision of the Maryland General Corporation
Law requiring for any purpose a proportion greater than a majority of the
votes of all classes or series, the affirmative vote of the holders of a
majority of the total number of shares of the Corporation, or of a series
of the Corporation, as applicable, outstanding and entitled to vote under
such circumstances pursuant to these Articles of Amendment and Restatement
and the By-Laws of the Corporation shall be effective for such purpose,
except to the extent otherwise required by the Investment Company Act of
1940 and rules thereunder.
(7) No stockholder of the Corporation shall be entitled as of right to
subscribe for, purchase, or otherwise acquire any shares of any classes or
series, or any other securities of the Corporation which the Corporation
proposes to issue or sell; and any or all of such shares or securities of
the Corporation, whether new or hereafter authorized or created, may be
issued, or may be reissued or transferred if the same have been required,
and sold to such persons, firms, corporations and associations, and for
such lawful consideration, and on such terms as the Board of Directors in
its discretion may determine, without first offering the same, or any
thereof, to any said stockholder.
3
<PAGE>
"Sixth. Transfers of Capital Stock.
(1) Issue of Shares.
(a) The Board of Directors may from time to time issue, reissue,
sell or cause to be reissued and sold any of the Corporation's
authorized shares of capital stock, including any additional shares
hereafter authorized and any shares redeemed or repurchased by the
Corporation.
(b) Subject to the requirements of the Maryland General
Corporation Law, the Board of Directors may authorize the issuance of
some or all of the shares of any or all classes or series without
certificates and may establish such conditions as it may determine in
connection with the issuance of certificates.
(c) For any corporate purpose, such as in connection with the
acquisition of all or substantially all the assets or stock of another
investment company or investment trust, the Board of Directors may
issue or cause to be issued shares of capital stock of the Corporation
and accept in payment therefor, in lieu of cash, assets or other
property, either with or without adjustment for contingent costs or
liabilities, provided such assets or other property are of the
character in which the Corporation is permitted to invest.
(2) Redemption Of Shares.
(a) The Board of Directors shall authorize the Corporation to the
extent it has funds or other property legally available therefore and
subject to such reasonable conditions as the Board of Directors may
determine, to permit each holder of shares of capital stock of the
Corporation to redeem all or any part of the shares standing in the
name of such holder on the books of the Corporation, at the applicable
redemption price of such shares, determined in accordance with
procedures established by the Board of Directors of the Corporation
from time to time in accordance with applicable law.
(b) Without limiting the generality of the foregoing, the Board
of Directors may authorize the Corporation, at its option and to the
extent permitted by and in accordance with the conditions of
applicable law, to redeem stock owned by any stockholder under
circumstances deemed appropriate by the Board of Directors in its sole
discretion from time to time, such circumstances including but not
limited to (1) failure to provide the Corporation with a tax
identification number and (2) failure to maintain ownership of a
specified minimum number or value of shares of any class or series of
stock of the Corporation, such redemption to be effected at such a
price, at such time and subject to such conditions as may be required
or permitted by applicable law.
(c) Payment for redeemed stock shall be made in cash unless, in
the opinion of the Board of Directors, which shall be conclusive,
conditions exist which make it advisable for the Corporation to make
payment wholly or partially in securities or other property or assets.
Payment made wholly or partially in securities or other property or
assets may be delayed to such reasonable extent, not inconsistent with
applicable law, as is reasonably necessary under the circumstances. No
stockholder shall have the right, except as determined by the Board of
Directors, to have his shares redeemed in such securities, property or
other assets.
(d) All rights of a stockholder with respect to a share redeemed,
including the right to receive dividends and distributions with
respect to such share, shall cease as of the time at which the
redemption price is to be paid, except the right of such stockholder
to receive payment of such shares as provided herein.
(e) Notwithstanding any other provisions Of this Article, the
Board of Directors may suspend the right of stockholders of any or all
classes or series of shares to require the Corporation to redeem
shares held by them for such periods and to the extent permitted by,
or in accordance with, the Investment Company Act of 1940, and the
rules, regulations and orders issued thereunder. The Board of
Directors may, in the absence of a ruling by a responsible regulatory
official, terminate such suspension at such time as the Board of
Directors, in its discretion, shall deem reasonable, such
determination to be conclusive.
(f) Shares of any class or series which have been redeemed shall
constitute authorized but unissued shares subject to classification
and reclassification as provided in these Articles of Amendment and
Restatement.
(3) Repurchase of Shares. The Board may by resolution from time to
time authorize the Corporation to purchase or otherwise acquire, directly
or through an agent, shares of any class or series of its outstanding stock
upon such terms and conditions and for such consideration as permitted by
applicable law and
4
<PAGE>
determined to be reasonable by the Board of Directors and to take all other
steps deemed necessary in connection therewith. Shares so purchased or
acquired shall have the status of authorized but unissued shares.
(4) Conversion and Exchange. Subject to compliance with the
requirements of the Investment Company Act of 1940, the Board of Directors
shall have the authority to provide that holders of shares of any class or
series shall have the right to convert or exchange said shares into shares
of one or more other classes or series of shares in accordance with such
requirements and procedures as may be established by the Board of
Directors.
"Seventh: Board of Directors.
The number of directors of the Corporation shall be eleven, or such other
number as may from time to time be fixed in the manner provided in the By-laws
of the Corporation, provided that the number of directors shall not be less than
the minimum number required under the Maryland General Corporation Law. The
By-laws may authorize a majority of the directors to increase or decrease the
number of directors within the limits set by these Articles and to fill
vacancies created by an increase in the number of directors. Except as provided
in the By-laws, the election of directors may be conducted in any way approved
at the meeting (whether of stockholders or directors) at which the election is
held, provided that such election shall be by ballot whenever requested by any
person entitled to vote. The names of the directors who are currently in office
and who shall act as such until their successors are duly elected and qualify
are as follows:
George S. Johnston Nicholas Bratt
Paul Bancroft III Thomas J. Devine
William H. Gleysteen, Jr. Dr. Wilson Nolen
William H. Luers Daniel Pierce
Gordon Shillinglaw Robert G. Stone, Jr.
Edmund D. Villani
(1) Removal of Directors. Subject to the limits of the Investment
Company Act of 1940 and unless otherwise provided by the By-laws, a
director may be removed with or without cause, by the affirmative vote of a
majority of (a) the Board of Directors, (b) a committee of the Board of
Directors appointed for such purpose, or (c) the stockholders by vote of a
majority of the outstanding shares of the Corporation.
(2) Powers of Directors. In addition to any powers conferred herein or
in the By-laws, the Board of Directors may, subject to any express
limitations contained in these Articles or in the By-laws, exercise the
full extent of powers conferred by the Maryland General Corporation Law or
other applicable law upon corporations or directors thereof, and the
enumeration and definition of particular powers herein or in the By-laws
shall in no way be deemed to restrict or otherwise limit those lawfully
conferred powers. In furtherance and without limitation of the foregoing,
the Board of Directors shall have power:
(a) to make, alter, amend or repeal from time to time the By-laws
of the Corporation except as otherwise provided by the By-laws, or
required by the Investment Company Act of 1940.
(b) subject to requirements of the Investment Company Act 1940,
to authorize the Corporation to enter into contracts. Such contracts
may be for any lawful purpose, whether or not such purpose involves
delegating functions normally performed by the Board of Directors,
including, but not limited to, the provisions of investment management
for the Corporation's investment portfolio, the distribution of
securities issued by the Corporation, the administration of the
Corporation's affairs, the provisions of transfer agent services with
respect to the Corporation's shares of capital stock, and the custody
of the Corporation's assets. Any party (including its associates) may
be retained in multiple capacities pursuant to one or more contracts
and may also perform services, including similar or identical
services, for others, including other investment companies. Subject to
the requirements of applicable law, such contracts may provide for
compensation to be paid by the Corporation in such amounts, including
payments of multiple amounts for parties (including their affiliates)
acting in multiple capacities, as the Board of Directors shall
determine in its discretion to be proper and reasonable.
(c) to authorize from time to time the payment of compensation to
the Directors for services to the Corporation, including fees for
attendance at meetings of the Board of Directors and committees
thereof.
(d) subject to the requirements of applicable law, to establish,
in its absolute discretion, the basis or method, timing and frequency
for determining the value of assets belonging to each class or series
and for determining the net asset value of each share of each class or
series for purposes of sales, redemptions, repurchases or otherwise.
5
<PAGE>
Without limiting the foregoing, the Board of Directors may
determine that the net asset value per share of any class or series
should be maintained at a designated constant value and may adopt
procedures, not inconsistent with applicable law, to accomplish that
result. Such procedures may include a requirement, in the event of a
net loss with respect to the particular class or series from time to
time, for automatic pro rata capital contributions from each
stockholder of that class or series in amounts sufficient to maintain
the designated constant share value.
(e) to determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings,
surplus or net assets in excess of capital, and to determine what
accounting periods shall be used by the Corporation for any purpose;
to set apart any funds of the Corporation reserves for such purposes
as it shall determine and to abolish the same; to declare and pay any
dividends and distributions in cash, securities or other property from
surplus or any funds legally available therefor, at such intervals as
it shall determine; to establish payment dates for dividends or any
other distributions on any basis, including dates occurring less
frequently than the effectiveness of declarations thereof.
(f) to make such elections, in its discretion, as to the tax
status of the Corporation or any series or class of the Corporation's
capital stock as may be permitted or required by the Internal Revenue
Code of 1986, as amended.
(3) Determination by Board of Directors. Any determination made in
good faith and, in the case of accounting matters, in accordance with
generally accepted accounting principles, by or pursuant to the direction
of the Board of Directors shall be final and shall be binding upon the
Corporation and upon all stockholders, past, present and future, of each
class and series.
"Eighth: Reservation of Right to Amend.
The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Amendment and Restatement from time to time and
at any time in the manner now or hereafter prescribed by the laws of the State
of Maryland and all rights herein conferred upon stockholders are granted
subject to such reservation.
"Ninth: Contracts.
The Corporation may enter into any contract with any corporation, firm,
partnership, trust or association, although one or more of the Directors,
officers or shareholders of the Corporation may be an officer, director,
partner, trustee, shareholder or member of, or have an interest in, such other
party to the contracts, and no such contract shall be invalidated or rendered
voidable by reason of the existence of any such relationship or interest, nor
shall any person holding such relationship be liable merely by reason of such
relationship or interest for any loss or expense to the Corporation under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair to the Corporation.
"Tenth: Liability and Indemnification.
To the fullest extent permitted by the Maryland General Corporation Law and
the Investment Company Act of 1940, no director or officer of the Corporation
shall be liable to the Corporation or to its stockholders for damages. The
limitation on liability applies to events occurring at the time a person serves
as a director or officer of the Corporation, whether or not such person is a
director or officer at the time of any proceeding in which liability is
asserted. No amendment to these Articles of Amendment and Restatement or repeal
of any of its provisions shall limit or eliminate the benefits provided to
directors and officers under this provision with respect to any act or omission
which occurred prior to such amendment or repeal.
The Corporation, including its successors and assigns, shall indemnify its
directors and officers and make advance payment of related expenses to the
fullest extent permitted, and in accordance with the procedures required by
Maryland law, including Section 2-418 of the Maryland General Corporation law,
as may be amended from time to time, and the Investment company Act of 1940. The
By-laws may provide that the Corporation shall indemnify its employees and/or
agents in any manner and within such limits as permitted by applicable law. Such
indemnification shall be in addition to any other right or claim to which any
director, officer, employee or agent may otherwise be entitled.
The Corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation or is or
was serving at the request of the Corporation as a director, officer, partner,
trustee, employee or agent of another foreign or domestic corporations,
partnership, joint venture, trust or other enterprise or employee benefit plan
against any liability asserted against and incurred by such person in any such
capacity or arising out of such person's position, whether or not the
Corporation would have had the power to indemnify against such liability.
6
<PAGE>
The rights provided to any person by this Article shall be enforceable
against the Corporation by such person who shall be presumed to have relied upon
such rights in serving or continuing to serve in the capacities indicated
herein. No amendment of these Articles of Amendment and Restatement shall impair
the rights of any person arising at any time with respect to events occurring
prior to such amendment.
Nothing in these Articles of Amendment and Restatement shall be deemed to
(i) require a waiver of compliance with any provision of the Securities Act of
1933, as amended, or the Investment Company Act of 1940, as amended, or of any
valid rule, regulation or order of the Securities and Exchange Commission under
those Acts or (ii) protect any director or officer of the Corporation against
any liability to the Corporation or its stockholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of his or her duties or by reason of his or her reckless
disregard of his or her obligations and duties hereunder.
"Eleventh: Shareholders.
(1) Meetings of Shareholders. Unless an election of directors is
required by the Investment Company Act of 1940, the Corporation shall
not be required to hold an annual meeting of shareholders in any year.
(2) Inspection of Records. Stockholders of the Corporation shall
have only such rights to inspect and copy the records, documents,
accounts and books of the Corporation and to request statements
regarding its affairs as are provided by the Maryland General
Corporation Law, subject to such reasonable regulation, not contrary
to the General Laws of the State of Maryland, as the Board of
Directors may from time to time adopt regarding the conditions and
limits of such rights.
(3) No Liability. The stockholders of the Corporation shall not
be liable for, and their private property shall not be subject to,
claim, levy or other encumbrance on account of the debts or
liabilities of the Corporation, to any extent whatsoever.
(4) Owner of Record. The Corporation shall be entitled to treat
the person in whose name any share of the capital stock of the
Corporation is registered as the owner thereof for purposes of
dividends and other distributions in the course of business or in the
course of recapitalization, sale of the property and assets of the
Corporation, or otherwise, and for the purpose of votes, approvals and
consents by stockholders and for the purpose of notices to
stockholder, and for all other purposes whatsoever; and the
Corporation shall not be bound to recognize any equitable or other
claim to or interest in such share, on the part of any other person,
whether or not the Corporation shall have notice thereof, save as
expressly required by law."
3. The number of directors of the Corporation is eleven, and the names of the
directors are set forth above in Article Seventh.
4. The Board of Directors of the Corporation, at a meeting duly convened and
held on September 21, 1990, adopted a resolution in which was set forth the
foregoing amendment and restatement of the Charter, declaring that said
amendment and restatement of the Charter was advisable, and directing that it be
submitted for consideration at a special meeting of the stockholders of the
Corporation.
5. The amendment and restatement of the Charter as hereinabove set forth was
duly approved by the stockholders of the Corporation at a special meeting held
on January 24, 1991.
6. The Articles of Amendment and Restatement shall become effective upon filing
with the State Department of Assessments and Taxation of Maryland.
IN WITNESS WHEREOF, SCUDDER INTERNATIONAL FUND, INC. has caused these
present to be signed in its name and on its behalf by its President witnesses by
its Vice President and Secretary on Jan. 24, 1991.
Scudder International Fund, Inc.
By: /s/ Nicholas Bratt
-----------------------------------
Nicholas Bratt, President
Witness:
/s/ Thomas F. McDonough
- -------------------------------------------------
Thomas F. McDonough, Vice President and Secretary
7
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
The Undersigned, President of Scudder International Fund, Inc., who
executed on behalf of said corporation the foregoing Articles of Amendment and
Restatement, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said corporation, the foregoing Articles of Amendment
and Restatement to be the corporate act of said corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
By: /s/ Nicholas Bratt
---------------------------------
Nicholas Bratt, President
Dated: Jan. 24, 1991
/s/ Therese M. Meany
- ---------------------------------
Notary Public
My commission expires:
THERESE M. MEANY
NOTARY PUBLIC, State of New York
No 41-2644550 - Queens County
Certificate Filed in New York County
Term Expires November 30, 1991
8
Exhibit 1(b)
SCUDDER INTERNATIONAL FUND, INC.
ARTICLES SUPPLEMENTARY
SCUDDER INTERNATIONAL FUND, INC., a Maryland corporation having a principal
office in New York, New York and having The Corporation Trust Incorporated as
its resident agent located at First Maryland Building, 32 South Street,
Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to and in accordance with Section 2-105(c) of the Maryland
General Corporation Law, the aggregate number of shares of stock that the
Corporation, being registered as an open-end investment company under the
Investment Company Act of 1940 (the "1940 Act"), has the authority to issue is
hereby increased to three hundred million (300,000,000) shares, with a par value
of One Cent ($.0l) per share, for an aggregate par value of Three Million
Dollars ($3,000,000.00).
(a) Immediately before the increase effected by these Articles
Supplementary, the total number of shares of stock of all classes
that the Corporation had the authority to issue was one hundred
million (100,000,000) shares with a par value of One Cent ($.0l)
per share, for an aggregate par value of One Million Dollars
($1,000,000).
(b) Immediately after the increase effected by these Articles
Supplementary, the total number of shares of stock of all classes
that the Corporation has the authority to issue is three hundred
million (300,000,000) shares, with a par value of One Cent ($.0l)
per share, for an aggregate par value of Three Million Dollars
($3,000,000.00).
SECOND: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the Corporation,
the Board of Directors has duly classified the one hundred million (100,000,000)
shares of the capital stock of the Corporation resultant from the increase in
authorized capital effected by these Articles Supplementary as a class
designated as the "Latin America Fund" and one hundred million (100,000,000)
shares of the capital stock of the Corporation resultant from the increase in
authorized capital effected by these Articles Supplementary as a class
designated as the "Pacific Opportunities Fund." The shares of capital stock of
the Corporation authorized prior to such increase were previously designated as
the "International Fund" series. The International Fund, The Latin America Fund
and The Pacific Opportunities Fund are each hereinafter referred to as a
"Series." Each Series consists of one hundred million (100,000,000) shares, with
a par value of One Cent ($.0 1) per share, for an aggregate par value of One
Million Dollars ($1,000,000.00), with the aggregate par value of all Series
being Three Million Dollars ($3,000,000.00).
THIRD: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors to classify and reclassify and
issue any unissued shares of any Series and to fix or alter all terms thereof to
the full extent provided by the Charter of the Corporation.
FOURTH: A description of the Series, including the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions for redemptions is set forth in the
Amended and Restated Articles of the Corporation and is not changed by the
Articles Supplementary, except that these three series of shares, as opposed to
one, now exist.
FIFTH: The Board of Directors of the Corporation, acting at a duly called
meeting held on September 17, 1992, adopted resolutions increasing the aggregate
number of shares of capital stock that the Corporation has authority to issue
and classifying the authorized capital stock of the Corporation as set forth in
these Articles Supplementary.
IN WITNESS WHEREOF, Scudder International Fund, Inc. has caused these
Articles Supplementary to be signed and acknowledged in its name and on its
behalf by its President and its corporate seal to be hereunto affixed and
attested by its Secretary, on the 17th day of September, 1992.
SCUDDER INTERNATIONAL FUND, INC.
By /s/ Nicholas Bratt
-----------------------------------
Nicholas Bratt
President
<PAGE>
Verification
I, Thomas F. McDonough, Secretary of Scudder International Fund, Inc. (the
"Corporation") do hereby verify that I have executed these Articles
Supplementary and acknowledge the same to be my act; that adoption of these
Articles Supplementary by the Corporation was a valid corporate act; that, to
the best of my knowledge, information and belief, the matters and facts set
forth herein are true in all material respects; and that this statement is made
under the penalties for perjury.
/s/ Thomas F. McDonough
----------------------------------
Thomas F. McDonough
Secretary
SEAL
2
Exhibit 1(c)
SCUDDER INTERNATIONAL FUND, INC
ARTICLES SUPPLEMENTARY
SCUDDER INTERNATIONAL FUND, INC., a Maryland corporation having a principal
office in New York, New York and having The Corporation Trust Incorporated as
its resident agent located at First Maryland Building, 32 South Street,
Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Charter of the
Corporation, the Board of Directors has further classified the one hundred
million (100,000,000) shares of the capital stock of the Corporation
designated as the "Latin America Fund" series to be redeemable at a price
equal to ninety-eight percent (98%) of net asset value per share if such
shares have been issued and outstanding on the books of the Corporation for
one year or less subject to such exceptions as the Board of Directors may
fix by resolution. The foregoing condition of redemption may be revised or
eliminated by the Board of Directors from time to time, without filing
additional Articles Supplementary, provided the interests of any
outstanding shareholders of the Latin America Fund series are not adversely
affected.
SECOND: A description of the Corporation's series, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions for
redemptions is set forth in the Amended and Restated Articles of the
Corporation and is not changed by these Articles Supplementary, except as
set forth above.
THIRD: The Board of Directors of the Corporation, acting at a duly
called meeting held on September 17, 1992, adopted resolutions establishing
the condition of redemption as set forth in these Articles Supplementary.
IN WITNESS WHEREOF, Scudder International Fund, Inc. has caused these
Articles Supplementary to be signed and acknowledged in its name and on its
behalf by its Vice President and its corporate seal to be hereunto affixed and
attested by its Secretary, on the 1st day of December, 1992.
SCUDDER INTERNATIONAL FUND, INC.
By /s/ David S. Lee
----------------------------------
David S. Lee
Vice President
RECEIVED
'92 DEC 2 PM 2 37
STATE DEPT. OF
ASSESSMENTS & TAXATION
<PAGE>
Verification
I, Thomas F. McDonough, Secretary of Scudder International Fund, Inc. (the
"Corporation") do hereby verify that I have executed these Articles
Supplementary and acknowledge the same to be my act; that adoption of these
Articles Supplementary by the Corporation was a valid corporate act; that, to
the best of my knowledge, information and belief, the matters and facts set
forth herein are true in all material respects; and that this statement is made
under the penalties of perjury.
/s/ Thomas F. McDonough
----------------------------------
Thomas F. McDonough
Secretary
SEAL
2
STATE
DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
8/04/94 - 11:58 a.m.
EXHIBIT 1(d)
SCUDDER INTERNATIONAL FUND, INC.
ARTICLES SUPPLEMENTARY
SCUDDER INTERNATIONAL FUND, INC., a Maryland corporation having a
principal office in New York, New York and having The Corporation Trust
Incorporated as its resident agent located at First Maryland Building, 32 South
Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to and in accordance with Section 2-105(c) of the Maryland
General Corporation Law, the aggregate number of shares of stock that the
Corporation, being registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), has the authority
to issue is hereby increased to four hundred million (400,000,000) shares, with
a par value of One Cent ($.01) per share, for an aggregate par value of Four
Million Dollars ($4,000,000.00).
(a) Immediately before the increase effected by these Articles
Supplementary, the total number of shares of stock of all classes
that the Corporation had the authority to issue was three hundred
million (300,000,000) shares with a par value of One Cent ($.01) per
share, for an aggregate par value of Three Million Dollars
($3,000,000.00).
(b) Immediately after the increase effected by these Articles
Supplementary, the total number of shares of stock of all classes
that the Corporation has the authority to issue is four hundred
million (400,000,000) shares, with a par value of One Cent ($.01)
per share, for an aggregate par value of Four Million Dollars
($4,000,000.00).
SECOND: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Articles of Amendment and
Restatement, as amended from time to time (the "Charter") of the Corporation,
the Board of Directors has duly classified the one hundred million (100,000,000)
shares of the capital stock of the Corporation resultant from the increase of
authorized capital effected by these Articles Supplementary as the "Greater
Europe Growth Fund." Prior to such increase, one hundred million (100,000,000)
shares of authorized capital stock were designated as the "International Fund,"
one hundred million (100,000,000) shares of authorized capital stock were
designated as the "Latin America Fund," and one hundred million (100,000,000)
shares were designated as the "Pacific Opportunities Fund," and such increase
shall not affect the International Fund, Latin America Fund or Pacific
Opportunities Fund shares.
THIRD: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors to classify and reclassify and
issue any unissued shares of any series of the Corporation (a "Series") and to
fix or alter all terms thereof to the full extent provided by the Charter of the
Corporation.
FOURTH: A description of the Series, including the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions for redemptions is set forth in the
Charter of the Corporation and is not changed by the Articles Supplementary,
except that these four Series of shares, as opposed to three, now exist.
FIFTH: The Board of Directors of the Corporation, by action of a unanimous
written consent of the Board of Directors dated August 3, 1994, adopted
resolutions increasing the aggregate number of shares of capital stock that the
Corporation has authority to issue and classifying the authorized capital stock
of the Corporation as set forth in these Articles Supplementary.
IN WITNESS WHEREOF, Scudder International Fund, Inc. has caused these
Articles Supplementary to be signed and acknowledged in its name and on its
behalf by its President and its corporate seal to be hereunto affixed and
attested by its Secretary, on the 3rd day of August, 1994.
ATTEST: SCUDDER INTERNATIONAL FUND, INC.
By /s/Thomas F. McDonough By /s/Nicholas Bratt
--------------------------- ----------------------------
Thomas F. McDonough Nicholas Bratt
Secretary President
SEAL
INTAS0992
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 3 page document on
file in this office. DATED: 8/4/94.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ Gloria J. Watson
------------------------------------------------------------------
This stamp replaces our previous certification system. Effective 10/84
- --------------------------------------------------------------------------------
Exhibit 2(a)
AMENDED AND RESTATED BY-LAWS
OF
SCUDDER INTERNATIONAL FUND, INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. If a meeting of the stockholders of the
Corporation is required by the Investment Company Act of 1940, as amended, (the
"1940 Act") to take action on the election of Directors, then there shall be an
annual meeting to elect Directors held within the United States no later than
120 days after the occurrence of the event requiring the meeting. In other
years, no annual meeting need be held.
SECTION 2. Special Meetings. Special meetings of the stockholders of the
Corporation, or of a class or series, for any purpose or purposes, unless
otherwise prescribed by statute or by the Corporation's Articles of Amendment
and Restatement, as may be amended, (the "Charter") may be held at any place
within the United States, and may be called at any time by the Board of
Directors, the Chairman of the Board or by the President, and shall be called by
the President or Secretary at the request in writing of a majority of the Board
of Directors or at the request in writing of stockholders entitled to cast at
least 25 (twenty-five) percent of the votes entitled to be cast at the meeting.
Notwithstanding the foregoing, unless requested by stockholders entitled to cast
a majority of the votes entitled to be cast at the meeting, a special meeting of
such stockholders need not be called at the request of stockholders to consider
any matter which is substantially the same as a matter voted on at any special
meeting of the stockholders held during the preceding 12 (twelve) months. A
written stockholder request for a meeting shall state the purpose of the
proposed meeting and the matters proposed to be acted on at it, and the
stockholders requesting such meeting shall have paid to the Corporation the
reasonably estimated cost of preparing and mailing the notice thereof, which the
Secretary shall determine and specify to such stockholders.
SECTION 3. Notice of Meetings. The Secretary of the Corporation shall give
written or printed notice of the purpose or purposes and of the date, time and
place of every meeting of the stockholders of record and entitled to vote at a
meeting of the Corporation, or of a class or series, by placing the notice
<PAGE>
in the mail at least 10 (ten) days, but not more than 90 (ninety) days, prior to
the date designated for the meeting addressed to each stockholder entitled to
vote at his address appearing on the books of the Corporation or supplied by the
stockholder to the Corporation for the purpose of notice. The notice of any
meeting of stockholders may be accompanied by a form of proxy approved by the
Board of Directors in favor of the actions or persons as the Board of Directors
may select. Notice of any meeting of stockholders of the Corporation, or a class
or series, shall be deemed waived by any stockholder of the Corporation, or the
class or series, who attends the meeting in person or by proxy, or who before or
after the meeting submits a signed waiver of notice that is filed with the
records of the meeting.
SECTION 4. Quorum. As provided in the Corporation's Charter, except as
otherwise provided by statute, the presence in person or by proxy of
stockholders of the Corporation, or the class or series, entitled to cast at
least one third of the votes entitled to be cast shall constitute a quorum at
each meeting of such stockholders and all questions shall be decided by majority
vote of the shares so represented in person or by proxy at the meeting and
entitled to vote. In the absence of a quorum, the stockholders entitled to vote
present in person or by proxy, by majority vote and without notice other than by
announcement, may adjourn the meeting from time to time as provided in Section 5
of this Article I until a quorum shall attend. The stockholders entitled to vote
present at any duly organized meeting may continue to do business for which the
particular meeting was called until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum. The absence from any meeting
in person or by proxy of holders of the number of shares of stock of the
Corporation, or a class or series, required for action upon any given matter
shall not prevent action at the meeting on any other matter or matters that may
properly come before the meeting, so long as there are present, in person or by
proxy, holders of the number of shares of stock of the Corporation, or the class
or series, required for action upon the other matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders may be adjourned
from time to time, without notice other than announcement at the meeting at
which the adjournment is taken. At any adjourned meeting at which a quorum shall
be present any action may be taken that could have been taken at the meeting
originally called. A meeting of the stockholders may not be adjourned to a date
more than 120 (one hundred twenty) days after the original record date.
SECTION 6. Organization. At every meeting of the stockholders, the Chairman
of the Board, or in his absence or
- 2 -
<PAGE>
inability to act, the President, or in his absence or inability to act, a Vice
President, or in the absence or inability to act of the Chairman of the Board,
the President and all the Vice Presidents, a chairman chosen by the
stockholders, shall act as Chairman of the meeting. The Secretary, or in his
absence or inability to act, a person appointed by the chairman of the meeting,
shall act as secretary of the meeting and keep the minutes of the meeting.
SECTION 7. Order of Business. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.
SECTION 8. Voting. As provided in the Corporation's Charter, except as
otherwise provided by statute, each holder of record of shares of stock of a
class or series having voting power shall be entitled to one vote for every full
share of stock, with a fractional vote for fractional shares, standing in his
name on the records of the Corporation as of the record date determined pursuant
to Section 9 of this Article I or if such record date shall not have been so
fixed, then at the later of (i) the close of business on the day on which notice
of the meeting is mailed or (ii) the thirtieth day before the meeting. All
shares of all classes and series shall vote together as a single class, provided
that when Maryland General Corporation Law or the Investment Company Act of 1940
requires that a class or series vote vote separately with respect to a given
matter, the separate voting requirements of the applicable law shall govern with
respect to the affected classes or series and other classes or series shall vote
as a single class. As to any matter that does not affect the interest of a
particular class or series, only the holders of shares of the one or more
affected class or series shall be entitled to vote.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by the
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases in which the proxy states that it is
irrevocable and where an irrevocable proxy is permitted by law. A proxy
purporting to be executed by or on behalf of a stockholder shall be deemed valid
unless challenged at or prior to its exercise. Except as otherwise provided by
statute, the Corporation's Charter or these By-laws, any corporate action to be
taken by vote of the stockholders shall be authorized by a majority of the total
votes validly cast at a meeting of stockholders at which a quorum is present.
- 3 -
<PAGE>
SECTION 9. Fixing of Record Date. The Board of Directors may set a record
date for the purpose of determining stockholders entitled to notice of and to
vote at any meeting of the stockholders. The record date for a particular
meeting shall be not more than 90 (ninety) nor fewer than 10 (ten) days before
the date of the meeting. If no record date has been fixed, the record date for
the determination of stockholders entitled to notice of or to vote at a meeting
of stockholders shall be the later of the close of business on the day on which
notice of the meeting is mailed or the thirtieth day before the meeting, or, if
notice is waived by all stockholders, at the close of business on the tenth day
next preceding the day on which the meeting is held. All persons who were
holders of record of shares of the class or series to which the meeting relates
as of the record date of a meeting, and no others, shall be entitled to vote at
such meeting and adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting or
at any adjournment of the meeting. If the inspectors shall not be so appointed
or if any of them shall fail to appear or act, the chairman of the meeting may,
and on the request of any stockholder entitled to vote at the meeting shall,
appoint inspectors. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath to execute faithfully the duties of
inspector at the meeting with strict impartiality and according to the best of
his ability. The inspectors shall determine the number of shares outstanding and
the voting power of each share, the number of shares represented at the meeting,
the existence of a quorum and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do those acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting or any stockholder entitled to vote at
the meeting, the inspectors shall make a report in writing of any challenge,
request or matter determined by them and shall execute a certificate of any fact
found by them. No Director or candidate for the office of Director shall act as
inspector of an election of Directors. Inspectors need not be stockholders of
the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting. Except as otherwise
provided by statute or the Corporation's Charter, any action required to be
taken at any meeting of stockholders, or any action that may be taken at any
meeting of the stockholders, may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the
- 4 -
<PAGE>
records of stockholders' meetings: (i) an unanimous written consent that sets
forth the action and is signed by each stockholder entitled to vote on the
matter and (ii) a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote at the
meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. All powers of
the Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholders by law, by the
Corporation's Charter, or by these By-Laws. All acts done by any meeting of the
Directors or by any person acting as a Director, so long as his successor shall
not have been duly elected or appointed, shall, notwithstanding that it be
afterwards discovered that there was some defect in the election of the
Directors or of such person acting as aforesaid or that they or any of them were
disqualified, be as valid as if the Directors or such other person, as the case
may be, had been duly elected and were or was qualified to be Directors or a
Director of the Corporation.
SECTION 2. Number of Directors. The number of Directors may be changed from
time to time by resolution of the Board of Directors adopted by a majority of
the Directors then in office; provided, however, that the number of Directors
shall in no event be fewer than three nor more than fifteen. Any vacancy created
by an increase in Directors may be filled in accordance with Section 6 of this
Article II. No reduction in the number of Directors shall have the effect of
removing any Director from office prior to the expiration of his term unless the
Director is specifically removed pursuant to Section 5 of this Article II at the
time of the decrease. A Director need not be a stockholder of the Corporation, a
citizen of the United States or a resident of the State of Maryland.
SECTION 3. Election and Term of Directors. Directors shall be elected at
the annual meeting of stockholders or a special meeting held for that purpose;
provided, however, that if no annual meeting of the stockholders of the
Corporation is required to be held in a particular year pursuant to Section I of
Article I of these By-laws, Directors shall be elected at the next annual
meeting held. The term of office of each Director shall be from the time of his
election and qualification until his successor shall have been elected and shall
have been qualified, or until his death, or until he shall have resigned or have
been removed
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as provided in these By-laws, or as otherwise provided by statute or the
Corporation's Charter.
SECTION 4. Resignation. A Director of the Corporation may resign at any
time by giving written notice of his resignation to the Board of Directors, the
Chairman of the Board, the President or the Secretary of the Corporation. Any
resignation shall take effect at the time specified in it or, should the time
when it is to become effective not be specified in it, immediately upon its
receipt. Acceptance of a resignation shall not be necessary to make it effective
unless the resignation states otherwise.
SECTION 5. Removal of Directors. Any Director of the Corporation may be
removed as set forth in the Corporation's Charter.
SECTION 6. Vacancies. Subject to the provisions of the 1940 Act, (i) any
vacancies in the Board of Directors arising from an increase in the number of
directors shall be filled by a vote of a majority of the Board and (ii) any
vacancies in the Board arising from death, resignation, removal or any other
cause shall be filled by a vote of the majority of the remaining Directors even
though that majority is less than a quorum. Any Director elected or appointed to
fill a vacancy shall hold office until a successor has been chosen and qualifies
or until his earlier resignation or removal.
SECTION 7. Place of Meetings. Meetings of the Board may be held at any
place that the Board of Directors may from time to time determine or that is
specified in the notice of the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of Directors may
be held without notice of the date, time and place determined by the Board of
Directors.
SECTION 9. Special Meetings. Special meetings of the Board of Directors may
be called by two or more Directors of the Corporation, the Chairman of the
Board, the Secretary or the President.
SECTION 10. Notice of Special Meetings. Notice of each special meeting of
the Board of Directors shall be given by the Secretary as hereinafter provided.
Each notice shall state the date, time and place of the meeting and shall be
delivered to each Director, either personally or by telephone or other standard
form of telecommunication, at least 24 (twenty-four) hours before the time at
which the meeting is to be held, or by first-class mail, postage prepaid,
addressed to the Director at his residence or usual place of business, and
mailed at least 2 (two) days before the day on which the meeting is to be held.
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SECTION 11. Waiver of Notice of Meetings. Notice when required, of any
meeting of the Board of Directors or a committee of the Board need not be given
to any Director who shall, either before or after the meeting, sign a written
waiver of notice that is filed with the records of the meeting or who shall
attend the meeting.
SECTION 12. Quorum and Voting. One-third (but not fewer than 2 (two)) of
the members of the entire Board of Directors shall be present in person at any
meeting of the Board in order to constitute a quorum for the transaction of
business at the meeting, and except as otherwise expressly required by statute,
the Corporation's Charter, these By-Laws, or the 1940 Act, the act of a majority
of the Directors present at any meeting at which a quorum is present shall be
the act of the Board. In the absence of a quorum at any meeting of the Board, a
majority of the Directors present may adjourn the meeting to another date, time
and place until a quorum shall be present. Notice of the date, time and place of
any adjourned meeting shall be given to the Directors who were not present at
the time of the adjournment and, unless the date, time and place were announced
at the meeting at which the adjournment was taken, to the other Directors. At
any adjourned meeting at which a quorum is present, any business may be
transacted that might have been transacted at the meeting as originally called.
SECTION 13. Organization. The Board of Directors may designate a Chairman
of the Board, who shall preside at each meeting of the Board and who shall have
such other duties as the Board of Directors shall determine. In the absence or
inability of the Chairman of the Board to act, the President, if also a
Director, or another Director chosen by a majority of the Directors present,
shall act as chairman of the meeting and preside at the meeting. The Secretary,
or, in his absence or inability to act, the Assistant Secretary, or, in his
absence or inability to act, any person appointed by the Chairman, shall act as
secretary of the meeting and keep the minutes thereof.
SECTION 14. Committees. The Board of Directors may designate by resolution
one or more committees, including an executive committee, of the Board of
Directors, each consisting of 2 (two) or more Directors. To the extent provided
in the resolution, and permitted by law, the Board may delegate to these
committees any of its powers, except the power to authorize the issuance of
stock, declare a dividend or distribution on stock, recommend to stockholders
any action requiring stockholder approval, amend these By-laws, or approve any
merger or share exchange which does not require stockholder approval. If the
Board of Directors has given general authorization for the
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issuance of stock, a committee of the Board, in accordance with a general
formula or method specified by the Board by resolution or by adoption of a stock
option or other plan, may fix the terms of stock subject to classification or
reclassification and the terms on which any stock may be issued, including all
terms and conditions required or permitted to be established or authorized by
the Board of Directors. Any committee or committees shall have the name or names
determined from time to time by resolution adopted by the Board of Directors.
Each committee shall keep regular minutes of its meetings and report the same to
the Board of Directors when required. The members of a committee present at any
meeting, whether or not they constitute a quorum, may appoint a Director to act
in the place of an absent member.
SECTION 15. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the 1940 Act, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee of the Board may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board or committee.
SECTION 16. Telephone Conference. Members of the Board of Directors or any
committee of the Board may participate in any Board or committee meeting by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at the
meeting.
SECTION 17. Compensation. Each Director shall be entitled to receive
compensation, if any, as may from time to time be fixed by the Board of
Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, he attends. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in traveling to and from the
place of a Board or committee meeting.
SECTION 18. Honorary Directors. The Board of Directors may from time to
time designate and appoint one or more qualified persons to the position of
"honorary Director". Each honorary Director shall serve for such term as shall
be specified in the resolution of the Board of Directors appointing him or until
his earlier resignation or removal. An honorary Director may be removed from
such position with or without cause by the vote of a majority of the Board of
Directors given at any regular or special meeting. An honorary Director may be
invited to attend all meetings of the Board of Directors but shall not be
present at any portion of a meeting from which the honorary Director
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shall have been excluded by vote of the Directors. An honorary Director shall
not be a "Director" or "officer" within the meaning of the Corporation's
Charter, or of these By-Laws, shall not be deemed to be a member of an "advisory
board" within the meaning of the 1940 Act, shall not hold himself out as any of
the foregoing, and shall not be liable to any person for any act of the
Corporation. Notice of special meetings may be given to an honorary Director but
the failure to give such notice shall not affect the validity of any meeting or
the action taken thereat. An honorary Director shall not have the powers of a
Director, may not vote at meetings of the Board of Directors and shall not take
part in the operation or governance of the Corporation. An honorary Director
shall not receive any compensation but may, in the discretion of the Board of
Directors, be reimbursed for expenses incurred in attending meetings of the
Board of Directors or otherwise.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of the Corporation shall
be a President, a Secretary and a Treasurer, each of whom shall be elected by
the Board of Directors. The Board of Directors may elect or appoint one or more
Vice Presidents and may also appoint any other officers, agents and employees it
deems necessary or proper. Any two or more offices may be held by the same
person, except the offices of President and Vice President, but no officer
shall, in more than one capacity, execute, acknowledge or verify any instrument
required to be executed, acknowledged or verified by more than one officer. Each
officer shall be elected by the Board of Directors in accordance with the
provisions of the Maryland General Corporation Law and shall serve until his
successor shall have been duly elected and shall have been qualified, or until
his death, or until he shall have resigned or have been removed, as provided in
these By-Laws. The Board of Directors may from time to time elect, or delegate
to the President the power to appoint, such officers (including one or more
Assistant Vice Presidents, one or more Assistant Treasurers and one or more
Assistant Secretaries) and such agents as may be necessary or desirable for the
business of the Corporation. Such other officers and agents shall have such
duties and shall hold their offices for such terms as may be prescribed by the
Board or by the appointing authority. The Chairman of the Board shall be chosen
from among the Directors of the Corporation and may hold such office only so
long as the Chairman continues to be a Director.
SECTION 2. Resignations. Any officer of the Corporation may resign at any
time by giving written notice of his
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resignation to the Board of Directors, the Chairman of the Board, the President
or the Secretary. Any resignation shall take effect at the time specified
therein or, if the time when it shall become effective is not specified therein,
immediately upon its receipt. Acceptance of a resignation shall not be necessary
to make it effective unless the resignation states otherwise.
SECTION 3. Removal of Officer, Agent or Employee. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors whenever in
the Board's judgment the best interests of the Corporation will be served
thereby, and the Board may delegate the power of removal as to agents and
employees not elected or appointed by the Board of Directors. Removal shall be
without prejudice to the person's contract rights, if any, but the appointment
of any person as an officer, agent or employee of the Corporation shall not of
itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office whether arising from death,
resignation, removal or any other cause, may be filled in the manner prescribed
in these By-Laws for the regular election or appointment to the office.
SECTION 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer with respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by the Board, any officer,
agent or employee of the Corporation shall give a bond or other security for the
faithful performance of his duties, including responsibility for negligence and
for the accounting of any of the Corporation's property, funds or securities
that come into his hands in an amount and with any surety or sureties as the
Board may require.
SECTION 7. Chairman of the Board. The Chairman of the Board, if there be
such an officer, shall be the senior officer of the Corporation, shall preside
at all stockholders' meetings and at all meetings of the Board of Directors (as
set forth in Article II, Section 13) and unless otherwise provided by Trustee
resolution shall be ex officio, with a vote, a member of all committees of the
Board of Directors. He shall have such other powers and perform such other
duties as may be assigned to him from time to time by the Board of Directors.
SECTION 8. President. The President shall be the chief executive officer of
the Corporation. In the absence or inability of the Chairman of the Board to
act, or if no Chairman shall be in office, the President shall preside at all
meetings
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of the stockholders and, if also a Director, of the Board of Directors. The
President shall have, subject to the control of the Board of Directors, general
charge of the business and affairs of the Corporation, and general supervision
over its officers, employees and agents, and he may delegate these powers.
Except as the Board of Directors may otherwise order, he may sign in the name
and on behalf of the Corporation all deeds, bonds, contracts, or agreements. He
shall exercise such other powers and perform such other duties as from time to
time may be assigned to him by the Board of Directors.
SECTION 9. Vice President. Each Vice President shall have the powers and
perform the duties that the Board of Directors or the President may from time to
time prescribe. At the request or in the absence or disability of the President,
the Vice President (or, if there are two or more Vice Presidents, then the
senior of the Vice Presidents present and able to act) may perform all the
duties of the President and, when so acting, shall have all the powers of and be
subject to all the restrictions upon the President.
SECTION 10. President of a Class of Series. The Board of Directors may from
time to time elect or appoint a President of a class or series. The President of
a class or series shall preside at meetings of stockholders of that class or
series in the absence of the Chairman, and shall have the status of a Vice
President of the Corporation.
SECTION 11. Treasurer and Assistant Treasurer. Subject to the provisions of
any contract that may be entered into with any custodian pursuant to authority
granted by the Board of Directors, the Treasurer shall have charge of all
receipts and disbursements of the Corporation and shall have or provide for the
custody of the Corporation's funds and securities; he shall have full authority
to receive and give receipts for all money due and payable to the Corporation,
and to endorse checks, drafts and warrants, in its name and on its behalf and to
give full discharge for the same; and he shall deposit all funds of the
Corporation, except those that may be required for current use, in such banks or
other places of deposit as the Board of Directors may from time to time
designate. The Treasurer shall render to the Board of Directors such financial
information as the Board shall direct. In general, he shall perform all duties
incident to the office of Treasurer and such other duties as may from time to
time be assigned to him by the Board of Directors or the President.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer, the President or the Board of
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Directors may assign, and, in the absence of the Treasurer, the Assistant
Treasurer may perform all of the duties of Treasurer.
SECTION 12. Secretary and Assistant Secretary. The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the
purpose the minutes of all meetings of the Board of Directors, the committees of
the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates, if any, of the Corporation
(unless the seal of the Corporation on such certificates shall be a facsimile,
as hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board of Directors or the President.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary, the President or the Board of Directors may assign, and, in the
absence of the Secretary, he may perform all duties of the Secretary.
SECTION 13. Subordinate Officers. The Board of Directors from time to time
may appoint such other officers or agents as it may deem advisable, each of whom
shall have such title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
SECTION 14. Delegation of Duties. In case of the absence of any officer of
the Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board may confer for the time being the powers or duties, or any
of them, of such officer upon any other officer or upon any Director.
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ARTICLE IV
STOCK
SECTION 1. Stock Certificates. The interest of each stockholder of the
Corporation may be evidenced by certificates for shares of stock in such form as
the Board of Directors may from time to time prescribe, subject to applicable
law. The certificates representing shares of stock shall be signed by or in the
name of the Corporation by the President, a Vice President or the Chairman of
the Board and by the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer and sealed with the seal of the Corporation. Any or all of
the signatures or the seal on the certificate may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate shall be issued, it may be
issued by the Corporation with the same effect as if such officer, transfer
agent or registrar were still in office at the date of issue. Notwithstanding
the foregoing, as provided under Maryland General Corporation Law and the
Charter the Board of Directors may authorize the issuance of any class or series
of stock without certificate.
SECTION 2. Books of Account and Record of Stockholders. There shall be kept
at the principal executive offices of the Corporation correct and complete books
and records of accounts of all the business and transactions of the Corporation.
The stock ledgers of the Corporation, containing the names and addresses of the
stockholders and the number of shares held by them respectively, shall be kept
at the principal offices of the Corporation or, if the Corporation employs a
transfer agent, at the offices of the transfer agent of the Corporation.
SECTION 3. Transfers of Shares. Unless otherwise determined by Director
resolution, the basis upon which stock shall be issued, redeemed, repurchased,
converted and exchanged, including the determination of net asset value per
share and the suspension thereof shall be as set forth in the Corporation's
registration statements filed with the Securities and Exchange Commission, as
amended from time to time and executed by a majority of the Directors or their
attorneys. Transfers of shares of stock of the Corporation shall be made on the
stock records of the Corporation only by the registered holder thereof, or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary or with a transfer agent or transfer clerk, and on surrender
of the certificate or certificates, if issued, for the shares properly endorsed
or
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accompanied by a duly executed stock transfer power, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require, and the payment of all taxes thereon.
SECTION 4. Regulations. The Board of Directors may make any additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more transfer clerks
and one or more registrars and may require all certificates for shares of stock
to bear the signature or signatures of any of them.
SECTION 5. Stolen, Lost or Destroyed Certificates. The holder of any
certificate representing shares of stock of a class or series shall immediately
notify the Corporation of its theft, loss or destruction and the Corporation may
issue a new certificate of stock of the class or series in the place of any
certificate issued by it that has been alleged to have been stolen, lost or
destroyed. The Board may, in its discretion, require the owner (or his legal
representative) of a stolen, lost or destroyed certificate: to give to the
Corporation a bond in a sum, limited or unlimited, and in a form and with any
surety or sureties, as the Board in its absolute discretion shall determine, to
indemnify the Corporation against any claim that may be made against it on
account of the alleged theft, loss or destruction of any such certificate, or
issuance of a new certificate. Anything herein to the contrary notwithstanding,
the Board of Directors, in its absolute discretion, may refuse to issue any such
new certificate, except pursuant to legal proceedings under the laws of the
State of Maryland.
SECTION 6. Fixing of Record Date for Dividends, Distributions, etc. The
Board may fix, in advance, a date not more than 90 (ninety) days preceding the
date fixed for the payment of any dividend or the making of any distribution
with respect to, or the allotment of rights to subscribe for securities of the
Corporation, or a class or series, or for the delivery of evidences of rights or
evidences of interests in the class or series arising out of any change,
conversion or exchange of common stock or other securities, as the record date
for the determination of the stockholders of the class or series entitled to
receive any such dividend, distribution, allotment, rights or interests, and in
such case only the stockholders of record of the class or series at the time so
fixed shall be entitled to receive such dividend, distribution, allotment,
rights or interests. If no record date has been fixed, the record date for
determining stockholders entitled to receive dividends shall be
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the close of business on the day on which the resolution of the Board of
Directors declaring the dividend or allotment of rights is adopted, but the
payment or allotment shall not be made more than 60 (sixty) days after the date
on which the resolution is adopted.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers. Any person who was or
is a party or is threatened to be made a party in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a current or former
Director or officer of the Corporation, or is or was serving while a Director or
officer of the Corporation at the request of the Corporation as a Director,
officer, partner, trustee, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust, enterprise or employee benefit plan, shall be
indemnified by the Corporation against judgments, penalties, fines, excise
taxes, settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding to
the fullest extent permissible under the Maryland General Corporation Law, the
Securities Act of 1933 and the 1940 Act, as such statutes are now or hereafter
in force, except that such indemnity shall not protect any such person against
any liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office ("disabling conduct").
SECTION 2. Advances. Any current or former Director or officer of the
Corporation claiming indemnification within the scope of this Article V shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the fullest extent permissible under the Maryland General
Corporation Law, the Securities Act of 1933 and the 1940 Act, as such statutes
are now or hereafter in force; provided however, that the person seeking
indemnification shall provide to the Corporation a written affirmation of his
good faith belief that the standard of conduct necessary for indemnification by
the Corporation has been met and a written undertaking by or on behalf of the
Director to repay any such advance if it is ultimately determined that he is not
entitled to indemnification, and provided further that at least one of the
following additional conditions is met: (1) the person seeking
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indemnification shall provide a security in form and amount acceptable to the
Corporation for his undertaking; (2) the Corporation is insured against losses
arising by reason of the advance; or (3) a majority of a quorum of Directors of
the Corporation who are neither "interested persons" as defined in Section
2(a)(19) of the 1940 Act, as amended, nor parties to the proceeding
("disinterested non-party Directors") or independent legal counsel, in a written
opinion, shall determine, based on a review of facts readily available to the
Corporation at the time the advance is proposed to be made, that there is reason
to believe that the person seeking indemnification will ultimately be found to
be entitled to indemnification.
SECTION 3. Procedure. At the request of any current or former Director or
officer, or any employee or agent whom the Corporation proposes to indemnify,
the Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the Securities Act of 1933
and the 1940 Act, as such statutes are now or hereafter in force, whether the
standards required by this Article V have been met; provided, however, that
indemnification shall be made only following: (1) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct or (2) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the person to be indemnified was not liable by reason of
disabling conduct, by (a) the vote of the majority of a quorum of disinterested
non-party Directors or (b) an independent legal counsel in a written opinion.
SECTION 4. Indemnification of Employees and Agents. Employees and agents
who are not officers or Directors of the Corporation may be indemnified, and
reasonable expenses may be advanced to such employees or agents, in accordance
with the procedures set forth in this Article V to the extent permissible under
the Maryland General Corporation Law, the Securities Act of 1933 and the 1940
Act, as such statutes are now or hereafter in force, and to such further extent,
consistent with the foregoing, as may be provided by action of the Board of
Directors or by contract.
SECTION 5. Other Rights. The indemnification provided by this Article V
shall not be deemed exclusive of any other right, in respect of indemnification
or otherwise, to which those seeking such indemnification may be entitled under
any insurance or other agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action by a Director or officer of the
Corporation in his official capacity and as to action by such person in another
capacity while holding such
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office or position, arid shall continue as to a person who has ceased to be a
Director or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 6. Constituent, Resulting or Surviving Corporations. For the
purposes of this Article V, references to the "Corporation" shall include all
constituent corporations absorbed in a consolidation or merger as well the
resulting or surviving corporation so that any person who is or was a Director,
officer, employee or agent of a constituent corporation or is or was serving at
the request of a constituent corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under this Article V with respect to
the resulting or surviving corporation as he would if he had served the
resulting or surviving corporation in the same capacity.
ARTICLE VI
MISCELLANEOUS
SECTION 1. Execution of Instruments. Subject to the provisions of Article
III hereof, all deeds, documents, transfers, contracts, agreements and other
instruments requiring execution by the Corporation shall be signed by the
President or a Vice President and by the Treasurer or Secretary or an Assistant
Treasurer or an Assistant Secretary, or as the Board of Directors may otherwise,
from time to time, authorize. Any such authorization may be general or confined
to specific instances.
SECTION 2. Seal. The seal of the Corporation shall be in the form approved
by the Board of Directors. The seal may be used by causing it or a facsimile to
be impressed or affixed or in any other manner reproduced, or by placing the
word "(seal)" adjacent to the signature of the person authorized to sign the
document on behalf of the Corporation.
SECTION 3. Fiscal Year. The fiscal year of the Corporation, or each class
or series, shall be fixed by the Board of Directors.
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ARTICLE VII
AMENDMENTS
These By-Laws may be amended or repealed by the Board of Directors at any
regular or special meeting of the Board of Directors, subject to the
requirements of the 1940 Act.
* * *
END OF BY-LAWS
* * *
Adopted by the Board of Directors on March 4, 1991.
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Exhibit 2(b)
SCUDDER INTERNATIONAL FUND, INC.
On September 20 1991, the Board of Directors of Scudder International Fund, Inc.
amended Article II, Section 7 of the By-Laws of the Corporation to read as
follows:
Place and Manner of Meetings. Meetings of the Board may be held at any place
that the Board of Directors may from time to time determine or that is specified
in the notice of the meeting. Meetings of the Board can be held in conjunction
with meetings of other investment companies having the same investment adviser
or an affiliated investment adviser.
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Exhibit 2(c)
SCUDDER INTERNATIONAL FUND, INC.
On December 12, 1991, the Directors of the Fund adopted the following
amending the By-Laws of the Fund:
RESOLVED, that pursuant to the provisions of Article VII of the Fund's
By-Laws, Section 10 of Article II of the Fund's By-Laws is hereby
amended to read in its entirety as follows (additions have been
underlined):
ARTICLE II
BOARD OF DIRECTORS
SECTION 10. Notice of Special Meetings. Notice of each special
meeting of the Board of Directors shall be given by the Secretary as
hereinafter provided. Each notice shall state the date, time and place
of the meeting and shall be delivered to each Director, either
personally or by telephone or other standard form of
telecommunication, at least 24 (twenty-four) hours before the time at
which the meeting is to be held, or by first-class mail, postage
prepaid, addressed to the Director at his residence or usual place of
business, and mailed at least 2 (two) days before the day on which the
meeting is to be held, or delivered to him personally or transmitted
by telegraph, cable or other communication leaving a visual record at
least one day before the meeting.
Exhibit 5(a)
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, NY 10154
December 14, 1990
Scudder International Fund, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Dear Sirs:
Scudder International Fund, Inc. (the "Fund") has been established as a
Maryland Corporation to engage in the business of an investment company.
The Fund has selected you to act as the sole investment manager of the Fund
and to provide certain other services, as more fully set forth below, and you
have indicated that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Fund agrees with you as follows:
1. Delivery of Documents. The Fund engages in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") included in the Fund's Registration Statement on Form N-1 A, as
amended from time to time, (the "Registration Statement") filed by the Fund
under the Investment Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents referred to in the
preceding sentence have been furnished to you by the Fund. The Fund has also
furnished you with copies properly certified or authenticated of each of the
following additional documents related to the Fund:
(a) Articles of Incorporation of the Fund dated June 20, 1984, as amended
to date (the "Articles").
(b) By-Laws of the Fund as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Fund and the shareholders of the
Fund selecting you as investment manager and approving the form of
this Agreement.
The Fund will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements, if any, to the foregoing,
including the Prospectus, the SAI and the Registration Statement.
2. Name of Fund. The Fund may use any name derived from the name "Scudder,
Stevens & Clark", if the Fund elects to do so, only for so long as this
Agreement, any other investment management agreement between you and the Fund or
any extension, renewal or amendment hereof or thereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to your business as investment manager. At such time as such an agreement shall
no longer be in effect, the Fund shall (to the extent the Fund has the legal
power to cause it to be done) cease to use such a name or any other name
indicating that it is managed by or otherwise connected with you or any
organization which shall have so succeeded to your business.
3. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge:
subject always to policies and instructions adopted by the Fund's Board of
Directors. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Fund or counsel to
you. You shall also make available to the Fund promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist the Fund to
comply with the requirements of the 1940 Act and other applicable laws. To the
extent required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in
<PAGE>
connection with the services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the Fund are being
conducted in a manner consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Fund's Board of Directors periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Fund's officers or Board of Directors shall reasonably
request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities as the Fund may require for its
reasonable needs, and you (or one or more of your affiliates designated by you)
shall render to the Fund administrative services necessary for operating as an
investment company and not provided by persons not parties to this Agreement
including, but not limited to, preparing reports to and meeting materials for
the Fund's Board of Directors and reports and notices to Fund shareholders;
supervising, negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, custodians, depositories,
transfer and pricing agents, accountants, attorneys, printers, underwriters,
brokers and dealers, insurers and other persons in any capacity deemed to be
necessary or desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC") and other regulatory and
self-regulatory organizations, including, but not limited to, preliminary and
definitive proxy materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant to Rule 24f-2
under the 1940 Act; overseeing the tabulation of proxies by the Fund's transfer
agent; assisting in the preparation and filing of the Fund's federal, state and
local tax returns; preparing and filing the Fund's federal excise tax return
pursuant to Section 4982 of the Code; providing assistance with investor and
public relations matters; monitoring the valuation of portfolio securities, the
calculation of net asset value and the calculation and payment of distributions
to Fund shareholders; monitoring the registration of the Fund's shares of
capital stock, $.01 par value per share (the "Shares") under applicable federal
and state securities laws; maintaining or causing to be maintained for the Fund
all books, records and reports and any other information required under the 1940
Act, to the extent that such books, records and reports and other information
are not maintained by the Fund's custodian or other agents of the Fund;
assisting in establishing the accounting policies of the Fund; assisting in the
resolution of accounting issues that may arise with respect to the Fund's
operations and consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith; establishing
and monitoring the Fund's operating expense budgets; reviewing the Fund's bills;
processing the payment of bills that have been approved by an authorized person;
assisting the Fund in determining the amount of dividends and distributions
available to be paid by the Fund to its shareholders, preparing and arranging
for the printing of dividend notices to shareholders, and providing the transfer
and dividend paying agent and the custodian with such information as is required
for such parties to effect the payment of dividends and distributions; and
otherwise assisting the Fund as it may reasonably request in the conduct of its'
business, subject to the direction and control of the Fund's Board of Directors.
Nothing in this Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the Fund or any other person not a party to this
Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Fund (including the Fund's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of your directors,
officers and employees as may duly be elected officers of the Fund, subject to
their individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described in
section 3 hereof and the administrative services described in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 5. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Directors and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out-of-pocket expenses, but not including your overhead
2
<PAGE>
or employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Fund; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's custodians, subcustodians,
transfer agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates and,
except as provided below in this section 5, other expenses in connection with
the issuance, offering, distribution, sale, redemption or repurchase of
securities issued by the Fund; expenses relating to investor and public
relations; expenses and fees of registering or qualifying Shares of the Fund for
sale; interest charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses (specifically including
travel expenses relating to Fund business) of Directors, officers and employees
of the Fund who are not affiliated persons of you; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities of the Fund;
expenses of printing and distributing reports, notices and dividends to
shareholders; expenses of printing and mailing Prospectuses and SAIs of the Fund
and supplements thereto; costs of stationery; any litigation expenses;
indemnification of Directors and officers of the Fund; costs of shareholders'
and other meetings; and travel expenses (or an appropriate portion thereof) of
Directors and officers of the Fund who are directors, officers or employees of
you to the extent that such expenses relate to attendance at meetings of the
Board of Directors of the Fund or any committees thereof or advisors thereto
held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Fund shall have adopted a plan in conformity with Rule
12b-1 under the 1940 Act providing that the Fund (or some other party) shall
assumed some or all of such expenses. You shall be required to pay such of the
foregoing sales expenses as are not required to be paid by the principal
underwriter pursuant to the underwriting agreement or are not permitted to be
paid by the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the Fund
shall pay you on the last day of each month the unpaid balance of a fee equal to
the excess of (a) 1/12 of 1.0 of 1% of the average daily net assets as defined
below of the Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $200,000,000, the fee payable for that
month based on the portion of the average of such values in excess of
$200,000,000 shall be 1/12 of .90 of 1% of such portion; provided that, for any
calendar month during which the average of such values exceeds $400,000,000, the
fee payable for that month based on the portion of the average of such values in
excess of $400,000,000 shall be 1/12 of .85 of 1% of such portion; and provided
that, for any calendar month during which the average of such values exceeds
$800,000,000 the fee payable for that month based on the portion of the average
of such values in excess of $800,000,000 shall be 1/12 of .80 of 1% of such
portion over (b) the greater of (i) the amount by which the Fund's expenses
exceed the lowest applicable expense limitation (as more fully described below)
or (ii) any compensation waived by you from time to time (as more fully
described below). You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided that no such
payment shall exceed 75% of the amount of your fee then accrued on the books of
the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Articles and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 6.
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or
3
<PAGE>
regulations of any jurisdiction in which the Shares of the Fund may be qualified
for offer and sale. Except to the extent that such amount has been reflected in
reduced payments to you, you shall refund to the Fund the amount of any payment
received in excess of the limitation pursuant to this section 6 as promptly as
practicable after the end of such fiscal year, provided that you shall not be
required to pay the Fund an amount greater than the fee paid to you in respect
of such year pursuant to this Agreement. As used in this section 6, "expenses"
shall mean those expenses included in the applicable expense limitation having
the broadest specifications thereof, and "expense limitation" means a limit on
the maximum annual expenses which may be incurred by an investment company
determined (i) by multiplying a fixed percentage by the average, or by
multiplying more than one such percentage by different specified amounts of the
average, of the values of an investment company's net assets for a fiscal year
or (ii) by multiplying a fixed percentage by an investment company's net
investment income for a fiscal year. The words "lowest applicable expense
limitation" shall be construed to result in the largest reduction of your
compensation for any fiscal year of the Fund; provided, however, that nothing in
this Agreement shall limit your fees if not required by an applicable statute or
regulation referred to above in this section 6.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Fund.
8. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Fund agrees that you shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Fund or its
shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties hereunder.
Any person, even though also employed by you, who may be or become an employee
of and paid by the Fund shall be deemed, when acting within the scope of his or
her employment by the Fund, to be acting in such employment solely for the Fund
and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1992, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval
and (b) by the Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Fund's Board of Directors on 60 days'
written notice to you, or by you on 60 days' written notice to the Fund. This
Agreement shall terminate automatically in the event of its assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the outstanding voting
securities of the Fund and by the Fund's Board of Directors, including a
majority of the Directors who are not parties to this Agreement
4
<PAGE>
or interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall not apply to the management of assets allocated to any
series of the Fund's Shares hereafter established by the Fund's Board of
Directors.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
Scudder International Fund, Inc.
By /s/ [ILLEGIBLE]
---------------------------------
President
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER, STEVENS & CLARK, INC.
By
----------------------------------
Managing Director
5
Exhibit 5(b)
Scudder International Fund, Inc.
345 Park Avenue
New York, NY 10154
December 7, 1992
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, NY 10154
Investment Management Agreement
Scudder Latin America Fund
Dear Sirs:
Scudder International Fund, Inc. (the "Corporation") has been established
as a Maryland Corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation (the "Articles"), the
Board of Directors has divided the Corporation's shares of common stock, par
value $.01 per share, (the "Shares") into separate series, or funds, including
Scudder Latin America Fund (the "Fund"). Series may be abolished and dissolved,
and additional series established, from time to time by action of the Directors.
That Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) Articles of Incorporation of the Corporation dated June 20, 1984, as
amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders
of the Fund selecting you as investment manager and approving the form
of this Agreement.
The Corporation will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Name of Corporation and Fund. The Corporation and the Fund may use any
name derived from the name "Scudder, Stevens & Clark", if the Corporation elects
to do so, only for so long as this Agreement, any other investment management
agreement between you and the Corporation with respect to the Fund or any
extension, renewal or amendment hereof or thereof remains in effect, including
any similar agreement with any organization which shall have succeeded to your
business as investment manager. At such time as such an agreement shall no
longer be in effect, the Corporation and the Fund shall each (to the extent the
Corporation has the legal power to cause it to be done) cease to use such a name
or any other name indicating that it is managed by or otherwise connected with
you or any organization which shall have so succeeded to your business.
3. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated
<PAGE>
investment company under Subchapter M of the Code and regulations issued
thereunder. The Fund shall have the benefit of the investment analysis and
research, the review of current economic conditions and trends and the
consideration of long-range investment policy generally available to your
investment advisory clients. In managing the Fund in accordance with the
requirements set forth in this section 3, you shall be entitled to receive and
act upon advice of counsel to the Corporation or counsel to you. You shall also
make available to the Corporation promptly upon request all of the Fund's
investment records and ledgers as are necessary to assist the Corporation to
comply with the requirements of the 1940 Act and other applicable laws. To the
extent required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Corporation are being conducted in a manner
consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic reports
on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities as the Fund may require for its
reasonable needs, and you (or one or more of your affiliates designated by you)
shall render to the Corporation administrative services on behalf of the Fund
necessary for operating as an investment company and not provided by persons not
parties to this Agreement including, but not limited to, preparing reports to
and meeting materials for the Corporation's Board of Directors and reports and
notices to Fund shareholders; supervising, negotiating contractual arrangements
with, to the extent appropriate, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities, the calculation of net asset value and the calculation and
payment of distributions to Fund share holders; monitoring the registration of
Shares of the Fund under applicable federal and state securities laws;
maintaining or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent and the custodian with such information as is required for such parties to
effect the payment of dividends and distributions; and otherwise assisting the
Corporation as it may reasonably request in the conduct of the Fund's business,
subject to the direction and control of the Corporation's Board of Directors.
Nothing in this Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the Fund or any other person not a party to this
Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
2
<PAGE>
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 5. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Directors and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out-of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's custodians, subcustodians,
transfer agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates and,
except as provided below in this section 5, other expenses in connection with
the issuance, offering, distribution, sale, redemption or repurchase of
securities issued by the Fund; expenses relating to investor and public
relations; expenses and fees of registering or qualifying Shares of the Fund for
sale; interest charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses (specifically including
travel expenses relating to Corporation business) of Directors, officers and
employees of the Corporation who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the l940 Act providing that the Fund
(or some other party) shall have assumed some or all of such expenses. You shall
be required to pay such of the foregoing sales expenses as are not required to
be paid by the principal underwriter pursuant to the underwriting agreement or
are not permitted to be paid by the Fund (or some other party) pursuant to such
a plan.
6. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you on the last day of each month
the unpaid balance of a fee equal to the excess of (a) 1/12 of 1.25% of the
average daily net assets as defined below of the Fund for such month over (b)
the greater of (i) the amount by which the Fund's expenses exceed the lowest
applicable expense limitation (as more fully described below) or (ii) any
compensation waived by you from time to time (as more fully described below).
You shall be entitled to receive during any month such interim payments of your
fee hereunder as you shall request, provided that no such payment shall exceed
75% of the amount of your fee then accrued on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Articles and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 6.
3
<PAGE>
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or regulations of any jurisdiction in which the Shares of the Fund may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Fund the amount of
any payment received in excess of the limitation pursuant to this section 6 as
promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Fund an amount greater than the fee paid to you
in respect of such year pursuant to this Agreement. As used in this section 6,
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Fund; provided, however, that
nothing in this Agreement shall limit your fees if not required by an applicable
statute or regulation referred to above in this section 6.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Corporation.
8. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Corporation agrees that you
shall not be liable under this Agreement for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Corporation,
the Fund or its shareholders to which you would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of your
duties, or by reason of your reckless disregard of your obligations and duties
hereunder. Any person, even though also employed by you, who may be or become an
employee of and paid by the Fund shall be deemed, when acting within the scope
of his or her employment by the Fund, to be acting in such employment solely for
the Fund and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1994, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement
4
<PAGE>
shall be effective until approved by the vote of a majority of the outstanding
voting securities of the Fund and by the Corporation's Board of Directors,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
Scudder International Fund, Inc.
(on behalf of Scudder Latin America Fund)
By /s/ Nicholas Bratt
--------------------------------------
President
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER, STEVENS & CLARK, INC.
By /s/ David S. Lee
--------------------------------------
Managing Director
5
Exhibit 5(c)
Scudder International Fund, Inc.
345 Park Avenue
New York, NY 10154
December 7, 1992
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, NY 10154
Investment Management Agreement
Scudder Pacific Opportunities Fund
Dear Sirs:
Scudder International Fund, Inc. (the "Corporation") has been established
as a Maryland Corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation (the "Articles"), the
Board of Directors has divided the Corporation's shares of common stock, par
value $.01 per share, (the "Shares") into separate series, or funds, including
Scudder Pacific Opportunities Fund (the "Fund"). Series may be abolished and
dissolved, and additional series established, from time to time by action of the
Directors.
That Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) Articles of Incorporation of the Corporation dated June 20, 1984, as
amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders
of the Fund selecting you as investment manager and approving the form
of this Agreement.
The Corporation will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Name of Corporation and Fund. The Corporation and the Fund may use any
name derived from the name "Scudder, Stevens & Clark", if the Corporation elects
to do so, only for so long as this Agreement, any other investment management
agreement between you and the Corporation with respect to the Fund or any
extension, renewal or amendment hereof or thereof remains in effect, including
any similar agreement with any organization which shall have succeeded to your
business as investment manager. At such time as such an agreement shall no
longer be in effect, the Corporation and the Fund shall each (to the extent the
Corporation has the legal power to cause it to be done) cease to use such a name
or any other name indicating that it is managed by or otherwise connected with
you or any organization which shall have so succeeded to your business.
3. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
<PAGE>
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the Corporation to comply with the requirements of the 1940 Act and other
applicable laws. To the extent required by law, you shall furnish to regulatory
authorities having the requisite authority any information or reports in
connection with the services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the Corporation are
being conducted in a manner consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic reports
on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities as the Fund may require for its
reasonable needs, and you (or one or more of your affiliates designated by you)
shall render to the Corporation administrative services on behalf of the Fund
necessary for operating as an investment company and not provided by persons not
parties to this Agreement including, but not limited to, preparing reports to
and meeting materials for the Corporation's Board of Directors and reports and
notices to Fund shareholders; supervising, negotiating contractual arrangements
with, to the extent appropriate, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities, the calculation of net asset value and the calculation and
payment of distributions to Fund shareholders; monitoring the registration of
Shares of the Fund under applicable federal and state securities laws;
maintaining or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent and the custodian with such information as is required for such parties to
effect the payment of dividends and distributions; and otherwise assisting the
Corporation as it may reasonably request in the conduct of the Fund's business,
subject to the direction and control of the Corporation's Board of Directors.
Nothing in this Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the Fund or any other person not a party to this
Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
2
<PAGE>
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 5. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Directors and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out-of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's custodians, subcustodians,
transfer agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates and,
except as provided below in this section 5, other expenses in connection with
the issuance, offering, distribution, sale, redemption or repurchase of
securities issued by the Fund; expenses relating to investor and public
relations; expenses and fees of registering or qualifying Shares of the Fund for
sale; interest charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses (specifically including
travel expenses relating to Corporation business) of Directors, officers and
employees of the Corporation who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall have assumed some or all of such expenses. You shall
be required to pay such of the foregoing sales expenses as are not required to
be paid by the principal underwriter pursuant to the underwriting agreement or
are not permitted to be paid by the Fund (or some other party) pursuant to such
a plan.
6. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you on the last day of each month
the unpaid balance of a fee equal to the excess of (a) 1/12 of 1.10% of the
average daily net assets as defined below of the Fund for such month over (b)
the greater of (i) the amount by which the Fund's expenses exceed the lowest
applicable expense limitation (as more fully described below) or (ii) any
compensation waived by you from time to time (as more fully described below).
You shall be entitled to receive during any month such interim payments of your
fee hereunder as you shall request, provided that no such payment shall exceed
75% of the amount of your fee then accrued on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Articles and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 6.
3
<PAGE>
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or regulations of any jurisdiction in which the Shares of the Fund may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Fund the amount of
any payment received in excess of the limitation pursuant to this section 6 as
promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Fund an amount greater than the fee paid to you
in respect of such year pursuant to this Agreement. As used in this section 6,
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Fund; provided, however, that
nothing in this Agreement shall limit your fees if not required by an applicable
statute or regulation referred to above in this section 6.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Corporation.
8. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Corporation agrees that you
shall not be liable under this Agreement for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Corporation,
the Fund or its shareholders to which you would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of your
duties, or by reason of your reckless disregard of your obligations and duties
hereunder. Any person, even though also employed by you, who may be or become an
employee of and paid by the Fund shall be deemed, when acting within the scope
of his or her employment by the Fund, to be acting in such employment solely for
the Fund and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1994, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
4
<PAGE>
effective until approved by the vote of a majority of the outstanding voting
securities of the Fund and by the Corporation's Board of Directors, including a
majority of the Directors who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
Scudder International Fund, Inc.
(on behalf of Scudder Pacific Opportunities
Fund)
By /s/Nicholas Bratt
-------------------------------------
President
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER, STEVENS & CLARK, INC.
By /s/David S. Lee
-------------------------------------
Managing Director
5
Exhibit 5(g)
SCUDDER INTERNATIONAL FUND, INC.
345 Park Avenue
New York, New York 10154
June 10, 1997
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder International Growth and Income Fund
Ladies and Gentlemen:
Scudder International Fund, Inc. (the "Corporation") has been established
as a Maryland Corporation to engage in the business of an investment company.
Pursuant to the Corporation's Amended and Restated Articles of Incorporation, as
amended from time-to-time (the "Articles"), the Board of Directors has divided
the Corporation's shares of Common stock, par value $.01 per share, (the
"Shares") into separate series, or funds, including Scudder International Growth
and Income Fund (the "Fund"). Series may be abolished and dissolved, and
additional series established, from time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you to act as the sole
investment manager of the Fund and to provide certain other services, as more
fully set forth below, and you have indicated that you are willing to act as
such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
<PAGE>
(a) The Amended and Restated Articles of Incorporation dated January 24, 1991,
as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Corporation selecting you as investment
manager and approving the form of this Agreement.
(d) Articles Supplementary dated March 3, 1997 relating to the Fund.
The Corporation will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of the
rights to use and sublicense the use of the "Scudder" and "Scudder, Stevens &
Clark," trademarks (together, the "Scudder Marks"), you hereby grant the
Corporation a nonexclusive right and sublicense to use (i) the "Scudder" name
and mark as part of the Corporation's name (the "Fund Name"), and (ii) the
Scudder Marks in connection with the Corporation's investment products and
services, in each case only for so long as this Agreement, any other investment
management agreement between you and the Corporation, or any extension, renewal
or amendment hereof or thereof remains in effect, and only for so long as you
are a licensee of the Scudder Marks, provided however, that you agree to use
your best efforts to maintain your license to use and sublicense the Scudder
Marks. The Corporation agrees that it shall have no right to sublicense or
assign rights to use the Scudder Marks, shall acquire no interest in the Scudder
Marks other than the rights granted herein, that all of the Corporation's uses
of the Scudder Marks shall inure to the benefit of Scudder Corporation Company
as owner and licensor of the Scudder Marks (the "Trademark Owner"), and that the
Corporation shall not challenge the validity of the Scudder Marks or the
Trademark Owner's ownership thereof. The Corporation further agrees that all
services and products it offers in connection with the Scudder Marks shall meet
commercially reasonable standards of quality, as may be determined by you or the
Trademark Owner from time to time, provided that you acknowledge that the
services and products the Corporation rendered during the one-year period
preceding the date of this Agreement are acceptable. At your reasonable request,
the Corporation shall cooperate with you and the Trademark Owner and shall
execute and deliver any and all documents necessary to maintain and protect
(including but not limited to in connection with any trademark infringement
2
<PAGE>
action) the Scudder Marks and/or enter the Corporation as a registered user
thereof. At such time as this Agreement or any other investment management
agreement shall no longer be in effect between you (or your successor) and the
Corporation, or you no longer are a licensee of the Scudder Marks, the
Corporation shall (to the extent that, and as soon as, it lawfully can) cease to
use the Fund Name or any other name indicating that it is advised by, managed by
or otherwise connected with you (or any organization which shall have succeeded
to your business as investment manager) or the Trademark Owner. In no event
shall the Corporation use the Scudder Marks or any other name or mark
confusingly similar thereto (including, but not limited to, any name or mark
that includes the name "Scudder") if this Agreement or any other investment
advisory agreement between you (or your successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the Corporation to comply with the requirements of the 1940 Act and other
applicable laws. To the extent required by law, you shall furnish to regulatory
authorities having the requisite authority any information or reports in
connection with the services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the Corporation are
being conducted in a manner consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission
3
<PAGE>
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic reports
on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Corporation administrative
services on behalf of the Fund necessary for operating as an open-end investment
company and not provided by persons not parties to this Agreement including, but
not limited to, preparing reports to and meeting materials for the Corporation's
Board of Directors and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities, the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
4
<PAGE>
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Corporation as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Corporation's Board of Directors. Nothing in this Agreement shall be deemed to
shift to you or to diminish the obligations of any agent of the Fund or any
other person not a party to this Agreement which is obligated to provide
services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 5. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Directors and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out-of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
5
<PAGE>
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Corporation business) of Directors,
officers and employees of the Corporation who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall assume some or all of such expenses. You shall be
required to pay such of the foregoing sales expenses as are not required to be
paid by the principal underwriter pursuant to the underwriting agreement or are
not permitted to be paid by the Fund (or some other party) pursuant to such a
plan.
6. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you on the last day of each month
the unpaid balance of a fee equal to the excess of (a) 1/12 of 1.00 percent of
the average daily net assets as defined below of the Fund for such month; over
(b) the greater of (i) the amount by which the Fund's expenses exceed the lowest
applicable expense limitation (as more fully described below) or (ii) any
compensation waived by you from time to time (as more fully described below).
You shall be entitled to receive during any month such interim payments of your
fee hereunder as you shall request, provided that no such payment shall exceed
6
<PAGE>
75 percent of the amount of your fee then accrued on the books of the Fund and
unpaid.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Articles and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 6.
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or regulations of any jurisdiction in which the Shares of the Fund may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Fund the amount of
any payment received in excess of the limitation pursuant to this section 6 as
promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Fund an amount greater than the fee paid to you
in respect of such year pursuant to this Agreement. As used in this section 6,
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Fund; provided, however, that
nothing in this Agreement shall limit your fees if not required by an applicable
7
<PAGE>
statute or regulation referred to above in this section 6.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Corporation.
8. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Corporation agrees that you
shall not be liable under this Agreement for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Corporation,
the Fund or its shareholders to which you would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of your
duties, or by reason of your reckless disregard of your obligations and duties
hereunder. Any person, even though also employed by you, who may be or become an
employee of and paid by the Fund shall be deemed, when acting within the scope
of his or her employment by the Fund, to be acting in such employment solely for
the Fund and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1998, and continue in force from year to year
8
<PAGE>
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the outstanding voting
securities of the Fund and by the Corporation's Board of Directors, including a
majority of the Directors who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
9
<PAGE>
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
SCUDDER INTERNATIONAL FUND, INC.,
on behalf of Scudder International Growth and
Income Fund
By: /s/Nicholas Bratt
-------------------------------
President
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER, STEVENS & CLARK, INC.
By: /s/David S. Lee
-------------------------------
Managing Director
10
Exhibit 6(a)
SCUDDER INTERNATIONAL FUND, INC.
345 Park Avenue
New York, New York 10154
July 15, 1985
Scudder Fund Distributors, Inc.
175 Federal Street
Boston, Massachusetts 02110
Underwriting Agreement
Dear Sirs:
Scudder International Fund, Inc. (hereinafter called the "Fund") is a
corporation organized under the laws of Maryland and is engaged in the business
of an investment company. The authorized capital of the Fund consists of shares
of common stock, par value $1.00 per share ("Shares"). The Fund has selected you
to act as principal underwriter (as such term is defined in Section 2(a)(29) of
the Investment Company Act of 1940, as amended (the "1940 Act")) of the Shares
and you are willing to act as such principal underwriter and to perform the
duties and functions of underwriter in the manner and on the terms and
conditions hereinafter set forth. Accordingly, the Fund hereby agrees with you
as follows:
1. Delivery of Documents. The Fund has furnished you with copies properly
certified or authenticated of each of the following:
(a) Articles of Incorporation of the Fund, dated June 23, 1975, as amended
to date.
(b) By-Laws of the Fund as in effect on the date hereof.
<PAGE>
(c) Resolutions of the Board of Directors of the Fund selecting you as
principal underwriter and approving this form of Agreement.
The Fund will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements to the foregoing, if any.
The Fund will furnish you promptly with properly certified or authenticated
copies of any registration statement filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, (the "1933
Act") or the 1940 Act, together with any financial statements and exhibits
included therein, and all amendments or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Fund will from time to
time use its best efforts to register under the 1933 Act such number of Shares
not already so registered as you may reasonably be expected to sell on behalf of
the Fund. You and the Fund will cooperate in taking such action as may be
necessary from time to time to qualify Shares so registered for sale by you or
the Fund in any states mutually agreeable to you and the Fund, and to maintain
such qualification. This Agreement relates to the issue and sale of Shares that
are duly authorized and registered and available for sale by the Fund, including
redeemed or repurchased Shares if and to the extent that they may be legally
sold and if, but only if, the Fund sees fit to sell them
-2-
<PAGE>
3. Sale of Shares. Subject to the provisions of paragraphs 5 and 7 hereof
and to such minimum purchase requirements as may from time to time be currently
indicated in the Fund's prospectus or statement of additional information, you
are authorized to sell as agent on behalf of the Fund Shares authorized for
issue and registered under the 1933 Act. You may also purchase as principal
Shares for resale to the public. Such sales will be made by you on behalf of the
Fund by accepting unconditional orders to purchase Shares placed with you by
investors and such purchases will be made by you only after acceptance by you of
such orders. The sales price to the public of Shares shall be the public
offering price as defined in paragraph 6 hereof.
4. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors unconditional
orders for Shares authorized for issue by the Fund and registered under the 1933
Act, provided that you may in your discretion refuse to accept orders for Shares
from any particular applicant.
5. Sale of Shares by the Fund. Unless you are otherwise notified by the
Fund, any right granted to you to accept orders for Shares or to make sales on
behalf of the Fund or to purchase Shares for resale will not apply to (i) Shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all of the assets
-3-
<PAGE>
of any investment company or substantially all the outstanding shares of any
such company, and (ii) to Shares that may be offered by the Fund to shareholders
of the Fund by virtue of their being such shareholders.
6. Public Offering Price. All Shares sold to investors by you will be sold
at the public offering price. The public offering price for all accepted
subscriptions will be the net asset value per Share, determined, in the manner
provided in the Fund's registration statements as from time to time in effect
under the 1933 Act and the 1940 Act, next after the order is accepted by you.
7. Suspension of Sales. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be accepted by you except unconditional orders placed with you
before you had knowledge of the suspension. In addition, the Fund reserves the
right to suspend sales and your authority to accept orders for Shares on behalf
of the Fund if, in the judgment of a majority of the Board of Directors or a
majority of the Executive Committee of such Board, if such body exists, it is in
the best interests of the Fund to do so, such suspension to continue for such
period as may be determined by such majority; and in that event, no Shares will
be sold by you on behalf of the Fund while such suspension remains in effect
except for Shares necessary to cover unconditional orders accepted by you before
you had knowledge of the suspension.
-4-
<PAGE>
8. Portfolio Securities. Portfolio securities of the Fund may be bought or
sold by or through you and you may participate directly or indirectly in
brokerage commissions or "spread" in respect of transactions in portfolio
securities of the Fund; provided, however, that all sums of money received by
you as a result of such purchases and sales or as a result of such participation
must, after reimbursement of your actual expenses in connection with such
activity, be paid over by you to or for the benefit of the Fund.
9. Expenses. (a) The Fund will pay (or will enter into arrangements
providing that others than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and filing of
any registration statement (including a prospectus and statement
of additional information) under the 1933 Act or the 1940 Act, or
both, and any amendments or supplements thereto that may be made
from time to time;
(2) in connection with the registration and qualification of Shares
for sale in the various jurisdictions in which the Fund shall
determine it advisable to qualify such Shares for sale (including
registering the Fund as a broker or dealer or any officer of the
Fund or other person as agent or salesman of the Fund in any such
jurisdictions);
-5-
<PAGE>
(3) of preparing, setting in type, printing and mailing any notice,
proxy statement, report, prospectus or other communication to
shareholders of the Fund in their capacity as such;
(4) of preparing, setting in type, printing and mailing prospectuses
annually, and any supplements thereto, to existing shareholders;
(5) in connection with the issue and transfer of Shares resulting
from the acceptance by you of orders to purchase Shares placed
with you by investors, including the expenses of printing and
mailing confirmations of such purchase orders and the expenses of
printing and mailing a prospectus included with the confirmation
of such orders;
(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the portion
allocated to you in this paragraph 9;
(8) of wiring funds in payment of Share purchases or in satisfaction
of redemption or repurchase requests, unless such expenses are
paid for by the investor or shareholder who initiates the
transaction;
-6-
<PAGE>
(9) of the cost of printing and postage of business reply envelopes
sent to Fund shareholders;
(10) of one or more CRT terminals connected with the computer
facilities of the transfer agent other than the portion allocated
to you in this paragraph 9;
(11) permitted to be paid or assumed by the Fund pursuant to a plan
("12b-1 Plan"), if any, adopted by the Fund in conformity with
the requirements of Rule 12b-1 under the 1940 Act ("Rule 12b-1")
or any successor rule, notwithstanding any other provision to the
contrary herein;
(12) of the expense of setting in type, printing and postage of the
periodic newsletter to shareholders other than the portion
allocated to you in this paragraph 9; and
(13) of the salaries and overhead of persons employed by you as
shareholder representatives other than the portion allocated to
you in this paragraph 9.
(b) You shall pay or arrange for the payment of all fees and expenses:
(1) of printing and distributing any prospectuses or reports prepared
for your
-7-
<PAGE>
use in connection with the offering of Shares to the public;
(2) of preparing, setting in type, printing and mailing any other
literature used by you in connection with the offering of Shares
to the public;
(3) of advertising in connection with the offering of Shares to the
public;
(4) incurred in connection with your registration as a broker or
dealer or the registration or qualification of your officers,
directors, agents or representatives under Federal and state
laws;
(5) of that portion of WATS (or equivalent) telephone lines,
allocated to you on the basis of use by investors (but not
shareholders) who request information or prospectuses;
(6) of that portion of the expense of setting in type, printing and
postage of the periodic newsletter to shareholders attributable
to promotional material included in such news letter at your
request concerning investment companies other than the Fund or
concerning the Fund to the extent you are required to assume the
expense thereof pursuant to para-
-8-
<PAGE>
graph 9(b)(8), except such material which is limited to
information, such as listings of other investment companies and
their investment objectives, given in connection with the
exchange privilege as from time to time described in the Fund's
prospectus;
(7) of that portion of the salaries and overhead of persons employed
by you as shareholder representatives attributable to the time
spent by such persons in responding to requests from investors,
but not shareholders, for information about the Fund; and
(8) of any activity which is primarily intended to result in the sale
of Shares, unless a 12b-1 Plan shall be in effect which provides
that the Fund shall bear some or all of such expenses, in which
case the Fund shall bear such expenses in accordance with such
Plan;
(9) of that portion of one or more CRT terminals connected with the
computer facilities of the transfer agent attributable to your
use of such terminal(s) to gain access to such of the transfer
agent's records as also serve as your records.
Expenses which are to be allocated between you and the Fund shall be
allocated pursuant to reasonable procedures or
-9-
<PAGE>
formulae mutually agreed upon from time to time, which procedures or formulae
shall to the extent practicable reflect studies of relevant empirical data.
10. Conformity with Law. You agree that in selling Shares you will duly
conform in all respects with the laws of the United States and any state in
which Shares may be offered for sale by you pursuant to this Agreement and to
the rules and regulations of the National Association of Securities Dealers,
Inc., of which you are a member.
11. Independent Contractor. You shall be an independent contractor and
neither you nor any of your officers or employees is or shall be an employee of
the Fund in the performance of your duties hereunder. You shall be responsible
for your own conduct and the employment, control and conduct of your agents and
employees and for injury to such agents or employees or to others through your
agents or employees. You assume full responsibility for your agents and
employees under applicable statutes and agree to pay all employee taxes
thereunder.
12. Indemnification. You agree to indemnify and hold harmless the Fund and
each of its directors and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act, against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which the Fund or such directors, officers, or controlling person
may become subject under such Act, under any other statute, at common law or
otherwise, arising out of
-10-
<PAGE>
the acquisition of any Shares by any person which (i) may be based upon any
wrongful act by you or any of your employees or representatives, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement (including a prospectus or statement of
additional information) covering Shares or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading if such statement or omission was made in reliance upon information
furnished to the Fund by you, or (iii) may be incurred or arise by reason of
your acting as the Fund's agent instead of purchasing and reselling Shares as
principal in distributing the Shares to the public, provided, however, that in
no case (i) is your indemnity in favor of a director or officer or any other
person deemed to protect such director or officer or other person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement or (ii) are you to be liable under your indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Fund or such person, as the case may be, shall
have notified you in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the
-11-
<PAGE>
claims shall have been served upon the Fund or upon such person (or after the
Fund or such person shall have received notice of such service on any designated
agent), but failure to notify you of any such claim shall not relieve you from
any liability which you may have to the Fund or any person against whom such
action is brought otherwise than on account of your indemnity agreement
contained in this paragraph. You shall be entitled to participate, at your own
expense, in the defense, or, if you so elect, to assume the defense of any suit
brought to enforce any such liability, but if you elect to assume the defense,
such defense shall be conducted by counsel chosen by you and satisfactory to the
Fund, to its officers and directors, or to any controlling person or persons,
defendant or defendants in the suit. In the event that you elect to assume the
defense of any such suit and retain such counsel, the Fund, such officers and
directors or controlling person or persons, defendant or defendants in the suit
shall bear the fees and expenses of any additional counsel retained by them,
but, in case you do not elect to assume the defense of any such suit, you will
reimburse the Fund, such officers and directors or controlling person or
persons, defendant or defendants in such suit for the reasonable fees and
expenses of any counsel retained by them. You agree promptly to notify the Fund
of the commencement of any litigation or proceedings against it in connection
with the issue and sale of any of Shares.
-12-
<PAGE>
The Fund agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act, against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
you or such directors, officers or controlling person may become subject under
such Act, under any other statute, at common law or otherwise, arising out of
the acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Fund or any of its employees or representatives, or (ii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in a registration statement (including a prospectus or statement
of additional information) covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to you by the Fund; provided, however, that in no case (i)
is the Fund's indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement or (ii) is the Fund to be liable under its indemnity
-13-
<PAGE>
agreement contained in this paragraph with respect to any claims made against
you or any such director, officer or controlling person unless you or such
director, officer or controlling person as the case may be, shall have notified
the Fund in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon you or upon such director, officer or controlling person (or after
you or such director, officer or controlling person shall have received notice
of such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve it from any liability which it may have to the
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. The Fund will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to you, your directors, officers or controlling persons
or persons, defendant or defendants in the suit. In the event that the Fund
elects to assume the defense of any such suit and retain such counsel, you, your
directors, officers or controlling person or persons, defendant or defendants in
the suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Fund does not elect to assume the defense of any such
suit, it will
-14-
<PAGE>
reimburse you or such directors, officers or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any Shares.
13. Authorized Representations. The Fund is not authorized to give any
information or to make any representations on behalf of you other than the
information and representations contained in a registration statement (including
a prospectus or statement of additional information) covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time.
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of Shares
other than the information and representations contained in a registration
statement (including a prospectus or statement of additional information)
covering Shares, as such registration statement may be amended or supplemented
from time to time. No person other than you is authorized to act as principal
underwriter (as such term is defined in the 1940 Act) for the Fund.
14. Duration and Termination of this Agreement. This Agreement shall become
effective upon the date first written above and will remain in effect for a
period of two years from
-15-
<PAGE>
the date hereof and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the directors who are not interested persons of you or of the Fund, cast in
person at a meeting called for the purpose of voting on such approval, and by
vote of the Board of Directors or of a majority of the outstanding voting
securities of the Fund. This Agreement may, on 60 days' written notice, be
terminated at any time without the payment of any penalty, by the Board of
Directors of the Fund, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement will automatically terminate
in the event of its assignment. In interpreting the provisions of this paragraph
14, the definitions contained in Section 2(a) of the 1940 Act (particularly the
definitions of "interested person", "assignment" and "majority of the
outstanding voting securities"), as modified by any applicable order of the
Securities and Exchange Commission, shall be applied.
15. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the
-16-
<PAGE>
Securities and Exchange Commission or other governmental authority or to obtain
any advantage under state or federal tax laws and should notify you of the form
of such amendment, and the reasons therefor, and if you should decline to assent
to such amendment, the Fund may terminate this Agreement forthwith. If you
should at any time request that a change be made in the Fund's Articles of
Incorporation or By-laws or in its methods of doing business, in order to comply
with any requirements of federal law or regulations of the Securities and
Exchange Commission or of a national securities association of which you are or
may be a member relating to the sale of shares of the Fund, and the Fund should
not make such necessary change within a reasonable time, you may terminate this
Agreement forthwith.
16. Termination of Prior Agreements. This Agreement upon its effectiveness
terminates and supersedes all prior underwriting contracts between the parties.
17. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
-17-
<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Very truly yours,
SCUDDER INTERNATIONAL FUND, INC.
BY: /s/ [ILLEGIBLE]
-----------------------------------
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER FUND DISTRIBUTORS, INC.
BY: /s/ David S. Lee
-----------------------------------
-18-
Exhibit 6(b)
SCUDDER INTERNATIONAL FUND, INC.
345 Park Avenue
New York, New York 10154
Date: September 17, 1992
Scudder Investor Services, Inc.
175 Federal Street
Boston, Massachusetts 02110
Underwriting Agreement
Dear Ladies and Gentlemen:
Scudder International Fund, Inc. (hereinafter called the "Fund") is a
corporation organized under the laws of Maryland and is engaged in the business
of an investment company. The authorized capital of the Fund consists of shares
of common stock, par value $1.00 per share ("Shares"), currently divided into
three classes ("series"); however, shares may be divided into additional series
of the Fund and the series may be terminated from time to time by action of the
Directors. The Fund has selected you to act as principal underwriter (as such
term is defined in Section 2(a)(29) of the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Shares and you are willing to act as such
principal underwriter and to perform the duties and functions of underwriter in
the manner and on the terms and conditions hereinafter set forth. Accordingly,
the Fund hereby agrees with you as follows:
1. Delivery of Documents. The Fund has furnished you with copies properly
certified or authenticated of each of the following:
(a) Articles of Incorporation of the Fund, dated June 23, 1975, as amended
to date.
(b) By-Laws of the Fund as in effect on the date hereof.
<PAGE>
(c) Resolutions of the Board of Directors of the Fund selecting you as
principal underwriter and approving this form of Agreement.
(d) The Articles Supplementary, $0.01 Par Value, dated September 17, 1992.
The Fund will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements to the foregoing, if any.
The Fund will furnish you promptly with properly certified or authenticated
copies of any registration statement filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, (the "1933
Act") or the 1940 Act, together with any financial statements and exhibits
included therein, and all amendments or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Fund will from time to
time use its best efforts to register under the 1933 Act such number of Shares
not already so registered as you may reasonably be expected to sell on behalf of
the Fund. You and the Fund will cooperate in taking such action as may be
necessary from time to time to qualify Shares so registered for sale by you or
the Fund in any states mutually agreeable to you and the Fund, and to maintain
such qualification. This Agreement relates to the issue and sale of Shares that
are duly authorized and registered and available for sale by the Fund, including
redeemed or repurchased Shares if and to the extent that they may be legally
sold and if, but only if, the Fund sees fit to sell them.
3. Sale of Shares. Subject to the provisions of paragraphs 5 and 7 hereof
and to such minimum purchase requirements as may
2
<PAGE>
from time to time be currently indicated in the Fund's prospectus or statement
of additional information, you are authorized to sell as agent on behalf of the
Fund Shares authorized for issue and registered under the 1933 Act. You may also
purchase as principal Shares for resale to the public. Such sales will be made
by you on behalf of the Fund by accepting unconditional orders to purchase
Shares placed with you by investors and such purchases will be made by you only
after acceptance by you of such orders. The sales price to the public of Shares
shall be the public offering price as defined in paragraph 6 hereof.
4. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors unconditional
orders for Shares authorized for issue by the Fund and registered under the 1933
Act, provided that you may in your discretion refuse to accept orders for Shares
from any particular applicant.
5. Sale of Shares by the Fund. Unless you are otherwise notified by the
Fund, any right granted to you to accept orders for Shares or to make sales on
behalf of the Fund or to purchase Shares for resale will not apply to (i) Shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all of the assets of any investment company or substantially all
the outstanding shares of any such company, and (ii) to Shares that may be
offered by the Fund to shareholders of the Fund by virtue of their being such
shareholders.
6. Public Offering Price. All Shares sold to investors by you will be sold
at the public offering price. The public offering
3
<PAGE>
price for all accepted subscriptions will be the net asset value per Share,
determined, in the manner provided in the Fund's registration statements as from
time to time in effect under the 1933 Act and the 1940 Act, next after the order
is accepted by you.
7. Suspension of Sales. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be accepted by you except unconditional orders placed with you
before you had knowledge of the suspension. In addition, the Fund reserves the
right to suspend sales and your authority to accept orders for Shares on behalf
of the Fund if, in the judgement of a majority of the Board of Directors or a
majority of the Executive Committee of such Board, if such body exists, it is in
the best interests of the Fund to do so, such suspension to continue for such
period as may be determined by such majority; and in that event, no Shares will
be sold by you on behalf of the Fund while such suspension remains in effect
except for Shares necessary to cover unconditional orders accepted by you before
you had knowledge of the suspension.
8. Portfolio Securities. Portfolio securities of the Fund may be bought or
sold by or through you and you may participate directly or indirectly in
brokerage commissions or "spread" in respect to transactions in portfolio
securities of any series of the Fund; provided, however, that all sums of money
received by you as a result of such purchases and sales or as a result of such
participation must, after reimbursement of your actual expenses in connection
with such activity, be paid over by you to or for the benefit of the Fund.
9. Expenses. (a) The Fund will pay (or will enter into
4
<PAGE>
arrangements providing that others than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and filing of any
registration statement (including a prospectus and statement of
additional information) under the 1933 Act or the 1940 Act, or both,
and any amendments or supplements thereto that may be made from time
to time;
(2) in connection with the registration and qualification of Shares for
sale in the various jurisdictions in which the Fund shall determine it
advisable to qualify such Shares for sale (including registering the
Fund as a broker or dealer or any officer of the Fund or other person
as agent or salesman of the Fund in any such jurisdictions);
(3) of preparing, setting in type, printing and mailing any notice, proxy
statement, report, prospectus or other communication to shareholders
of the Fund in their capacity as such;
(4) of preparing, setting in type, printing and mailing prospectuses
annually, and any supplements thereto, to existing shareholders;
(5) in connection with the issue and transfer of Shares resulting from the
acceptance by you of orders to purchase Shares placed with you by
investors, including the expenses of printing and mailing
confirmations of such purchase orders and the expenses of printing and
mailing a prospectus included with the confirmation of such orders;
5
<PAGE>
(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the portion
allocated to you in this paragraph 9;
(8) of wiring funds in payment of Share purchases or in satisfaction of
redemption or repurchase requests, unless such expenses are paid for
by the investor or shareholder who initiates the transaction;
(9) of the cost of printing and postage of business reply envelopes sent
to Fund shareholders;
(10) of one or more CRT terminals connected with the computer facilities of
the transfer agent other than the portion allocated to you in this
paragraph 9;
(11) permitted to be paid or assumed by the Fund pursuant to a plan ("12b-1
Plan"), if any, adopted by the Fund in conformity with the
requirements of Rule 12b-1 under the 1940 Act ("Rule 12b-1") or any
successor rule, notwithstanding any other provision to the contrary
herein;
(12) of the expense of setting in type, printing and postage of the
periodic newsletter to shareholders other than the portion allocated
to you in this paragraph 9; and
(13) of the salaries and overhead of persons employed by you as shareholder
representatives other than the portion allocated to you in this
paragraph 9.
b) You shall pay or arrange for the payment of all fees and expenses:
(1) of printing and distributing any prospectuses or reports prepared for
your use in connection with the offering of
6
<PAGE>
Shares to the public;
(2) of preparing, setting in type, printing and mailing any other
literature used by you in connection with the offering of Shares to
the public;
(3) of advertising in connection with the offering of Shares to the
public;
(4) incurred in connection with your registration as a broker or dealer or
the registration or qualification of your officers, directors, agents
or representatives under Federal and state laws;
(5) of that portion of WATS (or equivalent) telephone lines, allocated to
you on the basis of use by investors (but not shareholders) who
request information or prospectuses;
(6) of that portion of the expenses of setting in type, printing and
postage of the periodic newsletter to shareholders attributable to
promotional material included in such newsletter at your request
concerning investment companies other than the Fund or concerning the
Fund to the extent you are required to assume the expense thereof
pursuant to paragraph 9(b)(8), except such material which is limited
to information, such as listings of other investment companies and
their investment objectives, given in connection with the exchange
privilege as from time to time described in the Fund's prospectus;
(7) of that portion of the salaries and overhead of persons employed by
you as shareholder representatives
7
<PAGE>
attributable to the time spent by such persons in responding to
requests from investors, but not shareholders, for information about
the Fund;
(8) of any activity which is primarily intended to result in the sale of
Shares, unless a 12b-1 Plan shall be in effect which provides that the
Fund shall bear some or all of such expenses, in which case the Fund
shall bear such expenses in accordance with such Plan; and
(9) of that portion of one or more CRT terminals connected with the
computer facilities of the transfer agent attributable to your use of
such terminal(s) to gain access to such of the transfer agent's
records as also serve as your records.
Expenses which are to be allocated between you and the Fund shall be
allocated pursuant to reasonable procedures or formulae mutually agreed upon
from time to time, which procedures or formulae shall to the extent practicable
reflect studies of relevant empirical data.
10. Conformity with Law. You agree that in selling Shares you will duly
conform in all respects with the laws of the United States and any state in
which Shares may be offered for sale by you pursuant to this Agreement and to
the rules and regulations of the National Association of Securities Dealers,
Inc., of which you are a member.
11. Independent Contractor. You shall be an independent contractor and
neither you nor any of your officers or employees is or shall be an employee of
the Fund in the performance of your duties hereunder. You shall be responsible
for your own conduct
8
<PAGE>
and the employment, control and conduct of your agents and employees and for
injury to such agents or employees or to others through your agents or
employees. You assume full responsibility for your agents and employees under
applicable statutes and agree to pay all employee taxes thereunder.
12. Indemnification. You agree to indemnify and hold harmless the Fund and
each of its directors and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act, against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which the Fund or such directors, officers, or controlling person
may become subject under such Act, under any other statute at common law or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by you or any of your employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement
(including a prospectus or statement of additional information) covering Shares
or any amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading if such statement or
omission was made in reliance upon information furnished to the Fund by you, or
(iii) may be incurred or arise by reason of your acting as the Fund's agent
instead of purchasing and reselling Shares as principal in distributing the
Shares to the public, provided, however, that in no case (i) is your indemnity
in favor of a director or officer or any other person deemed to protect such
director or officer or other person
9
<PAGE>
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of obligations and duties
under this Agreement or (ii) are you to be liable under your indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Fund or such person, as the case may be, shall
have notified you in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claims shall have
been served upon the Fund or upon such person (or after the Fund or such person
shall have received notice of such service on any designated agent), but failure
to notify you of any such claim shall not relieve you from any liability which
you may have to the Fund or any person against whom such action is brought
otherwise than on account of your indemnity agreement contained in this
paragraph. You shall be entitled to participate, at your own expense, in the
defense, or, if you so elect, to assume the defense of any suit brought to
enforce any such liability, but if you elect to assume the defense, such defense
shall be conducted by counsel chosen by you and satisfactory to the Fund, to its
officers and directors, or to any controlling person or persons, defendant or
defendants in the suit. In the event that you elect to assume the defense of any
such suit and retain such counsel, the Fund, such officers and directors or
controlling person or persons, defendant or defendants in the suit shall bear
the fees and expenses of any additional counsel retained by them, but, in case
you do not elect to assume the defense of any such suit, you will reimburse the
Fund, such
10
<PAGE>
officers and directors or controlling person or persons, defendant or defendants
in such suit for the reasonable fees and expenses of any counsel retained by
them. You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against it in connection with the issue and sale of
any Shares.
The Fund agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act, against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
you or such directors, officers or controlling person may become subject under
such Act, under any other statute, at common law or otherwise, arising out of
the acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Fund or any of its employees or representatives, or (ii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in a registration statement (including a prospectus or statement
of additional information) covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to you by the Fund; provided, however, that in no case (i)
is the Fund's indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless
11
<PAGE>
disregard of obligations and duties under this Agreement or (ii) is the Fund to
be liable under its indemnity agreement contained in this paragraph with respect
to any claims made against you or any such director, officer or controlling
person unless you or such director, officer or controlling person, as the case
may be, shall have notified the Fund in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon you or upon such director, officer or
controlling person (or after you or such director, officer or controlling person
shall have received notice of such service on any designated agent), but failure
to notify the Fund of any such claim shall not relieve it from any liability
which it may have to the person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. The Fund
will be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any such liability,
but if the Fund elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to you, your directors, officers, or
controlling person or persons, defendant or defendants in the suit. In the event
that the Fund elects to assume the defense of any such suit and retain such
counsel, you, your directors, officers or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, but, in case the Fund does not elect to
assume the defense of any such suit, it will reimburse you or such directors,
officers or controlling person or persons, defendant or defendants in the suit,
for the
12
<PAGE>
reasonable fees and expenses of any counsel retained by them. The Fund agrees
promptly to notify you of the commencement of any litigation or proceedings
against it or any of its officers or directors in connection with the issuance
or sale of any Shares.
13. Authorized Representations. The Fund is not authorized to give any
information or to make any representations on behalf of you other than the
information and representations contained in a registration statement (including
a prospectus or statement of additional information) covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time.
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of Shares
other than the information and representations contained in a registration
statement (including a prospectus or statement of additional information)
covering Shares, as such registration statement may be amended or supplemented
from time to time. No person other than you is authorized to act as principal
underwriter (as such term is defined in the 1940 Act) for the Fund.
14. Duration and Termination of this Agreement. This Agreement shall become
effective upon the date first written above and will remain in effect until
September 30, 1994 and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the directors who are not interested persons of you or of the Fund, cast in
person at a meeting called for the purpose of voting on such approval, and by
vote of the Board of Directors or of a majority of the outstanding voting
securities of
13
<PAGE>
the Fund. This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty, by the Board of Directors of the Fund,
by a vote of a majority of the outstanding voting securities of the Fund, or by
you. This Agreement will automatically terminate in the event of its assignment.
In interpreting the provisions of this paragraph 14, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "interested
person", "assignment" and "majority of the outstanding voting securities"), as
modified by any applicable order of the Securities and Exchange Commission,
shall be applied.
15. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under state or federal tax laws and should
notify you of the form of such amendment, and the reasons therefor, and if you
should decline to assent to such amendment, the Fund may terminate this
Agreement forthwith. If you should at any time request that a change be made in
the Fund's Articles of Incorporation or By-laws or in its methods of doing
business, in order to comply with any requirements of federal law or
regulations of the Securities and Exchange Commission or of a national
securities association of which you are
14
<PAGE>
or may be a member relating to the sale of shares of the Fund, and the Fund
should not make such necessary change within a reasonable time, you may
terminate this Agreement forthwith.
16. Termination of Prior Agreements. This Agreement upon its effectiveness
terminates and supersedes all prior underwriting contracts between the parties.
17. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Very truly yours,
SCUDDER INTERNATIONAL FUND, INC.
By: /s/ Thomas F. McDonough
------------------------------
Title: Vice President
The foregoing agreement is hereby accepted as of the foregoing date
thereof.
SCUDDER INVESTOR SERVICES, INC.
By: David S. Lee
-----------------------------------
Title: President
15
Exhibit 8(a)(1)
CUSTODIAN AGREEMENT
AGREEMENT made this 14 day of April, 1986, between Scudder International
Fund, Inc. (the "Fund") and Brown Brothers Harriman & Co. (the "Custodian").
WITNESSETH: That in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. The Fund hereby employs and appoints the Custodian as a custodian for
the term and subject to the provisions of this Agreement. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund as may be issued or sold from time to time.
The Custodian shall not be under any duty or obligation to require the Fund
to deliver to it any securities or funds owned by the Fund and shall have no
responsibility or liability for or on account of securities or funds not so
delivered. The Fund will deposit with the Custodian copies of the Certificate of
Incorporation and By-Laws (or comparable documents) of the Fund and all
amendments thereto, and copies of such votes and other proceedings of the Fund
as may be necessary for or convenient to the Custodian in the performance of its
duties.
<PAGE>
-2-
It is understood that as used in this Agreement, the term securities" shall
include futures contracts and options.
2. Except for securities and funds held by subcustodians appointed pursuant
to the provisions of Section 3 hereof, the Custodian shall have and perform the
following powers and duties:
A. Safekeeping - To keep safely the securities of the Fund that have been
delivered to the Custodian and from time to time to receive delivery of
securities for safekeeping.
B. Manner of Holding Securities - To hold securities of the Fund (1) by
physical possession of the share certificates or other instruments representing
such securities in registered or bearer form or of the broker's receipts or
confirmations for futures contracts, options and similar securities, or (2) in
book-entry form by a Securities System (as said term is defined in Section 2V).
C. Registered Name; Nominee - To hold registered securities of the Fund (1)
in the name or any nominee name of the Custodian or the Fund, or in the name or
any nominee name of any agent appointed pursuant to Section 6E, or (2) in street
certificate form, so-called, and in any case with or without any indication of
fiduciary capacity.
<PAGE>
-3-
D. Purchases - Upon receipt of proper instructions, and insofar as funds
are available for the purpose, to pay for and receive securities purchased for
the account of the Fund, payment being made only upon receipt of the securities
(1) by the Custodian, or (2) by a clearing corporation of a national securities
exchange of which the Custodian is a member, or (3) by a Securities System.
However, (i) in the case of repurchase agreements entered into by the Fund, the
Custodian (as well as a Subcustodian or an Agent, as defined in Section 2G) may
release funds to a Securities System prior to the receipt of advice from the
Securities System that the securities underlying such repurchase agreement have
been transferred by book entry into the Account (as defined in Section 2V) of
the Custodian (or such Subcustodian or Agent) maintained with such Securities
System, and (ii) in the case of futures contracts, options and similar
securities or time deposits, call account deposits, currency deposits, and other
deposits pursuant to Sections 2M, 2N and 20, the Custodian may make payment
therefor without receiving an instrument evidencing said contract, option,
security or deposit.
E. Exchanges - Upon receipt of proper instructions, to exchange securities
held by it for the account of the Fund for other securities in connection with
any reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event, and to deposit any such securities in accordance with
the terms of any reorganization or protective
<PAGE>
-4-
plan. Without such instructions, the Custodian may surrender securities in
temporary form for definitive securities, may surrender securities for transfer
into a name or nominee name as permitted in Section 2C, and may surrender
securities for a different number of certificates or instruments representing
the same number of shares or same principal amount of indebtedness, provided the
securities to be issued are to be delivered to the Custodian.
F. Sales of Securities - Upon receipt of proper instructions, to make
delivery of securities which have been sold for the account of the Fund, but
only against payment therefor (1) in cash, by a certified check, bank cashier's
check, bank credit, or bank wire transfer, or (2) by credit to the account of
the Custodian with a clearing corporation of a national securities exchange of
which the Custodian is a member, or (3) by credit to the account of the
Custodian or an Agent of the Custodian with a Securities System.
G. Depositary Receipts - Upon receipt of proper instructions, to instruct a
subcustodian appointed pursuant to Section 3 hereof (a "Subcustodian") or an
agent of the Custodian appointed pursuant to Section 6E hereof (an "Agent") to
surrender securities to the depositary used by an issuer of American Depositary
Receipts or International Depositary Receipts (hereinafter collectively referred
to as "ADRs") for such
<PAGE>
-5-
securities against a written receipt therefor adequately describing such
securities and written evidence satisfactory to the Subcustodian or Agent that
the depositary has acknowledged receipt of instructions to issue with respect to
such securities ADRs in the name of the Custodian, or a nominee of the
Custodian, for delivery to the Custodian in Boston, Massachusetts, or at such
other place as the Custodian may from time to time designate.
Upon receipt of proper instructions, to surrender ADRs to the issuer
thereof against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depositary to
deliver the securities underlying such ADRs to a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon receipt of proper instructions,
to deliver to the issuer or trustee thereof, or to the agent of either,
warrants, puts, calls, futures contracts, options rights or similar securities
for the purpose of being exercised or sold, provided that the new securities and
cash, if any, acquired by such action are to be delivered to the Custodian, and,
upon receipt of proper instructions, to deposit securities upon invitations for
tenders of securities, provided that the consideration is to be paid or
delivered or the tendered securities are to be returned to the Custodian.
<PAGE>
-6-
I. Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to proper instructions relative thereto.
J. Options - Upon receipt of proper instructions, to receive and retain
confirmations or other documents evidencing the purchase or writing of an option
on a security or securities index by the Fund; to deposit and maintain in a
segregated account, either physically or by book-entry in a Securities System,
securities subject to a covered call option written by the Fund; and to release
and/or transfer such securities or other assets only in accordance with a notice
or other communication evidencing the expiration, termination or exercise of
such covered option furnished by The Options Clearing Corporation, the
securities or options exchange on which such covered option is traded or such
other organization as may be responsible for handling such options transactions.
K. Futures Contracts - Upon receipt of proper instructions, to receive and
retain confirmations evidencing the purchase or sale of a futures contract or an
option on a futures contract by the Fund; to deposit and maintain in a
segregated account, for the benefit of any futures commission merchant, assets
designated by the Fund as initial, maintenance or variation "margin" deposits
intended to secure the Fund's performance of
<PAGE>
-7-
its obligations under any futures contracts purchased or sold or any options on
futures contracts written by the Fund, in accordance with the provisions of any
agreement or agreements among any of the Fund, the Custodian and such futures
commission merchant, designed to comply with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar organization or
organizations, regarding such margin deposits; and to release and/or transfer
assets in such margin accounts only in accordance with any such agreements or
rules.
L. Borrowings - Upon receipt of proper instructions, to deliver securities
of the Fund to lenders or their agents as collateral for borrowings effected by
the Fund, but only against receipt of the amounts borrowed, provided that if
such collateral is held in book-entry form by a Securities System (as defined in
Section 2V), such collateral may be transferred by book-entry to such lender or
its agent against receipt by the Custodian of an undertaking by such lender to
pay such borrowed money to or upon the Custodian's order on the next business
day following such transfer of collateral.
M. Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of the Fund on the Custodian's books subject only to draft
or order by the Custodian. All funds received by the Custodian from or for the
account of the Fund shall be deposited in said account(s). The responsibilities
of
<PAGE>
-8-
the Custodian to the Fund for deposits accepted on the Custodian's books shall
be that of a U. S. bank for a similar deposit.
If and when authorized by proper instructions, the Custodian may open and
operate an additional account(s) in such other banks or trust companies as may
be designated by the Fund in such instructions (any such bank or trust company
so designated by the Fund being referred to hereafter as a "Banking
Institution"), provided that such account(s) shall be in the name of the
Custodian for account of the Fund and subject only to the Custodian's draft or
order. Such accounts may be opened with Banking Institutions in the United
States and in other countries and may be denominated in either U. S. Dollars or
other currencies as the Fund may determine. All such deposits shall be deemed to
be portfolio securities of the Fund and accordingly the responsibility of the
Custodian therefor shall be the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities of the Fund.
N. Interest Bearing Call or Time Deposits - To place interest bearing fixed
term and call deposits with such banks and in such amounts as the Fund may
authorize pursuant to proper instructions. Such deposits may be placed with the
Custodian or with Subcustodians or other Banking Institutions as the Fund may
determine. Deposits may be denominated in U. S. Dollars
<PAGE>
-9-
or other currencies and need not be evidenced by the issuance or delivery of a
certificate to the Custodian, provided that the Custodian shall include in its
records with respect to the assets of the Fund, appropriate notation as to the
amount and currency of each such deposit, the accepting Banking Institution, and
other appropriate details. Such deposits, other than those placed with the
Custodian, shall be deemed portfolio securities of the Fund and the
responsibilities of the Custodian therefor shall be the same as those for demand
deposit bank accounts placed with other banks, as described in the second
paragraph of Section 2M of this Agreement. The responsibility of the Custodian
for such deposits accepted on the Custodian's books shall be that of a U. S.
bank for a similar deposit.
O. Foreign Exchange Transactions - Pursuant to proper instructions, to
enter into foreign exchange contracts to purchase and sell foreign currencies
for spot and future delivery on behalf and for the account of the Fund, and in
connection therewith to receive and retain receipts, confirmations or other
documents evidencing such contracts and to deposit and maintain cash or
designated securities in a segregated account and to release and/or transfer
assets held in such account only in accordance with such proper instructions.
Such transactions may be undertaken by the Custodian with such Banking
Institutions, including the Custodian and Subcustodian(s) as principals, as
approved and authorized by the Fund. Foreign exchange contracts,
<PAGE>
-10-
other than those executed with the Custodian, shall be deemed to be portfolio
securities of the Fund and the responsibilities of the Custodian therefor shall
be the same as those for demand deposit bank accounts placed with other banks as
described in the second paragraph of Section 2M of this Agreement.
P. Stock Loans - Upon receipt of proper instructions, to deliver securities
of the Fund, in connection with loans of securities by the Fund, to the borrower
thereof but only against receipt of such collateral as the Fund shall instruct;
except that in connection with any loans for which collateral is to be credited
to the Custodian's Account in a book-entry system referred to in Section 2V(ii)
hereof, the Custodian may deliver securities prior to the credit of such
collateral, provided that the Custodian shall promptly notify the Fund if such
collateral is not credited.
Q. Collections - To collect, receive and deposit in the account or accounts
referred to in Section 2M all income and other payments with respect to the
securities held hereunder, and to execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection with receipt of
income or other payments with respect to securities of the Fund or in connection
with transfer of securities, and pursuant to proper instructions to take other
actions, which involve an investment decision, with respect to collection or
receipt of funds or transfer of securities.
<PAGE>
-11-
R. Dividends, Distributions and Redemption - Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Fund's
shareholder servicing agent or agent with comparable duties (the "Shareholder
Servicing Agent") (given by such person or persons and in such manner on behalf
of the Shareholder Servicing Agent as the Fund shall have authorized), the
Custodian shall release funds or securities to the Shareholder Servicing Agent
or otherwise apply funds or securities, insofar as available, for the payment of
dividends or other distributions to Fund shareholders. Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Shareholder
Servicing Agent (given by such person or persons and in such manner on behalf of
the Shareholder Servicing Agent as the Fund shall have authorized), the
Custodian shall release funds or securities, insofar as available, to the
Shareholder Servicing Agent or as such Agent shall otherwise instruct for
payment to Fund shareholders who have delivered to such Agent a request for
repurchase or redemption of their shares of capital stock of the Fund.
S. Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund all
forms of proxies and all notices of meetings and any other notices or
announcements affecting or relating to securities owned by the Fund that are
received by the Custodian, and upon receipt of proper instructions, to execute
and deliver
<PAGE>
-12-
or cause its nominee to execute and deliver such proxies or other authorizations
as may be required. Neither the Custodian nor its nominee shall vote upon any of
such securities or execute any proxy to vote thereon or give any consent or take
any other action with respect thereto (except as otherwise herein provided)
unless ordered to do so by proper instructions.
T. Bills - Upon receipt of proper instructions, to pay or cause to be paid,
insofar as funds are available for the purpose, bills, statements, or other
obligations of the Fund.
U. Nondiscretionary Details - Without the necessity of express
authorization from the Fund (1) to attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealings with securities, funds or other property of the Fund held by the
Custodian except as otherwise directed from time to time by the Board of
Directors of the Fund, and (2) to make payments to itself or others for minor
expenses of handling securities or other similar items relating to the
Custodian's duties under this Agreement, provided that all such payments shall
be accounted for to the Fund.
V. Deposit of Fund Assets in Securities Systems - The Custodian may deposit
and/or maintain securities owned by the Fund in (i) The Depository Trust
Company, (ii) any book-entry system as provided in Subpart 0 of Treasury
Circular No. 300,
<PAGE>
-13-
31 CFR 306, Subpart B of 31 CRF Part 350, or the book-entry regulations of
federal agencies substantially in the form of Subpart O, or (iii) any other
domestic clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934 which acts as a
securities depository and whose use the Fund has previously approved in writing
(each of the foregoing being referred to in this Agreement as a "Securities
System"). Utilization of a Securities System shall be in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission rules
and regulations, if any, and subject to the following provisions:
(1) The Custodian may deposit and/or maintain Fund securities, either
directly or through one or more Agents appointed by the Custodian
(provided that any such Agent shall be qualified to act as a custodian
of the Fund pursuant to the Investment Company Act of 1940 and the
rules and regulations thereunder), in a Securities System provided
that such securities are represented in an account ("Account") of the
Custodian or such Agent in the Securities System which shall not
include any assets of the Custodian or Agent other than assets held as
a fiduciary, custodian, or otherwise for customers;
<PAGE>
-14-
(2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
(3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon (i) receipt
of advice from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment
for the account of the Fund. Copies of all advices from the Securities
System of transfers of securities for the account of the Fund shall
identify the Fund, be maintained for the Fund by the Custodian or an
Agent as referred to above, and be provided to the Fund at its
request. The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form of a written
advice or notice and shall furnish to the Fund copies of daily
transaction sheets
<PAGE>
-15-
reflecting each day's transactions in the Securities System for the
account of the Fund on the next business day;
(4) The Custodian shall provide the Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System; and the
Custodian and such Agents shall send to the Fund such reports on their
own systems of internal accounting control as the Fund may reasonably
request from time to time.
(5) At the written request of the Fund, the Custodian will terminate the
use of any such Securities System on behalf of the Fund as promptly as
practicable.
W. Other Transfers - To deliver securities, funds and other property of the
Fund to a Subcustodian or another custodian of the Fund; and, upon receipt of
proper instructions, to make such other disposition of securities, funds or
other property of the Fund in a manner other than or for purposes other than as
enumerated elsewhere in this Agreement, provided that the instructions relating
to such disposition shall include a statement of the purpose for which the
delivery is to be made, the amount of securities to be delivered and the name of
the person or persons to whom delivery is to be made.
<PAGE>
-16-
X. Investment Limitations - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Fund, the Custodian may assume unless and until notified in
writing to the contrary that proper instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Certificate
of Incorporation or By-Laws (or comparable documents) or votes or proceedings of
the shareholders or Directors of the Fund. The Custodian shall in no event be
liable to the Fund and shall be indemnified by the Fund for any violation or any
investment limitations to which the Fund is subject or other limitations with
respect to the Fund's powers to make expenditures, encumber securities, borrow
or take similar actions affecting its portfolio.
Y. Proper Instructions - Proper instructions shall mean a tested telex from
the Fund or a written request, direction, instruction or certification signed or
initialled on behalf of the Fund by one or more person or persons as the Board
of Directors of the Fund shall have from time to time authorized, provided,
however, that no such instructions directing the delivery of securities or the
payment of funds to an authorized signatory of the Fund shall be signed by such
person. Those persons authorized to give proper instructions may be identified
by the Board of Directors by name, title or position and will
<PAGE>
-17-
include at least one officer empowered by the Board to name other individuals
who are authorized to give proper instructions on behalf of the Fund. Telephonic
or other oral instructions given by any one of the above persons will be
considered proper instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. Oral instructions will be confirmed by tested telex or in
writing in the manner set forth above but the lack of such confirmation shall in
no way affect any action taken by the Custodian in reliance upon such oral
instructions. Proper instructions may relate to specific transactions or to
types or classes of transactions, and may be in the form of standing
instructions.
Proper instructions may include communications effected directly between
electro-mechanical or electronic devices or systems, in addition to tested
telex, provided that the Fund and the Custodian agree in writing to the use of
such device or system.
3. Securities, funds and other property of the Fund may be held by
subcustodians appointed pursuant to the provisions of this Section 3 (a
"Subcustodian"). The Custodian may, at any time and from time to time, appoint
any bank or trust company (meeting the requirements of a custodian or a foreign
custodian under the Investment Company Act of 1940 and the rules and
<PAGE>
-18-
regulations thereunder) to act as a Subcustodian for the Fund, provided that the
Fund shall have approved in writing (1) any such bank or trust company and the
subcustodian agreement to be entered into between such bank or trust company and
the Custodian, and (2) the Subcustodian's offices or branches at which the
Subcustodian is authorized to hold securities, cash and other property of the
Fund. Upon such approval by the Fund, the Custodian is authorized on behalf of
the Fund to notify each Subcustodian of its appointment as such. The Custodian
may, at any time in its discretion, remove any bank or trust company that has
been appointed as a Subcustodian.
Those Subcustodians, their offices or branches which the Fund has approved
to date are set forth on Appendix A hereto. Such Appendix shall be amended from
time to time as Subcustodians, branches or offices are changed, added or
deleted. The Fund shall be responsible for informing the Custodian sufficiently
in advance of a proposed investment which is to be held at a location not listed
on Appendix A, in order that there shall be sufficient time for the Fund to give
the approval required by the preceding paragraph and for the Custodian to put
the appropriate arrangements in place with such Subcustodian pursuant to such
subcustodian agreement.
If the Fund shall have invested in a security to be held in a location
before the foregoing procedures have been
<PAGE>
-19-
completed, such security shall be held by such agent as the Custodian may
appoint unless and until the Fund shall instruct the Custodian to move the
security into the possession of the Custodian or a Subcustodian. In any event,
the Custodian shall be liable to the Fund for the actions of such agent if and
only to the extent the Custodian shall have recovered from such agent for any
damages caused the Fund by such agent.
With respect to the securities and funds held by a Subcustodian, either
directly or indirectly, including demand and interest bearing deposits,
currencies or other deposits and foreign exchange contracts as referred to in
Sections 2M, 2N or 2O, the Custodian shall be liable to the Fund if and only to
the extent that such Subcustodian is liable to the Custodian and the Custodian
recovers under the applicable subcustodian agreement. The Custodian shall
nevertheless be liable to the Fund for its own negligence in transmitting any
instructions received by it from the Fund and for its own negligence in
connection with the delivery of any securities or funds held by it to any such
Subcustodian.
In the event that any Subcustodian appointed pursuant to the provisions of
this Section 3 fails to perform any of its obligations under the terms and
conditions of the applicable subcustodian agreement, the Custodian shall use its
best efforts to cause such Subcustodian to perform such obligations. In the
<PAGE>
-20-
event that the Custodian is unable to cause such Subcustodian to perform fully
its obligations thereunder, the Custodian shall forthwith upon the Fund's
request terminate such Subcustodian and, if necessary or desirable, appoint
another subcustodian in accordance with the provisions of this Section 3. At the
election of the Fund, it shall have the right to enforce, to the extent
permitted by the subcustodian agreement and applicable law, the Custodian's
rights against any such Subcustodian for loss or damage caused the Fund by such
Subcustodian.
At the written request of the Fund, the Custodian will terminate any
Subcustodian appointed pursuant to the provisions of this Section 3 in
accordance with the termination provisions under the applicable subcustodian
agreement. The Custodian will not amend any subcustodian agreement or agree to
change or permit any changes thereunder except upon the prior written approval
of the Fund.
In the event the Custodian intends to make any payment to a Subcustodian
under the indemnification provisions of any subcustodian agreement, the
Custodian shall give the Fund written notice of such intention no less than
thirty (30) days prior to the date such payment is to be made. The Fund shall be
obligated promptly to reimburse the Custodian the amount of such payment, unless
the Fund shall, within thirty (30) days of receipt of the Custodian's notice,
object in writing to such payment to the
<PAGE>
-21-
Subcustodian or to reimbursement of the Custodian (i) because the Fund disputes
the right of the Subcustodian to be so indemnified or (ii) because the Fund
believes that the Custodian was or might have been responsible by reason of the
Custodian's negligence or misconduct for the event or occurrence giving rise to
the Subcustodian's demand for indemnification. In the event the Fund, at the
direction of its Board of Directors or any Executive Committee thereof, shall
give written notice of such objection and the reasons therefor, the Custodian
may nevertheless make such payment to the Subcustodian, but without prejudice to
the Fund's right to refuse to reimburse the Custodian if the Fund's objection
under clause (i) or (ii) above shall be upheld in an appropriate judicial or
other proceeding; or in the alternative, the Custodian may refuse to pay the
indemnification demanded by the Subcustodian and the Custodian shall in such
event defend against any judicial or other proceeding brought against the
Custodian by the Subcustodian to obtain such indemnification. Such defense shall
be conducted by counsel reasonably satisfactory to both the Fund and the
Custodian. The Fund shall be entitled to participate in any such proceeding with
separate counsel of its own choice if it believes its position might otherwise
be compromised and, if the Fund or the Custodian believes there may be a
conflict in the respective positions of the Fund and the Custodian, then each
may retain separate counsel of its own choice. The Fund shall bear the
<PAGE>
-22-
costs and expenses of defending against the Subcustodian's claim, and the Fund
shall indemnify the Custodian and hold it harmless from all claims, liabilities,
judgments, costs and expenses (including counsel fees) and settlements of such
claim (provided that such settlement shall have been effected with the Fund's
written consent) incurred or assessed against the Custodian. Notwithstanding the
foregoing, if it shall be determined in an appropriate proceeding, including in
a proceeding as aforesaid brought by the Subcustodian, that, although the
Subcustodian was entitled to indemnification the Custodian was not entitled to
reimbursement by the Fund because the Custodian was responsible by reason of its
negligence or misconduct for the occurrence or event giving rise to the
Subcustodian's right to indemnification, then in such event the Fund shall not
be obligated to indemnify the Custodian as aforesaid and the Custodian shall
reimburse the Fund for any amounts paid by the Fund to Custodian in respect of
the costs and expenses of defending against the Subcustodian's claim.
4. The Custodian may assist generally in the preparation of reports to Fund
shareholders, regulatory authorities and others, audits of accounts, and other
ministerial matters of like nature.
<PAGE>
-23-
5. The Fund hereby also appoints the Custodian as its financial agent. With
respect to the appointment as financial agent, the Custodian shall have and
perform the following powers and duties:
A. Records - To create, maintain and retain such records relating to its
activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and Rules 31a-l and 31a-2 thereunder) and under
applicable Federal and State tax laws and administrative regulations. All such
records will be the property of the Fund and in the event of termination of this
Agreement shall be delivered to the successor custodian.
B. Accounts - To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by proper instructions.
C. Access to Records - Subject to security requirements of the Custodian
applicable to its own employees having access to similar records within the
Custodian and such regulations as may be reasonably imposed by the Custodian,
the books and records maintained by the Custodian pursuant to Sections 5A and 5B
shall be open to inspection and audit at reasonable times by officers of,
attorneys for, and auditors employed by, the Fund.
<PAGE>
-24-
D. Calculation of Net Asset Value - To compute and determine the net asset
value per share of capital stock of the Fund as of the close of business on the
New York Stock Exchange on each day on which such Exchange is open, unless
otherwise directed by proper instructions. Such computation and determination
shall be made in accordance with (1) the provisions of the Certificate of
Incorporation and By-Laws of the Fund, as they may. from time to time be amended
and delivered to the Custodian, (2) the votes of the Board of Directors of the
Fund at the time in force and applicable, as they may from time to time be
delivered to the Custodian, and (3) proper instructions from such officers of
the Fund or other persons as are from time to time authorized by the Board of
Directors of the Fund to give instructions with respect to computation and
determination of the net asset value. On each day that the Custodian shall
compute the net asset value per share of the Fund, the Custodian shall provide
the Fund with written reports which permit the Fund to verify that portfolio
transactions have been recorded in accordance with the Fund's instructions.
In computing the net asset value, the Custodian may rely upon any
information furnished by proper instructions, including without limitation any
information (1) as to accrual of liabilities of the Fund and as to liabilities
of the Fund not appearing on the books of account kept by the Custodian, (2) as
<PAGE>
-25-
to the existence, status and proper treatment of reserves, if any, authorized by
the Fund, (3) as to the sources of quotations to be used in computing the net
asset value, including those listed in Appendix B, (4) as to the fair value to
be assigned to any securities or other property for which price quotations are
not readily available, and (5) as to the sources of information with respect to
"corporate actions" affecting portfolio securities of the Fund, including those
listed in Appendix B. (Information as to "corporate actions" shall include
information as to dividends, distributions, stock splits, stock dividends,
rights offerings, conversions, exchanges, recapitalizations, mergers,
redemptions, calls, maturity dates and similar transactions, including the ex-
and record dates and the amounts or other terms thereof.)
In like manner, the Custodian shall compute and determine the net asset
value as of such other times as the Board of Directors of the Fund from time to
time may reasonably request.
Notwithstanding any other provisions of this Agreement, including Section
6C, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 5D: The Custodian shall be held to
the exercise of reasonable care in computing and determining net asset value as
provided in this Section 5D, but shall not be held accountable or liable for any
losses, damages or expenses the Fund or any
<PAGE>
-26-
shareholder or former shareholder of the Fund may suffer or in arising from or
based upon errors or delays in the determination of such net asset value unless
such error or delay was due to the Custodian's negligence, gross negligence or
reckless or willful misconduct in determination of such net asset value. (The
parties hereto acknowledge, however, that the Custodian's causing an error or
delay in the determination of net asset value may, but does not in and of
itself, constitute negligence, gross negligence or reckless or willful
misconduct.) In no event shall the Custodian be liable or responsible to the
Fund, any present or former shareholder of the Fund or any other party for any
error or delay which continued or was undetected after the date of an audit
performed by the certified public accountants employed by the Fund if, in the
exercise of reasonable care in accordance with generally accepted accounting
standards, such accountants should have become aware of such error or delay in
the course of performing such audit. The Custodian's liability for any such
negligence, gross negligence or reckless or willful misconduct which results in
an error in determination of such net asset value shall be limited to the
direct, out-of-pocket loss the Fund, shareholder or former shareholder shall
actually incur, measured by the difference between the actual and the
erroneously computed net asset value, and any expenses the Fund shall incur in
connection with correcting the records of the Fund affected by such error
(including charges made by the Fund's
<PAGE>
-27-
registrar and transfer agent for making such corrections) or communicating with
shareholders or former shareholders of the Fund affected by such error.
Without limiting the foregoing, the Custodian shall not be held accountable
or liable to the Fund, any shareholder or former shareholder thereof or any
other person for any delays or losses, damages or expenses any of them may
suffer or incur resulting from (1) the Custodian's failure to receive timely and
suitable notification concerning quotations or corporate actions relating to or
affecting portfolio securities of the Fund or (2) any errors in the computation
of the net asset value based upon or arising out of quotations or information as
to corporate actions if received by the Custodian either (i) from a source which
the Custodian was authorized pursuant to the second paragraph of this Section 5D
to rely upon, or (ii) from a source which in the Custodian's reasonable
judgment was as reliable a source for such quotations or information as the
sources authorized pursuant to that paragraph. Nevertheless, the Custodian will
use its best judgment in determining whether to verify through other sources any
information it has received as to quotations or corporate actions if the
Custodian has reason to believe that any such information might be incorrect.
In the event of any error or delay in the determination of such net asset
value for which the Custodian may be liable, the
<PAGE>
-28-
Fund and the Custodian will consult and make good faith efforts to reach
agreement on what actions should be taken in order to mitigate any loss suffered
by the Fund or its present or former shareholders, in order that the Custodian's
exposure to liability shall be reduced to the extent possible after taking into
account all relevant factors and alternatives. Such actions might include the
Fund or the Custodian taking reasonable steps to collect from any shareholder or
former shareholder who has received any overpayment upon redemption of shares
such overpaid amount or to collect from any shareholder who has underpaid upon a
purchase of shares the amount of such underpayment or to reduce the number of
shares issued to such shareholder. It is understood that in attempting to reach
agreement on the actions to be taken or the amount of the loss which should
appropriately be borne by the Custodian, the Fund and the Custodian will
consider such relevant factors as the amount of the loss involved, the Fund's
desire to avoid loss of shareholder good will, the fact that other persons or
entities could have been reasonably expected to have detected the error sooner
than the time it was actually discovered, the appropriateness of limiting or
eliminating the benefit which shareholders or former shareholders might have
obtained by reason of the error, and the possibility that other parties
providing services to the Fund might be induced to absorb a portion of the loss
incurred.
<PAGE>
-29-
E. Disbursements - Upon receipt of proper instructions, to pay or cause to
be paid, insofar as funds are available for the purpose, bills statements and
other obligations of the Fund (including but not limited to interest charges,
taxes, advisory fees, compensation to Fund officers and employees, and other
operating expenses of the Fund).
6. A. The Custodian shall not be liable for any action taken or omitted in
reliance upon proper instructions reasonably believed by it to be genuine or
upon any other written notice, request, direction, instruction, certificate or
other instrument believed by it to be genuine and signed by the proper party or
parties.
The Secretary or Assistant Secretary of the Fund shall certify to the
Custodian the names, signatures and scope of authority of all persons authorized
to give proper instructions or any other such notice, request, direction,
instruction, certificate or instrument on behalf of the Fund, the names and
signatures of the officers of the Fund, the name and address of the Shareholder
Servicing Agent, and any resolutions, votes, instructions or directions of the
Fund's Board of Directors or shareholders. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set forth
therein and may be considered in full force and effect until receipt of a
similar certificate to the contrary.
<PAGE>
-30-
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement.
The Custodian shall be entitled, at the expense of the Fund, to receive and
act upon advice of counsel (who may be counsel for the Fund) on all matters, and
the Custodian shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
B. With respect to the portfolio securities, cash and other property of the
Fund held by a Securities System, the Custodian shall be liable to the Fund for
any loss or damage to the Fund resulting from use of the Securities System if
caused by any negligence, misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or from any failure of the
Custodian or any such agent to enforce effectively such rights as it may have
against the Securities System. At the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any claim
against the Securities System or any other person which the Custodian may have
as a consequence of any such loss or damage if and to the extent that the Fund
has not been made whole for any such loss or damage. The Custodian shall be
subject to the same
<PAGE>
-31-
responsibility with respect to all securities of the Fund, and all cash, stock
dividends, rights and items of like nature to which the Fund is entitled, held
or received by such Securities System, as if the same where held or received by
the Custodian at its own office.
C. Except as may otherwise be set forth in this Agreement with respect to
particular matters, the Custodian shall be held only to the exercise of
reasonable care and diligence in carrying out the provisions of this Agreement,
provided that the Custodian shall not thereby be required to take any action
which is in contravention of any applicable law. The Fund agrees to indemnify
and hold harmless the Custodian and its nominees from all claims and liabilities
(including counsel fees) incurred or assessed against it or its nominees in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's breach of the relevant standard of conduct set forth in
this Agreement. Without limiting the foregoing indemnification obligation of the
Fund, the Fund agrees to indemnify the Custodian and its nominees against any
liability the Custodian or such nominee may incur by reason of taxes assessed to
the Custodian or such nominee or other costs, liability or expense incurred by
the Custodian or such nominee resulting directly or indirectly from the fact
that portfolio securities or other property of the Fund are registered in the
name of the Custodian or such nominee.
<PAGE>
-32-
It is also understood that the Custodian shall not be liable for any loss
involving any securities, currencies, deposits or other property of the Fund,
whether maintained by it, a Subcustodian, an agent of the Custodian or a
Subcustodian, a Securities System, or a Banking Institution, or a loss arising
from a foreign currency transaction or contract, resulting from a Sovereign
Risk. A "Sovereign Risk" shall mean nationalization, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar action
by any governmental authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting the
Fund's property; or acts of war, terrorism, insurrection or revolution; or any
other similar act or event beyond the Custodian's control.
D. The Custodian shall be entitled to receive reimbursement from the Fund
on demand, in the manner provided in Section 7, for its cash disbursements,
expenses and charges (including the fees and expenses of any Subcustodian or any
Agent) in connection with this Agreement, but excluding salaries and usual
overhead expenses.
E. The Custodian may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company as its agent (an
"Agent") to carry out such of the
<PAGE>
-33-
provisions of this Agreement as the Custodian may from time to time direct,
provided, however, that the appointment of such Agent (other than an Agent
appointed pursuant to the third paragraph of Section 3) shall not relieve the
Custodian of any of its responsibilities under this Agreement.
F. Upon request, the Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
7. The Fund shall pay the Custodian a custody fee based on such fee
schedule as may from time to time be agreed upon in writing by the Custodian and
the Fund. Such fee, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 6D, shall be billed to the Fund in such a
manner as to permit payment either by a direct cash payment to the Custodian or
by placing Fund portfolio transactions with the Custodian resulting in an
agreed-upon amount of commissions being paid to the Custodian within an
agreed-upon period of time.
8. This Agreement shall continue in full force and effect until terminated
by either party by an instrument in writing delivered or mailed, postage
prepaid, to the other party, such termination to take effect not sooner than
sixty (60) days after
<PAGE>
-34-
the date of such delivery or mailing. In the event of termination
the Custodian shall be entitled to receive prior to delivery of the securities,
funds and other property held by it all accrued fees and unreimbursed expenses
the payment of which is contemplated by Sections 6D and 7, upon receipt by the
Fund of a statement setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is agreed that
the funds and securities owned by the Fund and held by the Custodian or any
Subcustodian shall be delivered to the successor custodian, and the Custodian
agrees to cooperate with the Fund in execution of documents and performance of
other actions necessary or desirable in order to substitute the successor
custodian for the Custodian under this Agreement.
9. This Agreement constitutes the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof. No provision of this
Agreement may be amended or terminated except by a statement in writing signed
by the party against which enforcement of the amendment or termination is
sought.
In connection with the operation of this Agreement, the Custodian and the
Fund may agree in writing from time to time on such provisions interpretative of
or in addition to the provisions of this Agreement as may in their joint opinion
be consistent with the general tenor of this Agreement. No
<PAGE>
-35-
interpretative or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
10. This instrument is executed and delivered in The Commonwealth of
Massachusetts and shall be governed by and construed according to the laws of
said Commonwealth.
11. Notices and other writings delivered or mailed postage prepaid to the
Fund addressed to the Fund at 345 Park Avenue, New York, New York 10022, or to
such other address as the Fund may have designated to the Custodian in writing,
or to the Custodian at 40 Water Street, Boston, Massachusetts 02109, Attention:
Manager, Securities Department, or to such other address as the Custodian may
have designated to the Fund in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.
12. This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party.
13. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original. This
<PAGE>
-36-
Agreement shall become effective when one or more counterparts have been signed
and delivered by each of the parties.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
SCUDDER INTERNATIONAL FUND, INC. BROWN BROTHERS HARRIMAN & CO.
BY /s/ David S. Lee per pro /s/ [ILLEGIBLE]
------------------------------- ----------------------------
<PAGE>
SCUDDER INTERNATIONAL FUND
APPENDIX A
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN DEPOSITORY
- ------- ------------ ----------
<S> <C> <C>
AUSTRIA MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS NONE
BELGIUM MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS C.I.K.
DENMARK MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS NONE
FINLAND MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS NONE
FRANCE MORGAN GUARANTY TRUST COMPANY OF NEW YORK, PARIS SICOVAM
GERMANY MORGAN GUARANTY TRUST COMPANY OF NEW YORK, FRANKFURT KASSENVEREIN
ITALY BANCA COMMERCIALE ITALIANA SUBCUSTODIAN FOR
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS NONE
NETHERLANDS MORGAN BANK NEDERLAND NECIGEF
NORWAY MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS NONE
SPAIN BANCO DE SANTANDER, SUBCUSTODIAN FOR
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS NONE
SWEDEN MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS EUROCLEAR
SWITZERLAND MORGAN GUARANTY TRUST COMPANY OF NEW YORK, ZURICH SEGA
UNITED KINGDOM MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON TALISMAN
KOREA CITIBANK, N.A., SEOUL KSSC
JAPAN MORGAN GUARANTY TRUST COMPANY OF NEW YORK, TOKYO NONE
AUSTRALIA NATIONAL AUSTRALIA BANK, LTD. NONE
HONG KONG THE CHASE MANHATTAN BANK, N.A. NONE
SINGAPORE THE CHASE MANHATTAN BANK, N.A. NONE
SOUTH AFRICA BARCLAYS BANK, JOHANNESBURG SUBCUSTODIAN FOR
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS NONE
MEXICO CITIBANK, N.A., MEXICO CITY NONE
TRANSNATIONAL OPERATED BY MORGAN GUARANTY TRUST COMPANY OF NEW YORK, EUROCLEAR
BRUSSELS
</TABLE>
APPROVED: DSL
------------------------------------
SCUDDER INTERNATIONAL FUND
<PAGE>
APPENDIX B
INFORMATION PREFERRED AUTHORIZED SOURCES
- ----------- ----------------------------
1. PRICE QUOTATIONS CAZENOVE INCORPORATED
2. CORPORATE ACTIONS, INTERACTIVE DATA CORPORATION
DIVIDENDS, RIGHTS VALORINFORM (GENEVA)
OFFERINGS
3. FOREIGN EXCHANGE QUOTATIONS REUTERS, LIMITED
BROWN BROTHERS HARRIMAN & CO.,
NEW YORK
INFORMATION SUPPLEMENTARY AUTHORIZED SOURCES
- ----------- --------------------------------
1. PRICE QUOTATIONS QUOTRON
REUTERS, LIMITED
2. CORPORATE ACTIONS, CAZENOVE INCORPORATED
DIVIDENDS, SUBCUSTODIAN BANKS
RIGHTS OFFERINGS FUND MANAGERS
EXTEL (LONDON)
FOREIGN BROKERS
WEEKLY OFFICIAL INTELLIGENCE (LONDON)
SYDNEY STOCK EXCHANGE
REPORT (AUSTRALIA)
WEEKLY GAZETTE (HONG KONG)
J.M. SASSOON & CO. (SINGAPORE)
BONDHOLDERS REGISTER (LONDON)
Supplementary Authorized Sources shall be used only if the Custodian is unable
to obtain required information from a Preferred Authorized Source.
Exhibit 8(a)(2)
CUSTODIAN AGREEMENT
AGREEMENT made this 25th day of November, 1992, between SCUDDER LATIN
AMERICA FUND (the "Fund") and Brown Brothers Harriman & Co. (the "Custodian").
WITNESSETH: That in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. The Fund hereby employs and appoints the Custodian as a custodian for
the term and subject to the provisions of this Agreement. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund as may be issued or sold from time to time.
The Custodian shall not be under any duty or obligation to require the
Fund to deliver to it any securities or funds owned by the Fund and shall have
no responsibility or liability for or on account of securities or funds not so
delivered. The Fund will deposit with the Custodian copies of the Certificate of
Incorporation and By-Laws (or comparable documents) of the Fund and all
amendments thereto, and copies of such votes and other proceedings of the Fund
as may be necessary for or convenient to the Custodian in the performance of its
duties.
-1-
<PAGE>
It is understood that as used in this Agreement, the term "securities"
shall include futures contracts and options.
2. Except for securities and funds held by subcustodians appointed
pursuant to the provisions of Section 3 hereof, the Custodian shall have and
perform the following powers and duties:
A. Safekeeping - To keep safely the securities of the Fund that have been
delivered to the Custodian and from time to time to receive delivery of
securities for safekeeping.
B. Manner of Holding Securities - To hold securities of the Fund (1) by
physical possession of the share certificates or other instruments representing
such securities in registered or bearer form or of the broker's receipts or
confirmations for futures contracts, options and similar securities, or (2) in
book-entry form by a Securities System (as said term is defined in Section 2V).
C. Registered Name; Nominee - To hold registered securities of the Fund
(1) in the name or any nominee name of the Custodian or the Fund, or in the name
or any nominee name of any agent appointed pursuant to Section 6E, or (2) in
street certificate form, so-called, and in any case with or without any
indication of fiduciary capacity.
D. Purchases - Upon receipt of proper instructions, as defined in Section
2Y, insofar as funds are available for the purpose, to pay for and receive
securities purchased for the account of the Fund, payment being made only upon
receipt of the
-2-
<PAGE>
securities; provided, however, that the Custodian may make payment, which may be
prior to receipt of securities, and may accept delivery of securities, including
the form of securities received, in accordance with governmental regulations,
the rules of Securities Systems or other U.S. securities depositories and
clearing agencies, or generally accepted trade practice in the applicable U.S.
market. Receipt of securities on behalf of the Fund shall be by the Custodian or
a Subcustodian or by credit to an account which one of them may have with a
bank, Securities System, other U.S. securities depositary or clearing agency, or
other financial institution approved by the Fund.
E. Exchanges - Upon receipt of proper instructions, to exchange securities
held by it for the account of the Fund for other securities in connection with
any reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event, and to deposit any such securities in accordance with
the terms of any reorganization or protective plan. Without such instructions,
the Custodian may surrender securities in temporary form for definitive
securities, may surrender securities for transfer into a name or nominee name as
permitted in Section 2C, and may surrender securities for a different number of
certificates or instruments representing the same number of shares or same
principal amount of indebtedness, provided the securities to be issued are to be
delivered to the Custodian.
-3-
<PAGE>
F. Sales of Securities - Upon receipt of proper instructions, to make
delivery of securities which have been sold for the account of the Fund but only
against payment therefor; provided, however, that the Custodian may make
delivery, which may be prior to receipt of payment, and may accept payment,
including the form of payment received, in accordance with governmental
regulations, the rules of Securities Systems or other U.S. securities
depositories and clearing agencies, or generally accepted trade practice in the
applicable U.S. market. Receipt of payment on behalf of the Fund shall be by the
Custodian or a Subcustodian or by credit to an account which one of them may
have with a bank, Securities System, other U.S. securities depositary or
clearing agency, or other financial institution approved by the Fund.
G. Depositary Receipts - Upon receipt of proper instructions, to instruct
a subcustodian appointed pursuant to Section 3 hereof (a "Subcustodian") or an
agent of the Custodian appointed pursuant to Section 6E hereof (an "Agent") to
surrender securities to the depositary used by an issuer of American Depositary
Receipts or International Depositary Receipts (hereinafter collectively referred
to as "ADRs") for such securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to the Subcustodian
or Agent that the depositary has acknowledged receipt of instructions to issue
with respect to such securities
-4-
<PAGE>
ADRs in the name of the Custodian, or a nominee of the Custodian, for delivery
to the Custodian in Boston, Massachusetts, or at such other place as the
Custodian may from time to time designate.
Upon receipt of proper instructions, to surrender ADRs to the issuer
thereof against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depositary to
deliver the securities underlying such ADRs to a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon receipt of proper
instructions, to deliver to the issuer or Director thereof, or to the agent of
either, warrants, puts, calls, futures contracts, options, rights or similar
securities for the purpose of being exercised or sold, provided that the new
securities and cash, if any, acquired by such action are to be delivered to the
Custodian, and, upon receipt of proper instructions, to deposit securities upon
invitations for tenders of securities, provided that the consideration is to be
paid or delivered or the tendered securities are to be returned to the
Custodian.
I. Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to proper instructions relative thereto.
J. Options - Upon receipt of proper instructions, to receive and retain
confirmations or other documents evidencing the
-5-
<PAGE>
purchase or writing of an option on a security or securities index by the Fund;
to deposit and maintain in a segregated account, either physically or by
book-entry in a Securities System, securities subject to a covered call option
written by the Fund; and to release and/or transfer such securities or other
assets only in accordance with a notice or other communication evidencing the
expiration, termination or exercise of such covered option furnished by The
Options Clearing Corporation, the securities or options exchange on which such
covered option is traded or such other organization as may be responsible for
handling such options transactions.
K. Futures Contracts - Upon receipt of proper instructions, to receive and
retain confirmations evidencing the purchase or sale of a futures contract or an
option on a futures contract by the Fund; to deposit and maintain in a
segregated account, for the benefit of any futures commission merchant, assets
designated by the Fund as initial, maintenance or variation "margin" deposits
intended to secure the Fund's performance of its obligations under any futures
contracts purchased or sold or any options on futures contracts written by the
Fund, in accordance with the provisions of any agreement or agreements among any
of the Fund, the Custodian and such futures commission merchant, designed to
comply with the rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations, regarding such
margin deposits; and to release and/or transfer
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<PAGE>
assets in such margin accounts only in accordance with any such agreements or
rules.
L. Borrowings - Upon receipt of proper instructions, to deliver securities
of the Fund to lenders or their agents as collateral for borrowings effected by
the Fund, but only against receipt of the amounts borrowed, provided that if
such collateral is held in book-entry form by a Securities System (as defined in
Section 2V), such collateral may be transferred by book-entry to such lender or
its agent against receipt by the Custodian of an undertaking by such lender to
pay such borrowed money to or upon the Custodian's order on the next business
day following such transfer of collateral.
M. Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of the Fund on the Custodian's books subject only to draft
or order by the Custodian. All funds received by the Custodian from or for the
account of the Fund shall be deposited in said account(s). The responsibilities
of the Custodian to the Fund for deposits accepted on the Custodian's books
shall be that of a U.S. bank for a similar deposit.
If and when authorized by proper instructions, the Custodian may open and
operate an additional account(s) in such other banks or trust companies as may
be designated by the Fund in such instructions (any such bank or trust company
so designated by the Fund being referred to hereafter as a "Banking
Institution"), provided that such account(s) shall be in the name of the
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<PAGE>
Custodian for account of the Fund and subject only to the Custodian's draft or
order. Such accounts may be opened with Banking Institutions in the United
States and in other countries and may be denominated in either U.S. Dollars or
other currencies as the Fund may determine. All such deposits shall be deemed to
be portfolio securities of the Fund and accordingly the responsibility of the
Custodian therefor shall be the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities of the Fund.
N. Interest Bearing Call or Time Deposits - To place interest bearing
fixed term and call deposits with such banks and in such amounts as the Fund may
authorize pursuant to proper instructions. Such deposits may be placed with the
Custodian or with Subcustodians or other Banking Institutions as the Fund may
determine. Deposits may be denominated in U. 5. Dollars or other currencies and
need not be evidenced by the issuance or delivery of a certificate to the
Custodian, provided that the Custodian shall include in its records with respect
to the assets of the Fund, appropriate notation as to the amount and currency
of each such deposit, the accepting Banking Institution and other appropriate
details. Such deposits, other than those placed with the Custodian, shall be
deemed portfolio securities of the Fund and the responsibilities of the
Custodian therefor shall be the same as those for demand deposit bank accounts
placed with other banks, as described in the second paragraph of Section 2M of
this
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<PAGE>
Agreement. The responsibility of the Custodian for such deposits accepted on the
Custodian's books shall be that of a U. S. bank for a similar deposit.
O. Foreign Exchange Transactions - Pursuant to proper instructions, to
enter into foreign exchange contracts to purchase and sell foreign currencies
for spot and future delivery on behalf and for the account of the Fund, and in
connection therewith to receive and retain receipts, confirmations or other
documents evidencing such contracts and to deposit and maintain cash or
designated securities in a segregated account and to release and/or transfer
assets held in such account only in accordance with such proper instructions.
Such transactions may be undertaken by the Custodian with such Banking
Institutions, including the Custodian and Subcustodian(s) as principals, as
approved and authorized by the Fund. Foreign exchange contracts, other than
those executed with the Custodian, shall be deemed to be portfolio securities of
the Fund and the responsibilities of the Custodian therefor shall be the same as
those for demand deposit bank accounts placed with other banks as described in
the second paragraph of Section 2M of this Agreement.
P. Stock Loans - Upon receipt of proper instructions, to deliver
securities of the Fund, in connection with loans of securities by the Fund, to
the borrower thereof but only against receipt of such collateral as the Fund
shall instruct; except that in connection with any loans for which collateral is
to be
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<PAGE>
credited to the Custodian's Account in a book-entry system referred to in
Section 2V(ii) hereof, the Custodian may deliver securities prior to the credit
of such collateral, provided that the Custodian shall promptly notify the Fund
if such collateral is not credited.
Q. Collections - (i) To collect and receive all income, payments of
principal and other payments with respect to the securities held hereunder, and
in connection therewith to deliver the certificates or other instruments
representing the securities to the issuer thereof or its agent when securities
are called, redeemed, retired, mature or otherwise become payable; provided that
the payment is to be made in such form and at such time as is in accordance with
the terms of the agreement relating to the security, or such proper instructions
as the Custodian may receive, or governmental regulations, the rules of
Securities Systems or other U.S. securities depositories and clearing agencies,
or generally accepted trade practice in the applicable U.S. market; (ii) to
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income, principal or other
payments with respect to securities of the Fund or in connection with transfer
of securities; and (iii) pursuant to proper instructions to take such other
actions with respect to the collection or receipt of funds or transfer of
securities which involve an investment decision.
R. Dividends, Distributions and Redemptions - Upon receipt
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<PAGE>
of proper instructions from the Fund, or upon receipt of instructions from the
Fund's shareholder servicing agent or agent with comparable duties (the
"Shareholder Servicing Agent") (given by such person or persons and in such
manner on behalf of the Shareholder Servicing Agent as the Fund shall have
authorized), the Custodian shall release funds or securities to the Shareholder
Servicing Agent or otherwise apply funds or securities, insofar as available,
for the payment of dividends or other distributions to Fund shareholders. Upon
receipt of proper instructions from the Fund, or upon receipt of instructions
from the Shareholder Servicing Agent (given by such person or persons and in
such manner on behalf of the Shareholder Servicing Agent as the Fund shall have
authorized), the Custodian shall release funds or securities, insofar as
available, to the Shareholder Servicing Agent or as such Agent shall otherwise
instruct for payment to the Fund shareholders who have delivered to such Agent a
request for repurchase or redemption of their shares of capital stock of the
Fund.
S. Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund all
forms of proxies and all notices of meetings and any other notices or
announcements affecting or relating to securities owned by the Fund that are
received by the Custodian, and upon receipt of proper instructions, to execute
and deliver or cause its nominee to execute and deliver such proxies or other
authorizations as may be required. Neither the Custodian nor its
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<PAGE>
nominee shall vote upon any of such securities or execute any proxy to vote
thereon or give any consent or take any other action with respect thereto
(except as otherwise herein provided) unless ordered to do so by proper
instructions.
T. Bills - Upon receipt of proper instructions, to pay or cause to be
paid, insofar as funds are available for the purpose, bills, statements, or
other obligations of the Fund.
U. Nondiscretionary Details - Without the necessity of express
authorization from the Fund (1) to attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealings with securities, funds or other property of the Fund held by the
Custodian except as otherwise directed from time to time by the Board of
Directors of the Fund, and (2) to make payments to itself or others for minor
expenses of handling securities or other similar items relating to the
Custodian's duties under this Agreement, provided that all such payments shall
be accounted for to the Fund.
V. Deposit of Fund Assets in Securities Systems - The Custodian may
deposit and/or maintain securities owned by the Fund in (i) The Depository Trust
Company, (ii) any book-entry system as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CRF Part 350, or the book-entry
regulations of federal agencies substantially in the form of Subpart O, or (iii)
any other domestic clearing agency registered with the Securities
- 12 -
<PAGE>
and Exchange Commission under Section 17A of the Securities Exchange Act of 1934
which acts as a securities depository and whose use the Fund has previously
approved in writing (each of the foregoing being referred to in this Agreement
as a "Securities System"). Utilization of a Securities System shall be in
accordance with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
(1) The Custodian may deposit and/or maintain Fund securities, either
directly or through one or more Agents appointed by the Custodian
(provided that any such Agent shall be qualified to act as a
custodian of the Fund pursuant to the Investment Company Act of 1940
and the rules and regulations thereunder), in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian or such Agent in the Securities System
which shall not include any assets of the Custodian or Agent other
than assets held as a fiduciary, custodian, or otherwise for
customers;
(2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
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<PAGE>
(3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by the
Custodian or an Agent as referred to above, and be provided to the
Fund at its request. The Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the Fund in
the form of a written advice or notice and shall furnish to the Fund
copies of daily transaction sheets reflecting
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<PAGE>
each day's transactions in the Securities System for the account of
the Fund on the next business day;
(4) The Custodian shall provide the Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities
System; and the Custodian and such Agents shall send to the Fund
such reports on their own systems of internal accounting control as
the Fund may reasonably request from time to time.
(5) At the written request of the Fund, the Custodian will terminate the
use of any such Securities System on behalf of the Fund as promptly
as practicable.
W. Other Transfers - To deliver securities, funds and other property of
the Fund to a Subcustodian or another custodian of the Fund; and, upon receipt
of proper instructions, to make such other disposition of securities, funds or
other property of the Fund in a manner other than or for purposes other than as
enumerated elsewhere in this Agreement, provided that the instructions relating
to such disposition shall include a statement of the purpose for which the
delivery is to be made, the amount of
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<PAGE>
securities to be delivered and the name of the person or persons to whom
delivery is to be made.
X. Investment Limitations - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Fund, the Custodian may assume unless and until notified in
writing to the contrary that proper instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Certificate
of Incorporation or By-Laws (or comparable documents) or votes or proceedings of
the shareholders or Directors of the Fund. The Custodian shall in no event be
liable to the Fund and shall be indemnified by the Fund for any violation of any
investment limitations to which the Fund is subject or other limitations with
respect to the Fund's powers to make expenditures, encumber securities, borrow
or take similar actions affecting its portfolio.
Y. Proper Instructions - Proper instructions shall mean a tested telex
from the Fund or a written request, direction, instruction or certification
signed or initialled on behalf of the Fund by one or more person or persons as
the Board of Directors of the Fund shall have from time to time authorized,
provided, however, that no such instructions directing the delivery of
securities or the payment of funds to an authorized signatory of the Fund shall
be signed by such person. Those persons authorized to give proper instructions
may be identified by the Board of
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<PAGE>
Directors by name, title or position and will include at least one officer
empowered by the Board to name other individuals who are authorized to give
proper instructions on behalf of the Fund. Telephonic or other oral
instructions given by any one of the above persons will be considered proper
instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. Oral instructions will be confirmed by tested telex or in writing in
the manner set forth above but the lack of such confirmation shall in no way
affect any action taken by the Custodian in reliance upon such oral
instructions. Proper instructions may relate to specific transactions or to
types or classes of transactions, and may be in the form of standing
instructions.
Proper instructions may include communications effected directly between
electro-mechanical or electronic devices or systems, in addition to tested
telex, provided that the Fund and the Custodian agree in writing to the use of
such device or system.
Z. Segregated Account - The Custodian shall upon receipt of Proper
Instructions establish and maintain on its books a segregated account or
accounts for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities of the Fund, including securities maintained
by the Custodian pursuant to Section 2V hereof, (i) in accordance with
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<PAGE>
the provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934 and a member
of the National Association of Securities Dealers, Inc. (or any futures
commission merchant registered under the Commodity Exchange Act) relating to
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash or securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii) for
the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies, and (iv) as mutually
agreed from time to time between the Fund and the Custodian.
3. Securities, funds and other property of the Fund may be held by
subcustodians appointed pursuant to the provisions of this Section 3 (a
"Subcustodian"). The Custodian may, at any time and from time to time, appoint
any bank or trust company (meeting the requirements of a custodian or a foreign
custodian under the Investment Company Act of 1940 and the rules and regulations
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<PAGE>
thereunder) to act as a Subcustodian for the Fund, provided that the Fund shall
have approved in writing (1) any such bank or trust company and the subcustodian
agreement to be entered into between such bank or trust company and the
Custodian, and (2) the Subcustodian's offices or branches at which the
Subcustodian is authorized to hold securities, cash and other property of the
Fund. Upon such approval by the Fund, the Custodian is authorized on behalf of
the Fund to notify each Subcustodian of its appointment as such. The Custodian
may, at any time in its discretion, remove any bank or trust company that has
been appointed as a Subcustodian.
Those Subcustodians, their offices or branches which the Fund has approved
to date are set forth on Appendix A hereto. Such Appendix shall be amended from
time to time as Subcustodians, branches or offices are changed, added or
deleted. The Fund shall be responsible for informing the Custodian sufficiently
in advance of a proposed investment which is to be held at a location not listed
on Appendix A, in order that there shall be sufficient time for the Fund to give
the approval required by the preceding paragraph and for the Custodian to put
the appropriate arrangements in place with such Subcustodian pursuant to such
subcustodian agreement.
If the Fund shall have invested in a security to be held in a location
before the foregoing procedures have been completed, such security shall be held
by such agent as the Custodian may appoint
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<PAGE>
unless and until the Fund shall instruct the Custodian to move the security into
the possessions of the Custodian or a Subcustodian. In any event, the Custodian
shall be liable to the Fund for the actions of such agent if and only to the
extent the Custodian shall have recovered from such agent for any damages caused
the Fund by such agent.
With respect to the securities and funds held by a Subcustodian, either
directly or indirectly, including demand and interest bearing deposits,
currencies or other deposits and foreign exchange contracts as referred to in
Sections 2M, 2N or 20, the Custodian shall be liable to the Fund if and only to
the extent that such Subcustodian is liable to the Custodian and the Custodian
recovers under the applicable subcustodian agreement. The Custodian shall
nevertheless be liable to the Fund for its own negligence in transmitting any
instructions received by it from the Fund and for its own negligence in
connection with the delivery of any securities or funds held by it to any such
Subcustodian.
In the event that any Subcustodian appointed pursuant to the provisions of
this Section 3 fails to perform any of its obligations under the terms and
conditions of the applicable subcustodian agreement, the Custodian shall use its
best efforts to cause such Subcustodian to perform such obligations. In the
event that the Custodian is unable to cause such Subcustodian to perform fully
its obligations thereunder, the Custodian shall
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<PAGE>
forthwith upon the Fund's request terminate such Subcustodian and, if necessary
or desirable, appoint another subcustodian in accordance with the provisions of
this Section 3. At the election of the Fund, it shall have the right to enforce,
to the extent permitted by the subcustodian agreement and applicable law, the
Custodian's rights against any such Subcustodian for loss or damage caused the
Fund by such Subcustodian.
At the written request of the Fund, the Custodian will terminate any
Subcustodian appointed pursuant to the provisions of this Section 3 in
accordance with the termination provisions under the applicable subcustodian
agreement. The Custodian will not amend any subcustodian agreement or agree to
change or permit any changes thereunder except upon the prior written approval
of the Fund.
In the event the Custodian intends to make any payment to a Subcustodian
under the indemnification provisions of any subcustodian agreement, the
Custodian shall give the Fund written notice of such intention no less than
thirty (30) days prior to the date such payment is to be made. The Fund shall be
obligated promptly to reimburse the Custodian the amount of such payment, unless
the Fund shall, within thirty (30) days of receipt of the Custodian's notice,
object in writing to such payment to the Subcustodian or to reimbursement of the
Custodian (i) because the fund disputes the right of the Subcustodian to be so
indemnified or (ii) because the Fund believes that the Custodian was or might
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<PAGE>
have been responsible by reason of the Custodian's negligence or misconduct for
the event or occurance giving rise to the Subcustodian's demand for
indemnification. In the event the Fund, at the direction of its Board of
Directors or any Executive Committee thereof, shall give written notice of such
objection and the reasons therefor, the Custodian may nevertheless make such
payment to the Subcustodian, but without prejudice to the Fund's right to refuse
to reimburse the Custodian if the Fund's objection under clause (i) or (ii)
above shall be upheld in an appropriate judicial or other proceeding; or in the
alternative, the Custodian may refuse to pay the indemnification demanded by the
Subcustodian and the Custodian shall in such event defend against any judicial
or other proceeding brought against the Custodian by the Subcustodian to obtain
such indemnification. Such defense shall be conducted by counsel reasonably
satisfactory to both the Fund and the Custodian. The Fund shall be entitled to
participate in any such proceeding with separate counsel of its own choice if it
believes its position might otherwise be compromised and, if the Fund or the
Custodian believes there may be a conflict in the respective positions of the
Fund and the Custodian, then each may retain separate counsel of its own choice.
The Fund shall bear the costs and expenses of defending against the
Subcustodian's claim, and the Fund shall indemnify the Custodian and hold it
harmless from all claims, liabilities, judgments, costs and expenses (including
counsel fees) and settlements of such claim
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<PAGE>
(provided that such settlement shall have been effected with the Fund's written
consent) incurred or assesssed against the Custodian. Notwithstanding the
foregoing, if it shall be determined in an appropriate proceeding, including in
a proceeding as aforesaid brought by the Subcustodian, that, although the
Subcustodian was entitled to indemnification the Custodian was not entitled to
reimbursement by the Fund because the Custodian was responsible by reason of its
negligence or misconduct for the occurance or event giving rise to the
Subcustodian's right to indemnification, then in such event the Fund shall not
be obligated to indemnify the Custodian as aforesaid and the Custodian shall
reimburse the Fund for any amounts paid by the Fund to Custodian in respect of
the costs and expenses of defending against the Subcustodian's claim.
4. The Custodian may assist generally in the preparation of reports to
Fund shareholders, regulatory authorities and others, audits of accounts, and
other ministerial matters of like nature.
5. The Fund hereby also appoints the Custodian as its financial agent.
With respect to the appointment as financial agent, the Custodian shall have and
perform the following powers and duties:
A. Records - To create, maintain and retain such records relating to its
activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and
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<PAGE>
Rules 31a-l and 31a-2 thereunder) and under applicable Federal and State tax
laws and administrative regulations. All such records will be the property of
the Fund and in the event of termination of this Agreement shall be delivered to
the successor custodian.
B. Accounts - To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by proper instructions.
C. Access to Records - Subject to security requirements of the Custodian
applicable to its own employees having access to similar records within the
Custodian and such regulations as may be reasonably imposed by the Custodian,
the books and records maintained by the Custodian pursuant to Sections 5A and 5B
shall be open to inspection and audit at reasonable times by officers of,
attorneys for, and auditors employed by, the Fund.
D. Calculation of Net Asset Value - To compute and determine the net asset
value per share of capital stock of the Fund as of the close of business on the
New York Stock Exchange on each day on which such Exchange is open, unless
otherwise directed by proper instructions. Such computation and determination
shall be made in accordance with (1) the provisions of the Fund's Certificate of
Incorporation or By-Laws of the Fund, as they may from time to time be amended
and delivered to the Custodian, (2) the votes of the Board of Directors of the
Fund at the time in force and applicable, as they may from time to time be
delivered
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<PAGE>
to the Custodian, and (3) proper instructions from such officers of the Fund or
other persons as are from time to time authorized by the Board of Directors of
the Fund to give instructions with respect to computation and determination of
the net asset value. On each day that the Custodian shall compute the net asset
value per share of the Fund, the Custodian shall provide the Fund with written
reports which permit the Fund to verify that portfolio transactions have been
recorded in accordance with the Fund's instructions.
In computing the net asset value, the Custodian may rely upon any
information furnished by proper instructions, including without limitation any
information (1) as to accrual of liabilities of the Fund and as to liabilities
of the Fund not appearing on the books of account kept by the custodian, (2) as
to the existence, status and proper treatment of reserves, if any, authorized by
the fund, (3) as to the sources of quotations to be used in computing the net
asset value, including those listed in Appendix B, (4) as to the fair value to
be assigned to any securities or other property for which price quotations are
not readily available, and (5) as to the sources of information with respect to
"corporate actions" affecting portfolio securities of the fund, including those
listed in Appendix B. (Information as to "corporate actions" shall include
information as to dividends, distributions, stock splits, stock dividends,
rights offerings, conversions, exchanges, recapitalizations, mergers,
redemptions,
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<PAGE>
calls, maturity dates and similar transactions, including the ex- and record
dates and the amounts or other terms thereof.)
In like manner, the Custodian shall compute and determine the net asset
value as of such other times as the Board of Directors of the Fund from time to
time may reasonably request.
Notwithstanding any other provisions of this Agreement, including Section
6C, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 5D: The Custodian shall be held to
the exercise of reasonable care in computing and determining net asset value as
provided in this Section 5D, but shall not be held accountable or liable for any
losses, damages or expenses the Fund or any shareholder or former shareholder of
the Fund may suffer or incur arising from or based upon errors or delays in the
determination of such net asset value unless such error or delay was due to the
Custodian's negligence, gross negligence or reckless or willful misconduct in
determination of such net asset value. (The parties hereto acknowledge, however,
that the Custodian's causing an error or delay in the determination of net asset
value may, but does not in and of itself, constitute negligence, gross
negligence or reckless or willful misconduct.) In no event shall the Custodian
be liable or responsible to the Fund, any present or former shareholder of the
fund or any other party for any error or delay which continued or was undetected
after the date of an audit performed by the certified public accountants
employed by the Fund
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<PAGE>
if, in the exercise of reasonable care in accordance with generally accepted
accounting standards, such accountants should have become aware of such error or
delay in the course of performing such audit. The Custodian's liability for any
such negligence, gross negligence or reckless or willful misconduct which
results in an error in determination of such net asset value shall be limited to
the direct, out-of-pocket loss the Fund, shareholder or former shareholder shall
actually incur, measured by the difference between the actual and the
erroneously computed net asset value, and any expenses the fund shall incur in
connection with correcting the records of the Fund affected by such error
(including charges made by the Fund's registrar and transfer agent for making
such corrections) or communicating with shareholders or former shareholders of
the Fund affected by such error.
Without limiting the foregoing, the Custodian shall not be held
accountable or liable to the Fund, any shareholder or former shareholder thereof
or any other person for any delays or losses, damages or expenses any of them
may suffer or incur resulting from (1) the Custodian's failure to receive timely
and suitable notification concerning quotations or corporate actions relating to
or affecting portfolio securities of the fund or (2) any errors in the
computation of the net asset value based upon or arising out of quotations or
information as to corporate actions if received by the Custodian either (i) from
a source which the
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Custodian was authorized pursuant to the second paragraph of this Section 5D to
rely upon, or (ii) from a source which in the Custodian's reasonable judgment
was as reliable a source for such quotations or information as the sources
authorized pursuant to that paragraph. Nevertheless, the Custodian will use its
best judgment in determining whether to verify through other sources any
information it has received as to quotations or corporate actions if the
Custodian has reason to believe that any such information might be incorrect.
In the event of any error or delay in the determination of such net asset
value for which the Custodian may be liable, the Fund and the Custodian will
consult and make good faith efforts to reach agreement on what actions should be
taken in order to mitigate any loss suffered by the Fund or its present or
former shareholders, in order that the custodian's exposure to liability shall
be reduced to the extent possible after taking into account all relevant factors
and alternatives. Such actions might include the Fund or the custodian taking
reasonable steps to collect from any shareholder or former shareholder who has
received any overpayment upon redemption of shares such overpaid amount or to
collect from any shareholder who has underpaid upon a purchase of shares the
amount of such underpayment or to reduce the number of shares issued to such
shareholder. It is understood that in attempting to reach agreement on the
actions to be taken or the amount of the loss which should appropriately be
borne by the
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<PAGE>
Custodian, the Fund and the Custodian will consider such relevant factors as the
amount of the loss involved, the Fund's desire to avoid loss of shareholder good
will, the fact that other persons or entitles could have been reasonably
expected to have detected the error sooner than the time it was actually
discovered, the appropriateness of limiting or eliminating the benefit which
shareholders or former shareholders might have obtained by reason of the error,
and the possibility that other parties providing services to the fund might be
induced to absorb a portion of the loss incurred.
E. Disbursements - Upon receipt of proper instructions, to pay or cause to
be paid, insofar as funds are avilable for the purpose, bills, statements and
other obligations of the Fund (including but not limited to interest charges,
taxes, advisory fees, compensation to Fund officers and employees, and other
operating expenses of the Fund).
6. A. The Custodian shall not be liable for any action taken or omitted in
reliance upon proper instructions reasonably believed by it to be genuine or
upon any other written notice, request, direction, instruction, certificate or
other instrument believed by it to be genuine and signed by the proper party or
parties.
The Secretary or Assistant Secretary of the Fund shall certify to the
custodian the names, signatures and scope of authority of all persons authorized
to give proper instructions or
- 29 -
<PAGE>
any other such notice, request, direction, instructions, certificate or
instrument on behalf of the Fund, the names and signatures of the officers of
the Fund, the name and address of the Shareholder Servicing Agent, and any
resolutions, votes, instructions or directions of the Fund's Board of Directors
or shareholders. Such certificate may be accepted and relied upon by the
Custodian as conclusive evidence of the facts set forth therein and may be
considered in full force and effect until receipt of a similar certificate to
the contrary.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement.
The Custodian shall be entitled, at the expense of the Fund, to receive
and act upon advice of counsel (who may be counsel for the Fund) on all matters,
and the Custodian shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
B. With respect to the portfolio securities, cash and other property of
the Fund held by a Securities System, the Custodian shall be liable to the Fund
for any loss or damage to the Fund resulting from use of the Securities System
if caused by any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from any failure
- 30 -
<PAGE>
of the Custodian or any such agent to enforce effectively such rights as it may
have against the Securities System. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to any
claim against the Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the extent that the
Fund has not been made whole for any such loss or damage. The Custodian shall be
subject to the same responsibility with respect to all securities of the Fund,
and all cash, stock dividends, rights and items of like nature to which the Fund
is entitlted, held or received by such Securities System, as if the same where
held or received by the Custodian at its own office.
C. Except as may otherwise be set forth in this Agreement with respect to
particular matters, the Custodian shall be held only to the exercise of
reasonable care and diligence in carrying out the provisions of this Agreement,
provided that the Custodian shall not thereby be required to take any action
which is in contravention of any applicable law. The Fund agrees to indemnify
and hold harmless the Custodian and its nominees from all claims and liabilities
(including counsel fees) incurred or assessed against it or its nominees in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's breach of the relevant standard of conduct set forth in
this Agreement. Without limiting the foregoing indemnification obligation of the
Fund, the Fund agrees to indemnify the Custodian
- 31 -
<PAGE>
and its nominees against any liability the Custodian or such nominee may incur
by reason of taxes assessed to the Custodian or such nominee or other costs,
liability or expense incurred by the Custodian or such nominee resulting
directly or indirectly from the fact that portfolio securities or other property
of the Fund are registered in the name of the Custodian or such nominee.
It is also understood that the Custodian shall not be liable for any loss
involving any securities, currencies, deposits or other property of the Fund,
whether maintained by it, a Subcustodian, an agent of the Custodian or a
Subcustodian, a Securities System or a Banking Institution, or a loss arising
from a foreign currency transaction or contract, resulting from a Sovereign
Risk. A "Sovereign Risk" shall mean nationalization, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar action
by any governmental authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting the
Fund's property; or acts of war, terrorism, insurrection or revolution; or any
other similar act or event beyond the Custodian's control.
D. The Custodian shall be entitled to receive reimbursement from the Fund
on demand, in the manner provided in Section 7, for its cash disbursements,
expenses and charges (including the fees and expenses of any Subcustodian or any
Agent) in connection with
- 32 -
<PAGE>
this Agreement, but excluding salaries and usual overhead expenses
E. The Custodian may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company as its agent (an
"Agent") to carry out such of the provisions of this Agreement as the Custodian
may from time to time direct, provided, however, that the appointment of such
Agent (other than an Agent appointed pursuant to the third paragraph of Section
3) shall not relieve the Custodian of any of its responsibilities under this
Agreement.
F. Upon request, the Fund shall deliver to the Custodian such proxies,
power of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
7. The Fund shall pay the Custodian a custody fee based on such fee
schedule as may from time to time be agreed upon in writing by the Custodian and
the Fund. Such fee, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 6D, shall be billed to the Fund in such a
manner as to permit payment either by a direct cash payment to the Custodian or
by placing Fund portfolio transactions with the Custodian resulting in an
agreed-upon amount of commissions being paid to the Custodian within an
agreed-upon period of time.
- 33 -
<PAGE>
8. This Agreement shall continue in full force and effect until terminated
by either party by an instrument in writing delivered or mailed, postage
prepaid, to the other party, such termination to take effect not sooner than
sixty (60) days after the date of such delivery or mailing. In the event of
termination the Custodian shall be entitled to receive prior to delivery of the
securities, funds and other property held by it all accrued fees and
unreimbursed expenses the payment of which is contemplated by Sections 6D and 7,
upon receipt by the Fund of a statement setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is agreed
that the funds and securities owned by the Fund and held by the Custodian or any
Subcustodian shall be delivered to the successor custodian, and the Custodian
agrees to cooperate with the Fund in execution of documents and performance of
other actions necessary or desirable in order to substitute the successor
custodian for the Custodian under this Agreement.
9. This Agreement constitutes the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be amended or terminated except by a statement in writing
signed by the party against which enforcement of the amendment or termination is
sought.
In connection with the operation of this Agreement, the Custodian and the
Fund may agree in writing from time to time on
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<PAGE>
such provisions interpretative of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. No interpretative or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of this Agreement.
10. This instrument is executed and delivered in The Commonwealth of
Massachusetts and shall be governed by and construed according to the laws of
said Commonwealth.
11. Notices and other writings delivered or mailed postage prepaid to the
fund addressed to the Fund at 175 Federal Street, Boston, Massachusetts 02110 or
to such other address as the Fund may have designated to the Custodian in
writing, or to the Custodian at 40 Water Street, Boston, Massachusetts 02109,
Attention: Manager, Securities Department, or to such other address as the
Custodian may have designated to the Fund in writing, shall be deemed to have
been properly delivered or given hereunder to the respective addressee.
12. This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party.
13. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original. This Agreement shall become effective when
one or more counterparts have been signed and delivered by each of the parties.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
SCUDDER LATIN AMERICA FUND BROWN BROTHERS HARRIMAN & CO.
By /s/ David S. Lee per pro /s/ [illegible]
-------------------------- --------------------------
- 36 -
<PAGE>
BROWN BROTHERS HARRIMAN & CO - GLOBAL CUSTODY NETWORK
SCUDDER LATIN AMERICA FUND
APPENDIX A
CENTRAL
COUNTRY SUBCUSTODIAN DEPOSITORY
- ------- ------------ ----------
ARGENTINA CITIBANK N A, BUENOS AIRES AGMT 07/16/81* CDV
BRAZIL THE FIRST NATIONAL BANK OF BOSTON NONE
RIO DE JANEIRO AND SAO PAULO AGMT 01/5/88
CHILE CITIBANK N A, SANTIAGO AGMT 07/16/81* NONE
MEXICO CITIBANK N A, MEXICO CITY AGMT 07/16/81* INDEVAL
TRANSNATIONAL BROWN BROTHERS HARRIMAN & CO EUROCEAR
CEDEL
URUGUAY CITIBANK N A, MONTEVIDEO AGMT 07/16/81* NONE
VENEZUELA CITIBANK N A, CARACAS AGMT 07/16/81* NONE
* CITIBANK N A AGREEMENT AMENDMENT DATED 8/31/90
I HEREBY CERTIFY THAT AT ITS MEETING ON SEPTEMBER 17, 1992 THE BOARD APPROVED
THE COUNTRIES, SUBCUSTODIANS, AGREEMENTS, AND CENTRAL DEPOSITORIES LISTED ON
THIS APPENDIX.
/s/ David S. Lee November 25, 1992
- --------------------------- ----------------------------
(SIGNATURE) (DATE)
Vice President
- ---------------------------
(TITLE)
<PAGE>
APPENDIX B
SCUDDER LATIN AMERICA FUND
--------------------------
THE FOLLOWING AUTHORIZED SOURCES ARE TO BE USED FOR PRICING AND FOREIGN EXCHANGE
QUOTATIONS, CORPORATE ACTIONS, DIVIDENDS AND RIGHTS OFFERINGS.
AUTHORIZED SOURCES
------------------
QUOTRON
REUTERS
INTERACTIVE DATA CORPORATION
VALORINOFORM (GENEVA)
TELEKURS
SUBSCRIPTION BANKS
FUND MANAGERS
EXTEL (LONDON)
REPUTABLE FOREIGN BROKERS
APPROVED: /s/ David S. Lee 11/25/92
----------------------------------
DATE
Exhibit 8(a)(3)
CUSTODIAN AGREEMENT
AGREEMENT made this 25th day of November, 1992, between SCUDDER PACIFIC
OPPORTUNITIES FUND (the "Fund") and Brown Brothers Harriman & Co. (the
"Custodian").
WITNESSETH: That in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. The Fund hereby employs and appoints the Custodian as a custodian for
the term and subject to the provisions of this Agreement. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund as may be issued or sold from time to time.
The Custodian shall not be under any duty or obligation to require the
Fund to deliver to it any securities or funds owned by the Fund and shall have
no responsibility or liability for or on account of securities or funds not so
delivered. The Fund will deposit with the Custodian copies of the Certificate of
Incorporation and By-Laws (or comparable documents) of the Fund and all
amendments thereto, and copies of such votes and other proceedings of the Fund
as may be necessary for or convenient to the Custodian in the performance of its
duties.
-1-
<PAGE>
It is understood that as used in this Agreement, the term "securities"
shall include futures contracts and options.
2. Except for securities and funds held by subcustodians appointed
pursuant to the provisions of Section 3 hereof, the Custodian shall have and
perform the following powers and duties:
A. Safekeeping - To keep safely the securities of the Fund that have been
delivered to the Custodian and from time to time to receive delivery of
securities for safekeeping.
B. Manner of Holding Securities - To hold securities of the Fund (1) by
physical possession of the share certificates or other instruments representing
such securities in registered or bearer form or of the broker's receipts or
confirmations for futures contracts, options and similar securities, or (2) in
book-entry form by a Securities System (as said term is defined in Section 2V).
C. Registered Name; Nominee - To hold registered securities of the Fund
(1) in the name or any nominee name of the Custodian or the Fund, or in the name
or any nominee name of any agent appointed pursuant to Section 6E, or (2) in
street certificate form, so-called, and in any case with or without any
indication of fiduciary capacity.
D. Purchases - Upon receipt of proper instructions, as defined in Section
2Y, insofar as funds are available for the purpose, to pay for and receive
securities purchased for the account of the Fund, payment being made only upon
receipt of the
-2-
<PAGE>
securities; provided, however, that the Custodian may make payment, which may be
prior to receipt of securities, and may accept delivery of securities, including
the form of securities received, in accordance with governmental regulations,
the rules of Securities Systems or other U.S. securities depositories and
clearing agencies, or generally accepted trade practice in the applicable U.S.
market. Receipt of securities on behalf of the Fund shall be by the Custodian or
a Subcustodian or by credit to an account which one of them may have with a
bank, Securities System, other U.S. securities depositary or clearing agency, or
other financial institution approved by the Fund.
E. Exchanges - Upon receipt of proper instructions, to exchange securities
held by it for the account of the Fund for other securities in connection with
any reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event, and to deposit any such securities in accordance with
the terms of any reorganization or protective plan. Without such instructions
the Custodian may surrender securities in temporary form for definitive
securities, may surrender securities for transfer into a name or nominee name as
permitted in Section 2C, and may surrender securities for a different number of
certificates or instruments representing the same number of shares or same
principal amount of indebtedness, provided the securities to be issued are to be
delivered to the Custodian.
-3-
<PAGE>
F. Sales of Securities - Upon receipt of proper instructions, to make
delivery of securities which have been sold for the account of the Fund but only
against payment therefor; provided, however, that the Custodian may make
delivery, which may be prior to receipt of payment, and may accept payment,
including the form of payment received, in accordance with governmental
regulations, the rules of Securities Systems or other U.S. securities
depositories and clearing agencies, or generally accepted trade practice in the
applicable U.S. market. Receipt of payment on behalf of the Fund shall be by the
Custodian or a Subcustodian or by credit to an account which one of them may
have with a bank, Securities System, other U.S. securities depositary or
clearing agency, or other financial institution approved by the Fund.
G. Depositary Receipts - Upon receipt of proper instructions, to instruct
a subcustodian appointed pursuant to Section 3 hereof (a "Subcustodian") or an
agent of the Custodian appointed pursuant to Section 6E hereof (an "Agent") to
surrender securities to the depositary used by an issuer of American Depositary
Receipts or International Depositary Receipts (hereinafter collectively referred
to as "ADRs") for such securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to the Subcustodian
or Agent that the depositary has acknowledged receipt of instructions to issue
with respect to such securities
-4-
<PAGE>
ADRs in the name of the Custodian, or a nominee of the Custodian, for delivery
to the Custodian in Boston, Massachusetts, or at such other place as the
Custodian may from time to time designate.
Upon receipt of proper instructions, to surrender ADRs to the issuer
thereof against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depositary to
deliver the securities underlying such ADRs to a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon receipt of proper
instructions, to deliver to the issuer or Director thereof, or to the agent of
either, warrants, puts, calls futures contracts, options, rights or similar
securities for the purpose of being exercised or sold, provided that the new
securities and cash, if any, acquired by such action are to be delivered to the
Custodian, and, upon receipt of proper instructions, to deposit securities upon
invitations for tenders of securities, provided that the consideration is to be
paid or delivered or the tendered securities are to be returned to the
Custodian.
I. Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to proper instructions relative thereto.
J. Options - Upon receipt of proper instructions, to receive and retain
confirmations or other documents evidencing the
-5-
<PAGE>
purchase or writing of an option on a security or securities index by the Fund;
to deposit and maintain in a segregated account, either physically or by
book-entry in a Securities System, securities subject to a covered call option
written by the Fund; and to release and/or transfer such securities or other
assets only in accordance with a notice or other communication evidencing the
expiration, termination or exercise of such covered option furnished by The
Options Clearing Corporation, the securities or options exchange on which such
covered option is traded or such other organization as may be responsible for
handling such options transactions.
K. Futures Contracts - Upon receipt of proper instructions, to receive and
retain confirmations evidencing the purchase or sale of a futures contract or an
option on a futures contract by the Fund; to deposit and maintain in a
segregated account, for the benefit of any futures commission merchant, assets
designated by the Fund as initial, maintenance or variation "margin" deposits
intended to secure the Fund's performance of its obligations under any futures
contracts purchased or sold or any options on futures contracts written by the
Fund, in accordance with the provisions of any agreement or agreements among any
of the Fund, the Custodian and such futures commission merchant, designed to
comply with the rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations, regarding such
margin deposits; and to release and/or transfer
-6-
<PAGE>
assets in such margin accounts only in accordance with any such agreements or
rules.
L. Borrowings - Upon receipt of proper instructions, to deliver securities
of the Fund to lenders or their agents as collateral for borrowings effected by
the Fund, but only against receipt of the amounts borrowed, provided that if
such collateral is held in book-entry form by a Securities System (as defined in
Section 2V), such collateral may be transferred by book-entry to such lender or
its agent against receipt by the Custodian of an undertaking by such lender to
pay such borrowed money to or upon the Custodian's order on the next business
day following such transfer of collateral.
M. Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of the Fund on the Custodian's books subject only to draft
or order by the Custodian. All funds received by the Custodian from or for the
account of the Fund shall be deposited in said account(s). The responsibilities
of the Custodian to the Fund for deposits accepted on the Custodian's books
shall be that of a U. S. bank for a similar deposit.
If and when authorized by proper instructions, the Custodian may open and
operate an additional account(s) in such other banks or trust companies as may
be designated by the Fund in such instructions (any such bank or trust company
so designated by the Fund being referred to hereafter as a "Banking
Institution"), provided that such account(s) shall be in the name of the
-7-
<PAGE>
Custodian for account of the Fund and subject only to the Custodian's draft or
order. Such accounts may be opened with Banking Institutions in the United
States and in other countries and may be denominated in either U. S. Dollars or
other currencies as the Fund may determine. All such deposits shall be deemed to
be portfolio securities of the Fund and accordingly the responsibility of the
Custodian therefor shall be the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities of the Fund.
N. Interest Bearing Call or Time Deposits - To place interest bearing
fixed term and call deposits with such banks and in such amounts as the Fund may
authorize pursuant to proper instructions. Such deposits may be placed with the
Custodian or with Subcustodians or other Banking Institutions as the Fund may
determine. Deposits may be denominated in U. 5. Dollars or other currencies and
need not be evidenced by the issuance or delivery of a certificate to the
Custodian, provided that the Custodian shall include in its records with respect
to the assets of the Fund, appropriate notation as to the amount and currency of
each such deposit, the accepting Banking Institution, and other appropriate
details. Such deposits, other than those placed with the Custodian, shall be
deemed portfolio securities of the Fund and the responsibilities of the
Custodian therefor shall be the same as those for demand deposit bank accounts
placed with other banks, as described in the second paragraph of Section 2M of
this
-8-
<PAGE>
Agreement. The responsibility of the Custodian for such deposits accepted on
the Custodian's books shall be that of a U. S. bank for a similar deposit.
O. Foreign Exchange Transactions - Pursuant to proper instructions, to
enter into foreign exchange contracts to purchase and sell foreign currencies
for spot and future delivery on behalf and for the account of the Fund, and in
connection therewith to receive and retain receipts, confirmations or other
documents evidencing such contracts and to deposit and maintain cash or
designated securities in a segregated account and to release and/or transfer
assets held in such account only in accordance with such proper instructions.
Such transactions may be undertaken by the Custodian with such Banking
Institutions, including the Custodian and Subcustodian(s) as principals, as
approved and authorized by the Fund. Foreign exchange contracts, other than
those executed with the Custodian, shall be deemed to be portfolio securities of
the Fund and the responsibilities of the Custodian therefor shall be the same as
those for demand deposit bank accounts placed with other banks as described in
the second paragraph of Section 2M of this Agreement.
P. Stock Loans - Upon receipt of proper instructions, to deliver
securities of the Fund, in connection with loans of securities by the Fund, to
the borrower thereof but only against receipt of such collateral as the Fund
shall instruct; except that in connection with any loans for which collateral is
to be
-9-
<PAGE>
credited to the Custodian's Account in a book-entry system referred to in
Section 2V(ii) hereof, the Custodian may deliver securities prior to the credit
of such collateral, provided that the Custodian shall promptly notify the Fund
if such collateral is not credited.
Q. Collections - (i) To collect and receive all income, payments of
principal and other payments with respect to the securities held hereunder, and
in connection therewith to deliver the certificates or other instruments
representing the securities to the issuer thereof or its agent when securities
are called, redeemed, retired, mature or otherwise become payable; provided that
the payment is to be made in such form and at such time as is in accordance with
the terms of the agreement relating to the security, or such proper instructions
as the Custodian may receive, or governmental regulations, the rules of
Securities Systems or other U.S. securities depositories and clearing agencies,
or generally accepted trade practice in the applicable U.S. market; (ii) to
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income, principal or other
payments with respect to securities of the Fund or in connection with transfer
of securities; and (iii) pursuant to proper instructions to take such other
actions with respect to the collection or receipt of funds or transfer of
securities which involve an investment decision.
R. Dividends, Distributions and Redemptions - Upon receipt
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<PAGE>
of proper instructions from the Fund, or upon receipt of instructions from the
Fund's shareholder servicing agent or agent with comparable duties (the
"Shareholder Servicing Agent") (given by such person or persons and in such
manner on behalf of the Shareholder Servicing Agent as the Fund shall have
authorized), the Custodian shall release funds or securities to the Shareholder
Servicing Agent or otherwise apply funds or securities, insofar as available,
for the payment of dividends or other distributions to Fund shareholders. Upon
receipt of proper instructions from the Fund, or upon receipt of instructions
from the Shareholder Servicing Agent (given by such person or persons and in
such manner on behalf of the Shareholder Servicing Agent as the Fund shall have
authorized), the Custodian shall release funds or securities, insofar as
available, to the Shareholder Servicing Agent or as such Agent shall otherwise
instruct for payment to the Fund shareholders who have delivered to such Agent a
request for repurchase or redemption of their shares of capital stock of the
Fund.
S. Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund all
forms of proxies and all notices of meetings and any other notices or
announcements affecting or relating to securities owned by the Fund that are
received by the Custodian, and upon receipt of proper instructions, to execute
and deliver or cause its nominee to execute and deliver such proxies or other
authorizations as may be required. Neither the Custodian nor its
- 11 -
<PAGE>
nominee shall vote upon any of such securities or execute any proxy to vote
thereon or give any consent or take any other action with respect thereto
(except as otherwise herein provided) unless ordered to do so by proper
instructions.
T. Bills - Upon receipt of proper instructions, to pay or cause to be
paid, insofar as funds are available for the purpose, bills, statements, or
other obligations of the Fund.
U. Nondiscretionary Details - Without the necessity of express
authorization from the Fund (1) to attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealings with securities, funds or other property of the Fund held by the
Custodian except as otherwise directed from time to time by the Board of
Directors of the Fund, and (2) to make payments to itself or others for minor
expenses of handling securities or other similar items relating to the
Custodian's duties under this Agreement, provided that all such payments shall
be accounted for to the Fund.
V. Deposit of Fund Assets in Securities Systems - The Custodian may
deposit and/or maintain securities owned by the Fund in (i) The Depository Trust
Company, (ii) any book-entry system as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CRF Part 350, or the book-entry
regulations of federal agencies substantially in the form of Subpart O, or (iii)
any other domestic clearing agency registered with the Securities
- 12 -
<PAGE>
and Exchange Commission under Section 17A of the Securities Exchange Act of 1934
which acts as a securities depository and whose use the Fund has previously
approved in writing (each of the foregoing being referred to in this Agreement
as a "Securities System"). Utilization of a Securities System shall be in
accordance with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
(1) The Custodian may deposit and/or maintain Fund securities, either
directly or through one or more Agents appointed by the Custodian
(provided that any such Agent shall be qualified to act as a
custodian of the Fund pursuant to the Investment Company Act of 1940
and the rules and regulations thereunder), in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian or such Agent in the Securities System
which shall not include any assets of the Custodian or Agent other
than assets held as a fiduciary, custodian, or otherwise for
customers;
(2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
- 13 -
<PAGE>
(3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by the
Custodian or an Agent as referred to above, and be provided to the
Fund at its request. The Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the Fund in
the form of a written advice or notice and shall furnish to the Fund
copies of daily transaction sheets reflecting
- 14 -
<PAGE>
each day's transactions in the Securities System for the account of
the Fund on the next business day;
(4) The Custodian shall provide the Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities
System; and the Custodian and such Agents shall send to the Fund
such reports on their own systems of internal accounting control as
the Fund may reasonably request from time to time.
(5) At the written request of the Fund, the Custodian will terminate the
use of any such Securities System on behalf of the Fund as promptly
as practicable.
W. Other Transfers - To deliver securities, funds and other property of
the Fund to a Subcustodian or another custodian of the Fund; and, upon receipt
of proper instructions, to make such other disposition of securities, funds or
other property of the Fund in a manner other than or for purposes other than as
enumerated elsewhere in this Agreement, provided that the instructions relating
to such disposition shall include a statement of the purpose for which the
delivery is to be made, the amount of
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<PAGE>
securities to be delivered and the name of the person or persons to whom
delivery is to be made.
X. Investment Limitations - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Fund, the Custodian may assume unless and until notified in
writing to the contrary that proper instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Certificate
of Incorporation or By-Laws (or comparable documents) or votes or proceedings of
the shareholders or Directors of the Fund. The Custodian shall in no event be
liable to the Fund and shall be indemnified by the Fund for any violation of any
investment limitations to which the Fund is subject or other limitations with
respect to the Fund's powers to make expenditures, encumber securities, borrow
or take similar actions affecting its portfolio.
Y. Proper Instructions - Proper instructions shall mean a tested telex
from the Fund or a written request, direction, instruction or certification
signed or initialled on behalf of the Fund by one or more person or persons as
the Board of Directors of the Fund shall have from time to time authorized,
provided, however, that no such instructions directing the delivery of
securities or the payment of funds to an authorized signatory of the Fund shall
be signed by such person. Those persons authorized to give proper instructions
may be identified by the Board of
- 16 -
<PAGE>
Directors by name, title or position and will include at least one officer
empowered by the Board to name other individuals who are authorized to give
proper instructions on behalf of the Fund. Telephonic or other oral instructions
given by any one of the above persons will be considered proper instructions if
the Custodian reasonably believes them to have been given by a person authorized
to give such instructions with respect to the transaction involved. Oral
instructions will be confirmed by tested telex or in writing in the manner set
forth above but the lack of such confirmation shall in no way affect any action
taken by the Custodian in reliance upon such oral instructions. Proper
instructions may relate to specific transactions or to types or classes of
transactions, and may be in the form of standing instructions.
Proper instructions may include communications effected directly between
electro-mechanical or electronic devices or systems, in addition to tested
telex, provided that the Fund and the Custodian agree in writing to the use of
such device or system.
Z. Segregated Account - The Custodian shall upon receipt of Proper
Instructions establish and maintain on its books a segregated account or
accounts for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities of the Fund, including securities maintained
by the Custodian pursuant to Section 2V hereof, (i) in accordance with
- 17 -
<PAGE>
the provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934 and a member
of the National Association of Securities Dealers, Inc. (or any futures
commission merchant registered under the Commodity Exchange Act) relating to
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash or securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii) for
the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies, and (iv) as mutually
agreed from time to time between the Fund and the Custodian.
3. Securities, funds and other property of the Fund may be held by
subcustodians appointed pursuant to the provisions of this Section 3 (a
"Subcustodian"). The Custodian may, at any time and from time to time, appoint
any bank or trust company (meeting the requirements of a custodian or a
foreign custodian under the Investment Company Act of 1940 and the rules and
regulations
- 18 -
<PAGE>
thereunder) to act as a Subcustodian for the Fund, provided that the Fund shall
have approved in writing (1) any such bank or trust company and the subcustodian
agreement to be entered into between such bank or trust company and the
Custodian, and (2) the Subcustodian's offices or branches at which the
Subcustodian is authorized to hold securities, cash and other property of the
Fund. Upon such approval by the Fund, the Custodian is authorized on behalf of
the Fund to notify each Subcustodian of its appointment as such. The Custodian
may, at any time in its discretion, remove any bank or trust company that has
been appointed as a Subcustodian.
Those Subcustodians, their offices or branches which the Fund has approved
to date are set forth on Appendix A hereto. Such Appendix shall be amended from
time to time as Subcustodians, branches or offices are changed, added or
deleted. The Fund shall be responsible for informing the Custodian sufficiently
in advance of a proposed investment which is to be held at a location not listed
on Appendix A, in order that there shall be sufficient time for the Fund to
give the approval required by the preceding paragraph and for the Custodian to
put the appropriate arrangements in place with such Subcustodian pursuant to
such subcustodian agreement.
If the Fund shall have invested in a security to be held in a location
before the foregoing procedures have been completed, such security shall be held
by such agent as the Custodian may appoint
- 19 -
<PAGE>
unless and until the Fund shall instruct the Custodian to move the security into
the possession of the Custodian or a Subcustodian. In any event, the Custodian
shall be liable to the Fund for the actions of such agent if and only to the
extent the Custodian shall have recovered from such agent for any damages caused
the Fund by such agent.
With respect to the securities and funds held by a Subcustodian, either
directly or indirectly, including demand and interest bearing deposits,
currencies or other deposits and foreign exchange contracts as referred to in
Sections 2M, 2N or 2O, the Custodian shall be liable to the Fund if and only to
the extent that such Subcustodian is liable to the Custodian and the Custodian
recovers under the applicable subcustodian agreement. The Custodian shall
nevertheless be liable to the Fund for its own negligence in transmitting any
instructions received by it from the Fund and for its own negligence in
connection with the delivery of any securities or funds held by it to any such
Subcustodian.
In the event that any Subcustodian appointed pursuant to the provisions of
this Section 3 fails to perform any of its obligations under the terms and
conditions of the applicable subcustodian agreement, the Custodian shall use its
best efforts to cause such Subcustodian to perform such obligations. In the
event that the Custodian is unable to cause such Subcustodian to perform fully
its obligations thereunder, the Custodian shall
- 20 -
<PAGE>
forthwith upon the Fund's request terminate such Subcustodian and, if necessary
or desirable, appoint another subcustodian in accordance with the provisions of
this Section 3. At the election of the Fund, it shall have the right to enforce,
to the extent permitted by the subcustodian agreement and applicable law, the
Custodian's rights against any such Subcustodian for loss or damage caused the
Fund by such Subcustodian.
At the written request of the Fund, the Custodian will terminate any
Subcustodian appointed pursuant to the provisions of this Section 3 in
accordance with the termination provisions under the applicable subcustodian
agreement. The Custodian will not amend any subcustodian agreement or agree to
change or permit any changes thereunder except upon the prior written approval
of the Fund.
In the event the Custodian intends to make any payment to a Subcustodian
under the indemnification provisions of any subcustodian agreement, the
Custodian shall give the Fund written notice of such intention no less than
thirty (30) days prior to the date such payment is to be made. The Fund shall be
obligated promptly to reimburse the Custodian the amount of such payment, unless
the Fund shall, within thirty (30) days of receipt of the Custodian's notice,
object in writing to such payment to the Subcustodian or to reimbursement of the
Custodian (i) because the fund disputes the right of the Subcustodian to be so
indemnified or (ii) because the Fund believes that the Custodian was or might
- 21 -
<PAGE>
have been responsible by reason of the Custodian's negligence or misconduct for
the event or occurance giving rise to the Subcustodian's demand for
indemnification. In the event the Fund, at the direction of its Board of
Directors or any Executive Committee thereof, shall give written notice of such
objection and the reasons therefor, the Custodian may nevertheless make such
payment to the Subcustodian, but without prejudice to the Fund's right to refuse
to reimburse the Custodian if the Fund's objection under clause (i) or (ii)
above shall be upheld in an appropriate judicial or other proceeding; or in the
alternative, the Custodian may refuse to pay the indemnification demanded by the
Subcustodian and the Custodian shall in such event defend against any judicial
or other proceeding brought against the Custodian by the Subcustodian to obtain
such indemnification. Such defense shall be conducted by counsel reasonably
satisfactory to both the Fund an the Custodian. The Fund shall be entitled to
participate in any such proceeding with separate counsel of its own choice if it
believes its position might otherwise be compromised and, if the Fund or the
Custodian believes there may be a conflict in the respective positions of the
Fund and the Custodian, then each may retain separate counsel of its own choice.
The Fund shall bear the costs and expenses of defending against the
Subcustodian's claim, and the Fund shall indemnify the Custodian and hold it
harmless from all claims, liabilities, judgments, costs and expenses (including
counsel fees) and settlements of such claim
- 22 -
<PAGE>
(provided that such settlement shall have been effected with the Fund's written
consent) incurred or assesssed against the Custodian. Notwithstanding the
foregoing, if it shall be determined in an appropriate proceeding, including in
a proceeding as aforesaid brought by the Subcustodian, that, although the
Subcustodian was entitled to indemnification the Custodian was not entitled to
reimbursement by the Fund because the Custodian was responsible by reason of its
negligence or misconduct for the occurance or event giving rise to the
Subcustodian's right to indemnification, then in such event the Fund shall not
be obligated to indemnify the Custodian as aforesaid and the Custodian shall
reimburse the Fund for any amounts paid by the Fund to Custodian in respect of
the costs and expenses of defending against the Subcustodian's claim.
4. The Custodian may assist generally in the preparation of reports to
Fund shareholders, regulatory authorities and others, audits of accounts, and
other ministerial matters of like nature.
5. The Fund hereby also appoints the Custodian as its financial agent.
With respect to the appointment as financial agent, the Custodian shall have and
perform the following powers and duties:
A. Records - To create, maintain and retain such records relating to its
activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and
- 23 -
<PAGE>
Rules 31a-l and 31a-2 thereunder) and under applicable Federal and State tax
laws and administrative regulations. All such records will be the property of
the Fund and in the event of termination of this Agreement shall be delivered to
the successor custodian.
B. Accounts - To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by proper instructions.
C. Access to Records - Subject to security requirements of the Custodian
applicable to its own employees having access to similar records within the
Custodian and such regulations as may be reasonably imposed by the Custodian,
the books and records maintained by the Custodian pursuant to Sections 5A and 5B
shall be open to inspection and audit at reasonable times by officers of,
attorneys for, and auditors employed by, the Fund.
D. Calculation of Net Asset Value - To compute and determine the net asset
value per share of capital stock of the Fund as of the close of business on the
New York Stock Exchange on each day on which such Exchange is open, unless
otherwise directed by proper instructions. Such computation and determination
shall be made in accordance with (1) the provisions of the Fund's Certificate of
Incorporation or By-Laws of the Fund, as they may from time to time be amended
and delivered to the Custodian, (2) the votes of the Board of Directors of the
Fund at the time in force and applicable, as they may from time to time be
delivered
- 24 -
<PAGE>
to the Custodian, and (3) proper instructions from such officers of the Fund or
other persons as are from time to time authorized by the Board of Directors of
the Fund to give instructions with respect to computation and determination of
the net asset value. On each day that the Custodian shall compute the net asset
value per share of the Fund, the Custodian shall provide the Fund with written
reports which permit the Fund to verify that portfolio transactions have been
recorded in accordance with the Fund's instructions.
In computing the net asset value, the Custodian may rely upon any
information furnished by proper instructions, including without limitation any
information (1) as to accrual of liabilities of the Fund and as to liabilities
of the Fund not appearing on the books of account kept by the custodian, (2) as
to the existence, status and proper treatment of reserves, if any, authorized by
the fund, (3) as to the sources of quotations to be used in computing the net
asset value, including those listed in Appendix B, (4) as to the fair value to
be assigned to any securities or other property for which price quotations are
not readily avilable, and (5) as to the sources of information with respect to
"corporate actions" affecting portfolio securities of the fund, including those
listed in Appendix B. (Information as to "corporate actions" shall include
information as to dividends, distributions, stock splits, stock dividends,
rights offerings, conversions, exchanges, recapitalizations, mergers,
redemptions,
- 25 -
<PAGE>
calls, maturity dates and similar transactions, including the ex-and record
dates and the amounts or other terms thereof.)
In like manner, the Custodian shall compute and determine the net asset
value as of such other times as the Board of Directors of the Fund from time to
time may reasonably request.
Notwithstanding any other provisions of this Agreement, including Section
6C, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 5D: The Custodian shall be held to
the exercise of reasonable care in computing and determining net asset value as
provided in this Section 5D, but shall not be held accountable or liable for any
losses, damages or expenses the Fund or any shareholder or former shareholder of
the Fund may suffer or incur arising from or based upon errors or delays in the
determination of such net asset value unless such error or delay was due to the
Custodian's negligence, gross negligence or reckless or willful misconduct in
determination of such net asset value. (The parties hereto acknowledge, however,
that the Custodian's causing an error or delay in the determination of net asset
value may, but does not in and of itself, constitute negligence, gross
negligence or reckless or willful misconduct.) In no event shall the Custodian
be liable or responsible to the Fund, any present or former shareholder of the
fund or any other party for any error or delay which continued or was undetected
after the date of an audit performed by the certified public accountants
employed by the Fund
- 26 -
<PAGE>
if, in the exercise of reasonable care in accordance with generally accepted
accounting standards, such accountants should have become aware of such error or
delay in the course of performing such audit. The Custodian's liability for any
such negligence, gross negligence or reckless or willful misconduct which
results in an error in determination of such net asset value shall be limited to
the direct, out-of-pocket loss the Fund, shareholder or former shareholder shall
actually incur, measured by the difference between the actual and the
erroneously computed net asset value, and any expenses the fund shall incur in
connection with correcting the records of the Fund affected by such error
(including charges made by the Fund's registrar and transfer agent for making
such corrections) or communicating with shareholders or former shareholders of
the Fund affected by such error.
Without limiting the foregoing, the Custodian shall not be held
accountable or liable to the Fund, any shareholder or former shareholder thereof
or any other person for any delays or losses, damages or expenses any of them
may suffer or incur resulting from (1) the Custodian's failure to receive timely
and suitable notification concerning quotations or corporate actions relating to
or affecting portfolio securities of the fund or (2) any errors in the
computation of the net asset value based upon or arising out of quotations or
information as to corporate actions if received by the Custodian either (i) from
a source which the
- 27 -
<PAGE>
Custodian was authorized pursuant to the second paragraph of this Section 5D to
rely upon, or (ii) from a source which in the Custodian's reasonable judgment
was as reliable a source for such quotations or information as the sources
authorized pursuant to that paragraph. Nevertheless, the Custodian will use its
best judgment in determining whether to verify through other sources any
information it has received as to quotations or corporate actions if the
Custodian has reason to believe that any such information might be incorrect.
In the event of any error or delay in the determination of such net asset
value for which the Custodian may be liable, the Fund and the Custodian will
consult and make good faith efforts to reach agreement on what actions should be
taken in order to mitigate any loss suffered by the Fund or its present or
former shareholders, in order that the custodian's exposure to liability shall
be reduced to the extent possible after taking into account all relevant factors
and alternatives. Such actions might include the Fund or the custodian taking
reasonable steps to collect from any shareholder or former shareholder who has
received any overpayment upon redemption of shares such overpaid amount or to
collect from any shareholder who has underpaid upon a purchase of shares the
amount of such underpayment or to reduce the number of shares issued to such
shareholder. It is understood that in attempting to reach agreement on the
actions to be taken or the amount of the loss which should appropriately be
borne by the
- 28 -
<PAGE>
Custodian, the Fund and the Custodian will consider such relevant factors as the
amount of the loss involved, the Fund's desire to avoid loss of shareholder good
will, the fact that other persons or entitles could have been reasonably
expected to have detected the error sooner than the time it was actually
discovered, the appropriateness of limiting or eliminating the benefit which
shareholders or former shareholders might have obtained by reason of the error,
and the possibility that other parties providing services to the fund might be
induced to absorb a portion of the loss incurred.
E. Disbursements - Upon receipt of proper instructions, to pay or cause to
be paid, insofar as funds are avilable for the purpose, bills, statements and
other obligations of the Fund (including but not limited to interest charges,
taxes, advisory fees, compensation to Fund officers and employees, and other
operating expenses of the Fund).
6. A. The Custodian shall not be liable for any action taken or omitted in
reliance upon proper instructions reasonably believed by it to be genuine or
upon any other written notice, request, direction, instruction, certificate or
other instrument believed by it to be genuine and signed by the proper party or
parties.
The Secretary or Assistant Secretary of the Fund shall certify to the
custodian the names, signatures and scope of authority of all persons authorized
to give proper instructions or
- 29 -
<PAGE>
any other such notice, request, direction, instructions, certificate or
instrument on behalf of the Fund, the names and signatures of the officers of
the Fund, the name and address of the Shareholder Servicing Agent, and any
resolutions, votes, instructions or directions of the Fund's Board of Directors
or shareholders. Such certificate may be accepted and relied upon by the
Custodian as conclusive evidence of the facts set forth therein and may be
considered in full force and effect until receipt of a similar certificate to
the contrary.
So long as and to the extent that it is in the exercise of reasonable care
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement.
The Custodian shall be entitled, at the expense of the Fund, to receive
and act upon advice of counsel (who may be counsel for the Fund) on all matters,
and the Custodian shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
B. With respect to the portfolio securities, cash and other property of
the Fund held by a Securities System, the Custodian shall be liable to the Fund
for any loss or damage to the Fund resulting from use of the Securities System
if caused by any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from any failure
- 30 -
<PAGE>
of the Custodian or any such agent to enforce effectively such rights as it may
have against the Securities System. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to any
claim against the Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the extent that the
Fund has not been made whole for any such loss or damage. The Custodian shall be
subject to the same responsibility with respect to all securities of the Fund,
and all cash, stock dividends, rights and items of like nature to which the Fund
is entitlted, held or received by such Securities System, as if the same where
held or received by the Custodian at its own office.
C. Except as may otherwise be set forth in this Agreement with respect to
particular matters, the Custodian shall be held only to the exercise of
reasonable care and diligence in carrying out the provisions of this Agreement,
provided that the Custodian shall not thereby be required to take any action
which is in contravention of any applicable law. The Fund agrees to indemnify
and hold harmless the Custodian and its nominees from all claims and liabilities
(including counsel fees) incurred or assessed against it or its nominees in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's breach of the relevant standard of conduct set forth in
this Agreement. Without limiting the foregoing indemnification obligation of the
Fund, the Fund agrees to indemnify the Custodian
- 31 -
<PAGE>
and its nominees against any liability the Custodian or such nominee may incur
by reason of taxes assessed to the Custodian or such nominee or other costs,
liability or expense incurred by the Custodian or such nominee resulting
directly or indirectly from the fact that portfolio securities or other property
of the Fund are registered in the name of the Custodian or such nominee.
It is also understood that the Custodian shall not be liable for any loss
involving any securities, currencies, deposits or other property of the Fund,
whether maintained by it, a Subcustodian, an agent of the Custodian or a
Subcustodian, a Securities System or a Banking Institution, or a loss arising
from a foreign currency transaction or contract, resulting from a Sovereign
Risk. A "Sovereign Risk" shall mean nationalization, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar action
by any governmental authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting the
Fund's property; or acts of war, terrorism, insurrection or revolution; or any
other similar act or event beyond the Custodian's control.
D. The Custodian shall be entitled to receive reimbursement from the Fund
on demand, in the manner provided in Section 7, for its cash disbursements,
expenses and charges (including the fees and expenses of any Subcustodian or any
Agent) in connection with
- 32 -
<PAGE>
this Agreement, but excluding salaries and usual overhead expenses.
E. The Custodian may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company as its agent (an
"Agent") to carry out such of the provisions of this Agreement as the Custodian
may from time to time direct, provided, however, that the appointment of such
Agent (other than an Agent appointed pursuant to the third paragraph of Section
3) shall not relieve the Custodian of any of its responsibilities under this
Agreement.
F. Upon request, the Fund shall deliver to the Custodian such proxies,
power of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
7. The Fund shall pay the Custodian a custody fee based on such fee
schedule as may from time to time be agreed upon in writing by the Custodian and
the Fund. Such fee, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 6D, shall be billed to the Fund in such a
manner as to permit payment either by a direct cash payment to the Custodian or
by placing Fund portfolio transactions with the Custodian resulting in an
agreed-upon amount of commissions being paid to the Custodian within an
agreed-upon period of time.
- 33 -
<PAGE>
8. This Agreement shall continue in full force and effect until terminated
by either party by an instrument in writing delivered or mailed, postage
prepaid, to the other party, such termination to take effect not sooner than
sixty (60) days after the date of such delivery or mailing. In the event of
termination the Custodian shall be entitled to receive prior to delivery of the
securities, funds and other property held by it all accrued fees and
unreimbursed expenses the payment of which is contemplated by Sections 6D and 7,
upon receipt by the Fund of a statement setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is agreed
that the funds and securities owned by the Fund and held by the Custodian or any
Subcustodian shall be delivered to the successor custodian, and the Custodian
agrees to cooperate with the Fund in execution of documents and performance of
other actions necessary or desirable in order to substitute the successor
custodian for the Custodian under this Agreement.
9. This Agreement constitutes the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be amended or terminated except by a statement in writing
signed by the party against which enforcement of the amendment or termination is
sought.
In connection with the operation of this Agreement, the Custodian and the
Fund may agree in writing from time to time on
- 34 -
<PAGE>
such provisions interpretative of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. No interpretative or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of this Agreement.
10. This instrument is executed and delivered in The Commonwealth of
Massachusetts and shall be governed by and construed according to the laws of
said Commonwealth.
11. Notices and other writings delivered or mailed postage prepaid to the
fund addressed to the Fund at 175 Federal Street, Boston, Massachusetts 02110 or
to such other address as the Fund may have designated to the Custodian in
writing, or to the Custodian at 40 Water Street, Boston, Massachusetts 02109,
Attention: Manager, Securities Department, or to such other address as the
Custodian may have designated to the Fund in writing, shall be deemed to have
been properly delivered or given hereunder to the respective addressee.
12. This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party.
13. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original. This Agreement shall become effective when
one or more counterparts have been signed and delivered by each of the parties.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
SCUDDER PACIFIC
OPPORTUNITIES FUND BROWN BROTHERS HARRIMAN & CO.
By /s/ David S. Lee per pro /s/ R. A. Hill
------------------------ ------------------------
- 36 -
<PAGE>
BROWN BROTHERS HARRIMAN & CO - GLOBAL CUSTODY NETWORK
SCUDDER PACIFIC OPPORTUNITIES FUND
APPENDIX A
COUNTRY SUBCUSTODIAN CENTRAL
- ------- ------------ DEPOSITORY
----------
AUSTRALIA NATIONAL AUSTRALIA BANK LTD AGMT 05/01/85 AUSTRACLEAR
NAB AMENDMENT 02/13/92
HONG KONG CHASE MANHATTAN BANK, HONG KONG AGMT 06/04/79 CCASS
CMB HONG KONG AGMT AMENDMENT 09/17/90
CMB HONG KONG AGMT SUPPLEMENT 08/12/92
INDONESIA CITIBANK N A, JAKARTA AGMT 07/16/81* NONE
KOREA CITIBANK N A, SEOUL AGMT 07/16/81* KSSC
MALAYSIA HONGKONG & SHANGHAI BKG CORP, KUALA LUMPUR NONE
HSBC REGIONAL AGMT 04/19/91
NEW ZEALAND NATIONAL AUSTRALIA BANK LTD AGMT 05/01/85 NONE
NAB AMENDMENT 02/13/92
NEW ZEALAND ADDENDUM 03/07/89
PAKISTAN STANDARD CHARTERED BANK, KARACHI NONE
SCB REGIONAL AGMT 02/18/92
PHILIPPINES CITIBANK N A, MANILA AGMT 07/16/81* NONE
SINGAPORE CHASE MANHATTAN BANK, SINGAPORE AGMT 06/09/80 CDP
CMB SINGAPORE AGMT AMENDMENT 09/17/90
SRI LAKKA HONGKONG & SHANGHAI BKG CORP, COLOMBO CDS
HSBC REGIONAL AGMT 04/19/91
TAIWAN STANDARD CHARTERED BANK, TAIPEI TSCD
SCB REGIONAL AGMT 02/18/92
THAILAND HONGKONG & SHANGHAI BKG CORP, SINGAPORE FOR SDC
BANGKOK - HSBC REGIONAL AGMT 04/19/91
TRANSNATIONAL BROWN BROTHERS HARRIMAN & CO EUROCLEAR
CEDEL
* CITIBANK N A AGREEMENT AMENDMENT DATED 8/31/90
I HEREBY CERTIFY THAT AT ITS MEETING ON September 17, 1992 THE BOARD APPROVED
THE COUNTRIES, SUBCUSTODIANS, AGREEMENTS, AND CENTRAL DEPOSITORIES LISTED ON
THIS APPENDIX.
/s/ David S. Lee November 25, 1992
- --------------------------- ------------------------
(SIGNATURE) (DATE)
Vice President
- ---------------------------
(TITLE)
<PAGE>
APPENDIX B
SCUDDER PACIFIC OPPORTUNITIES FUND
THE FOLLOWING AUTHORIZED SOURCES ARE TO BE USED FOR PRICING AND FOREIGN EXCHANGE
QUOTATIONS, CORPORATE ACTIONS, DIVIDENDS AND RIGHTS OFFERINGS:
AUTHORIZED SOURCES
------------------
QUOTRON
REUTERS
INTERACTIVE DATA CORPORATION
VALORINFORM (GENEVA)
TELEKURS
SUBSCRIPTION BANKS
FUND MANAGERS
EXTEL (LONDON)
REPUTABLE FOREIGN BROKERS
APPROVED: /s/ David S. Lee 11/25/92
--------------------------------
DATE
Exhibit 8(a)(5)
Effective November 1, 1981
SCHEDULE OF CHARGES
SCUDDER INTERNATIONAL FUND
CUSTODY, BOOKKEEPING, PRICING ONCE A DAY
Quarterly Rate CUMULATED
of Fee % FUND ASSETS ANNUAL FEE ANNUAL FEE
- -------------- ----------- ---------- ----------
.050 on First $1,000,000 $ 2,000 $ 2,000
.010 on next $29,000,000 $ 11,600 $13,600
.009 on next $10,000,000 $ 3,600 $17,200
.008 on next $10,000,000 $ 3,200 $20,400
Fee on a $50,000,000 Fund $ 20,400
.007 on next $50,000,000 $ 14,000 $34,400
Fee on a $100,000,000 Fund $ 34,400
.006 on all assets above $100,000,000
An activity charge of $10 will be made for each transaction including short-term
instruments and maturities.
You would have the option of paying all fees and charges in brokerage at the
rate of $2 of brokerage for each $1 of cash fee.
Minimum fee $20,000 per year.
To the above fees and charges would be added out-of-pocket expenses including
but not limited to telephone, telex, postage and insurance, taxes or duties.
The fees and expenses of Subcustodians will be the responsibility of the client.
Exhibit 8(b)(1)
MASTER SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of November 8, 1976, between Brown Brothers Harriman &
Co., a limited partnership organized under the laws of the State of New York
(the "Custodian"), and Morgan Guaranty Trust Company of New York, Tokyo office
(the "Subcustodian").
WITNESSETH:
WHEREAS, the Custodian has entered into certain custodian agreements and
may in the future enter into additional custodian agreements whereby cash and
securities will be held outside the United States;
WHEREAS, the Custodian desires to utilize subcustodians for the purpose of
holding cash and securities outside the United States; and
WHEREAS, the Subcustodian is willing to enter into an agreement whereby it
may, from time to time, be appointed as subcustodian for the Custodian's
customers (each such customer shall hereinafter be referred to as a "Customer");
NOW, THEREFORE, the Custodian and Subcustodian hereby agree as follows:
I. Upon the terms and conditions set forth in this Agreement and subject in
each case to acceptance by
<PAGE>
the Subcustodian, the Subcustodian may, at any time and from time to time, be
appointed as subcustodian for a Customer by delivery to the Subcustodian of a
letter substantially in the form of Exhibit A hereto.
II. The Custodian may from time to time deposit securities or cash with the
Subcustodian. The Subcustodian shall not be responsible for any property of the
Customer not delivered to the Subcustodian.
III. The Subcustodian shall hold and dispose of the securities hereafter
held by or deposited with the Subcustodian as follows:
A. The Subcustodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or
corporations, pursuant to the provisions hereof, all securities received by
it for the account of the Custodian as custodian for the Customer. All such
securities are to be held or disposed of by the Subcustodian for, and
subject at all times to the instructions of, the Custodian pursuant to the
terms of this Agreement.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall release or deliver securities owned by the Customer only for
-2-
<PAGE>
the following purposes:
(1) upon sale of securities for the account of the Customer
against receipt of payment therefor by cash, certified or cashier's
check, or bank credit;
(2) to the issuer thereof or its agent when securities are
called, redeemed, retired or otherwise become payable, provided that
the cash is to be delivered to the Subcustodian;
(3) for exchange for a different number of bonds or certificates
representing the same aggregate face amount or number of units, for
exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Subcustodian;
(4) in the case of warrants, rights or similar securities, the
surrender thereof in
-3-
<PAGE>
the exercise of such warrants, rights or similar securities; provided
that the surrender of interim receipts or temporary securities for
definitive securities may be made at any time; provided that, in any
such case, the securities are to be delivered to the Subcustodian;
(5) in the case of tender offers or similar offers to purchase
received in writing, the delivery of securities to the designated
depository or other receiving agent. The Subcustodian shall have full
responsibility for transmitting to the Custodian any such offers
received by it. Thereafter, the Custodian, if it desires to respond to
such offer, shall have full responsibility for providing the
Subcustodian with all necessary instructions in timely enough fashion
for the Subcustodian to act thereon prior to any expiration time for
such offer;
(6) upon receipt from the Custodian of instructions directing
disposition of securities in a manner other than or for purposes other
than the manners and purposes enumerated in the foregoing five items;
provided, however,
-4-
<PAGE>
that disposition pursuant to this item (6) shall be made by the
Subcustodian only upon receipt of instructions from the Custodian
specifying the amount of such securities to be delivered, the purpose
for which the delivery is to be made, and the name of the person or
persons to whom such delivery is to be made.
IV. The Subcustodian shall hold and dispose of cash hereafter held by or
deposited with the Subcustodian as follows:
A. The Subcustodian shall open and maintain with the Tokyo office of
Morgan Guaranty Trust Company of New York a separate account or accounts in
the name of the Custodian as custodian for the Customer, subject only to
draft or order by the Subcustodian acting pursuant to the terms of this
Agreement. The Subcustodian shall hold in such account or accounts, subject
to the provisions hereof, all cash received by it for the account of the
Custodian as custodian for the Customer.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall make payments
-5-
<PAGE>
of cash for the account of the Customer from such cash only for the
following purposes:
(1) upon the purchase of securities for the account of the
Customer but only against the delivery of such securities to the
Subcustodian;
(2) in connection with the subscription, conversion, exchange,
tender or surrender of securities owned by the Customer as set forth
in Paragraph IIIB hereof; and
(3) for deposit with the Custodian or with such other banking
institutions as may from time to time be approved by the Customer.
V. All instructions shall be in writing executed by the Custodian, and the
Subcustodian shall not be required to act on instructions otherwise
communicated; provided, however, that the Subcustodian may in its discretion act
on the basis of instructions received via telecommunications facilities if the
Subcustodian reasonably believes such instructions to have been dispatched by
the Custodian. The Subcustodian may require that instructions received via
telecommunications facilities be authenticated. The Subcustodian shall be
protected in acting upon any instructions, notice, request, con-
-6-
<PAGE>
sent, certificate or other instrument or paper reasonably believed by it to be
genuine and to have been properly executed. The Subcustodian may receive and
accept a certificate signed by a partner of the Custodian as conclusive evidence
of the authority of any person to act on behalf of the Custodian, and such
certificate may be considered as in full force and effect until receipt by the
Subcustodian of written notice to the contrary.
VI. Unless and until the Subcustodian receives. instructions from the
Custodian to the contrary, the Subcustodian shall:
A. Present for payment all coupons and other income items held by it
for the account of the Custodian as custodian for the Customer which call
for payment upon presentation and hold the cash received by it upon such
payment for the account of the Custodian as custodian for the Customer;
B. Collect interest and cash dividends received, with notice to the
Custodian, for the account of the Custodian as custodian for the Customer;
C. Hold for the account of the Custodian as custodian for the Customer
hereunder all stock dividends, rights and similar securities issued with
-7-
<PAGE>
respect to any securities held by it hereunder.
VII. The Subcustodian shall execute on behalf of the Custodian, in the
Customer's name, any declarations, affidavits, or certificates of ownership
which may be necessary or useful from time to time for the Subcustodian to
perform any or several of its obligations arising under the provisions of this
Agreement.
VIII. If the Subcustodian shall receive any notices or reports in respect
of securities held by it hereunder, it shall promptly upon receipt thereof
transmit to the Custodian by airmail, telecommunications facilities, or
comparable means any such notices or reports.
IX. The Subcustodian may, from time to time, appoint other offices of
Morgan Guaranty Trust Company of New York (located outside the United States)
and such other persons as are approved in advance by the Custodian and the
Customer ("Additional Subcustodians") for purposes of acquiring, holding or
disposing of securities outside of Japan. The Subcustodian shall be fully liable
to the Custodian for the acts or omissions of such Additional Subcustodians to
the same extent as if the acts or omissions of the Additional Subcustodians were
the acts or
-8-
<PAGE>
omissions of the Subcustodian. Upon receipt of instructions from the Custodian,
the Subcustodian shall terminate any Additional Subcustodians appointed pursuant
to the provisions of this paragraph in the manner provided in the applicable
agreement.
The Subcustodian shall transmit to Additional Subcustodians any
instructions received from the Custodian concerning the acquisition, custody or
disposition of securities by Additional Subcustodians and shall transmit to the
Custodian any notices or reports received from Additional Subcustodians in
respect of securities held by such Additional Subcustodians.
X. The Subcustodian may, from time to time, appoint (and may at any time
remove) any bank or trust company as its agent for purposes of acquiring or
disposing of securities or carrying out such provisions of this Agreement as the
Subcustodian may, from time to time, direct; provided that the Subcustodian
shall be fully liable to the Custodian for the acts or omissions of such agents
to the same extent as if the acts or omissions of the agents were the acts or
omissions of the Subcustodian.
-9-
<PAGE>
XI. On each day on which there is a cash or securities transaction over the
account of the Custodian as custodian for the Customer, the Subcustodian shall
dispatch to the Custodian (and to the Customer if requested) separate cash and
securities advices. The Subcustodian shall furnish the Custodian at the end of
every month with a statement of the cash and securities held by the
Subcustodian and any Additional Subcustodians and a summary of all transactions
effected over the account. Such statements and summaries shall be sent by air
mail, telecommunications facilities or comparable means to the Custodian within
15 days after the end of each month. Upon request of the Custodian, additional
statements will be furnished at the expense of the Custodian.
XII. As compensation for the services rendered pursuant to this Agreement,
the Custodian shall pay the Subcustodian a fee computed in accordance with the
schedule attached hereto as Exhibit B, as such schedule may be amended from time
to time by written agreement between the Custodian and the Subcustodian. The
Custodian shall reimburse the Subcustodian for any reasonable out-of-pocket
expenses incurred by the Subcustodian in connection with its obligations
hereunder (including the fees and reasonable
-10-
<PAGE>
out-of-pocket expenses of Additional Subcustodians and agents).
XIII. Upon request, the Custodian shall deliver or shall request the
Customer to deliver, to the Subcustodian, such proxies, powers-of-attorney or
other instruments as may be necessary or desirable in connection with the
performance by the Subcustodian of its obligations under this Agreement.
XIV. So long as and to the extent that it is in the exercise of reasonable
care, the Subcustodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement. The Subcustodian shall not be liable
for any action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be genuine and to
be signed by the proper party or parties. The Subcustodian shall be obligated
to exercise reasonable care and diligence in carrying out the provisions of this
Agreement; provided that the Subcustodian shall not thereby be required to take
any action which is in contravention of the laws of Japan or any other
applicable law. Notwithstanding the foregoing, the
-11-
<PAGE>
Subcustodian shall not be liable for (a) any violation by the Customer of any
limitation applicable to its powers to make expenditures, to invest in or pledge
securities or to borrow which does not involve action by the Subcustodian, and
(b) any violation by the Customer of any limitation applicable to its powers to
make investments, to invest in or pledge securities or to borrow which involves
action by the Subcustodian, provided that such action was authorized in
accordance with Paragraphs III, IV or V hereof. The Subcustodian shall be
entitled to and may act upon advice of counsel (who may be counsel for the
Customer) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
XV. This Agreement may be terminated at any time by the Custodian or the
Subcustodian by giving written notice to the other party at least thirty (30)
days prior to the date on which such termination is to become effective. Such
termination shall, inter alia, constitute a revocation of the Subcustodian's
authority to act on behalf of all Customers (including all authority granted to
the Subcustodian under any power-of-attorney executed in connection with this
Agreement). In the event of termination, the Subcustodian will deliver any
securities held
-12-
<PAGE>
by it or any Additional Subcustodians to the Custodian or to such successor
subcustodian as the Custodian shall instruct in a manner to be mutually agreed
upon by the parties hereto or in the failure of such agreement in a reasonable
manner. Further in the event of termination, the Subcustodian shall be entitled
to receive prior to the delivery of the securities held by it or any Additional
Subcustodians all accrued fees and unreimbursed expenses the payment of which is
contemplated by Paragraph XII hereof upon receipt by the Custodian of a final
statement setting forth such fees and expenses.
XVI. Except as the parties shall from time to time otherwise agree, all
instructions, notices, reports and other communications contemplated by this
Agreement shall be dispatched as follows:
If to the Custodian: Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Attention: Manager -
Securities Department
Telex No.: 940709
If to the Subcustodian: Morgan Guaranty Trust Company
of New York
New Yurakucho Building
12-1, 1-chome, Yuraku-cho
Chiyoda-ku
Tokyo, Japan
Attention: Custody Section
Telex No.: 78122805
-13-
<PAGE>
XVII. This Agreement constitutes the entire understanding and agreement of
the parties hereto, and neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated except by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
XVIII. This Agreement shall be binding upon and shall inure to the benefit
of the Custodian and the Subcustodian and their successors and assignees
provided that neither the Custodian nor the Subcustodian may assign this
Agreement or any of the rights or obligations hereunder without the prior
written consent of the other party.
XIX. This Agreement shall be construed in accordance with and governed by
the laws of the State of New York. The parties hereto agree that
notwithstanding any provision or provisions of this Agreement of apparent
contrary effect, the Subcustodian shall have no obligation to take any action
which is contrary to any or several provisions of the laws, orders or
regulations of Japan. The Subcustodian shall not be liable for any expense or
damage to the Custodian or the Customer that may result from violation of any or
several of the foregoing laws, orders
-14-
<PAGE>
and regulations, except as such expense or damage is caused by the wilful
misconduct or negligence of the Subcustodian.
XX. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. This Agreement shall become effective when one or more
counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROWN BROTHERS HARRIMAN & CO.
(the "Custodian")
Per Pro /s/ [illegible]
----------------------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
TOKYO OFFICE
(the "Subcustodian")
By /s/ H. Louis Bailey
--------------------------
[illegible] Vice Pres.
-15-
<PAGE>
BROWN BROTHERS HARRIMAN & CO. 40 WATER STREET
BOSTON o NEW YORK o PHILADELPHIA BOSTON, MASSACHUSETTS 02109
PRIVATE BANKERS (617) 742-7700
November 16, 1976
Morgan Guaranty Trust Company of New York
New Yurakucho Building
12-1, 1-chome, Yuraku-cho
Chiyoda-ku
Tokyo, Japan
Dear Sirs:
Pursuant to the terms and conditions of the Master Subcustodian Agreement
(the "Agreement") dated as of November 8, 1976, between Brown Brothers Harriman
& Co. and yourself, you are hereby appointed subcustodian for Scudder
International Fund, Inc. a Maryland Corporation having its principal place of
business at 345 Park Avenue, New York, New York 10022.
In connection with your appointment, we hereby deliver the following
documents:
1. A certificate signed by the Secretary of the Company as to
resolutions adopted by the Board of Directors: and
2. A power of attorney signed by a duly authorized officer of the
Company
If you accept this appointment, please sign and return the enclosed copy of
this letter, whereupon the appointment shall become a binding agreement.
Very truly yours,
/s/ [illegible]
per pro Brown Brothers Harriman & Co.
Accepted and agreed
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
TOKYO OFFICE
By /s/ H. Louis Bailey
-------------------------------
Dated: Nov 22, 1976
<PAGE>
CERTIFICATE
I hereby certify to Morgan Guaranty Trust Company of New York, Tokyo
Office, that at a meeting of the Board of Directors of Scudder International
Fund, Inc., a corporation organized under the laws of Maryland, duly called and
held at 10:00 A.M., on the 20th day of October, 1976, the following resolutions
were duly adopted and are now in full force and effect:
"RESOLVED, that Morgan Guaranty Trust Company, Tokyo Office (the
"Bank") is designated as subcustodian for the safekeeping of securities and
funds of the Corporation pursuant to the terms and conditions of the Master
Subcustodian Agreement (the "Agreement") dated as of November 8th, 1976,
between Brown Brothers Harriman & Co. (the "Custodian") and the Bank, such
securities and funds to be held and disposed of by the Bank as subcustodian
for the Corporation pursuant to the terms and conditions of the Agreement;
FURTHER RESOLVED, that securities so held by the Bank may be held,
endorsed and delivered in the name or names of its nominee or nominees; and
FURTHER RESOLVED, that deposits and withdrawals of securities and
funds into and from the subcustody accounts of the Corporation may be made
upon the authorization of the Custodian."
IN WITNESS WHEREOF, I have hereunto set my hand as assistant secretary of
said corporation and affixed the corporate seal this 16th day of November 1976.
/s/ [illegible]
----------------------------
Assistant Secretary
[CORPORATE SEAL]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
THAT, the UNDERSIGNED hereby appoints Morgan Guaranty Trust Company of New
York, Tokyo Office, New Yurakucho Building, 12-1 1-chome, Yuraku-cho,
Cheyoda-ku, Tokyo, Japan (the "Bank") as its true and lawful proxy in its behalf
and authorizes the Bank to do the following:
1. To arrange for the acquisition in the undersigned's name of shares,
bonds, debentures and any and all other types of securities
(hereinafter collectively referred to as "Securities"), in accordance
with the instructions given by Brown Brothers Harriman & Co. (the
"Custodian"), including, without limitation, filing applications for
any validation, license or approval required from the Japanese
government in connection with such acquisition;
2. To apply for and effect transfer of title to the undersigned's name in
the proper register with respect to the Securities acquired and to act
as the standing proxy in Japan of
<PAGE>
the undersigned with regard to the receipt of any and all notices
related to the Securities and the exercise of the undersigned's rights
as the holder thereof;
3. To arrange for the sale or other disposal of the Securities on behalf
of the undersigned upon specific instructions of the Custodian, and to
collect and receive the proceeds from such sale or disposition;
4. To receive the payment of dividends, distributions of profits,
interest and/or any other income from the Securities owned by the
undersigned;
5. To perform, even in the absence of explicit instructions, any and all
matters necessary or advisable, in the sole discretion of the Bank,
for protection of the undersigned's interests with respect to the
Securities;
6. To perform any and all procedures necessary or incidental for the
preservation of the privilege and benefit with regard to the taxation
granted to foreign investors under the Japanese tax laws or
international treaties, agreements
-2-
<PAGE>
or conventions to which Japan is a party.
IN WITNESS WHEREOF, the undersigned have executed this power of attorney on
this 16th day of November, 1976.
/s/ Scudder International Fund, Inc.
------------------------------------
(Customer)
By: /s/ David S. Lee
------------------------------------
Vice President
/s/ Dennis M. Cronin, Jr.
- --------------------------------
Notary Public
(or equivalent Public official)
Dennis M. Cronin, Jr.
MY COMMISSION EXPIRES OCTOBER 4, 1979
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, TOKYO OFFICE
EXHIBIT 8(b)(2)
Fee Schedule for Acting as Custodian
and Standing Proxy
------------------------------------
1. Safekeeping Charges. Yen 2.00 per share per annum for the first 10,000
shares. Yen 1.50 per share per annum for 10,001 shares or over to 100,000
shares. Yen 1.25 per share per annum for 100,001 shares or over to 1,000,000
shares. Yen 1.00 per share per annum for 1,000,001 shares or over to 5,000,000
shares. For 5,000,001 shares and over, reasonable rates to be agreed upon by the
Custodian and Subcustodian. Minimum Charge: Yen 20,000 per year.
2. Activity Charges. Yen 3,500 for each transaction over the account.
Exhibit 8(c)(1)
MASTER SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of November 15, 1976, between Brown Brothers Harriman &
Co., a limited partnership organized under the laws of the State of New York
(the "Custodian"), and Morgan Guaranty Trust Company of New York, Brussels
office (the "Subcustodian")
W I T N E S S E T H :
WHEREAS, the Custodian has entered into certain custodian agreements and
may in the future enter into additional custodian agreements whereby cash and
securities will be held outside the United States;
WHEREAS, the Custodian desires to utilize subcustodians for the purpose of
holding cash and securities outside the United States; and
WHEREAS, the Subcustodian is willing to enter into an agreement whereby it
may, from time to time, be appointed as subcustodian for the Custodian's
customers (each such customer shall hereinafter be referred to as a "Customer");
NOW, THEREFORE, the Custodian and Subcustodian hereby agree as follows:
I. Upon the terms and conditions set forth in this Agreement and subject in
each case to acceptance by
<PAGE>
the Subcustodian, the Subcustodian may, at any time and from time to time, be
appointed as subcustodian for a Customer by delivery to the Subcustodian of a
letter substantially in the form of Exhibit A hereto.
II. The Custodian may from time to time deposit securities or cash with the
Subcustodian. The Subcustodian shall not be responsible for any property of the
Customer not delivered to the Subcustodian.
III. The Subcustodian shall hold and dispose of the securities hereafter
held by or deposited with the Subcustodian as follows:
A. The Subcustodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or
corporations, pursuant to the provisions hereof, all securities received by
it for the account of the Custodian as custodian for the Customer. All such
securities are to be held or disposed of by the Subcustodian for, and
subject at all times to the instructions of, the Custodian pursuant to the
terms of this Agreement.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall release or deliver securities owned by the Customer only for
-2-
<PAGE>
the following purposes:
(1) upon sale of securities for the account of the Customer
against receipt of payment therefor by cash, certified or cashier's
check, or bank credit;
(2) to the issuer thereof or its agent when securities are
called, redeemed, retired or otherwise become payable, provided that
the cash is to be delivered to the Subcustodian;
(3) for exchange for a different number of bonds or certificates
representing the same aggregate face amount or number of units, for
exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Subcustodian;
(4) in the case of warrants, rights or similar securities, the
surrender thereof in
-3-
<PAGE>
the exercise of such warrants, rights or similar securities; provided
that the surrender of interim receipts or temporary securities for
definitive securities may be made at any time; provided that, in any
such case, the new securities are to be delivered to the Subcustodian;
(5) in the case of tender offers or similar offers to purchase
received in writing, the delivery of securities to the designated
depository or other receiving agent. The Subcustodian shall have full
responsibility for transmitting to the Custodian any such offers
received by it. Thereafter, the Custodian, if it desires to respond to
such offer, shall have full responsibility for providing the
Subcustodian with all necessary instructions in timely enough fashion
for the Subcustodian to act thereon prior to any expiration time for
such offer;
(6) upon receipt from the Custodian of instructions directing
disposition of securities in a manner other than or for purposes other
than the manners and purposes enumerated in the foregoing five items;
provided, however,
-4-
<PAGE>
that disposition pursuant to this item (6) shall be made by the
Subcustodian only upon receipt of instructions from the Custodian
specifying the amount of such securities to be delivered, the purpose
for which the delivery is to be made, and the name of the person or
persons to whom such delivery is to be made.
IV. The Subcustodian shall hold and dispose of cash hereafter held by or
deposited with the Subcustodian as follows:
A. The Subcustodian shall open and maintain with the Brussels office
of Morgan Guaranty Trust Company of New York a separate account or accounts
in the name of the Custodian as custodian for the Customer, subject only to
draft or order by the Subcustodian acting pursuant to the terms of this
Agreement. The Subcustodian shall hold in such account or accounts, subject
to the provisions hereof, all cash received by it for the account of the
Custodian as custodian for the Customer.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall make payments
-5-
<PAGE>
of cash for the account of the Customer from such cash only for the
following purposes:
(1) upon the purchase of securities for the account of the
Customer but only against the delivery of such securities to the
Subcustodian;
(2) in connection with the subscription, conversion, exchange,
tender or surrender of securities owned by the Customer as set forth
in Paragraph IIIB hereof; and
(3) for deposit with the Custodian or with such other banking
institutions as may from time to time be approved by the Customer.
V. All instructions shall be in writing executed by the Custodian, and the
Subcustodian shall not be required to act on instructions otherwise
communicated; provided, however, that the Subcustodian may in its discretion act
on the basis of instructions received via telecommunications facilities if the
Subcustodian reasonably believes such instructions to have been dispatched by
the Custodian. The Subcustodian may require that instructions received via
telecommunications facilities be authenticated. The Subcustodian shall be
protected in acting upon any instructions, notice, request, con-
-6-
<PAGE>
sent, certificate or other instrument or paper reasonably believed by it to be
genuine and to have been properly executed. The Subcustodian may receive and
accept a certificate signed by a partner of the Custodian as conclusive evidence
of the authority of any person to act on behalf of the Custodian, and such
certificate may be considered as in full force and effect until receipt by the
Subcustodian of written notice to the contrary.
VI. Unless and until the Subcustodian receives instructions from the
Custodian to the contrary, the Subcustodian shall:
A. Present for payment all coupons and other income items held by it
for the account of the Custodian as custodian for the Customer which call
for payment upon presentation and hold the cash received by it upon such
payment for the account of the Custodian as custodian for the Customer;
B. Collect interest and cash dividends received, with notice to the
Custodian, for the account of the Custodian as custodian for the Customer;
C. Hold for the account of the Custodian as custodian for the Customer
hereunder all stock dividends, rights and similar securities issued with
-7-
<PAGE>
respect to any securities held by it hereunder.
VII. The Subcustodian shall execute on behalf of the Custodian, in the
Customer's name, any declarations, affidavits, or certificates of ownership
which may be necessary or useful from time to time for the Subcustodian to
perform any or several of its obligations arising under the provisions of this
Agreement.
VIII. If the Subcustodian shall receive any notices or reports in respect
of securities held by it hereunder, it shall promptly upon receipt thereof
transmit to the Custodian by airmail, telecommunications facilities, or
comparable means any such notices or reports.
IX. The Subcustodian may, from time to time, appoint other offices of
Morgan Guaranty Trust Company of New York (located outside the United States)
and such other persons as are approved in advance by the Custodian and the
Customer ("Additional Subcustodians") for purposes of acquiring holding or
disposing of securities outside of Belgium. The Subcustodian shall be fully
liable to the Custodian for the acts or omissions of such Additional
Subcustodians to the same extent as if the acts or omissions of the Additional
Subcustodians were the acts or
-8-
<PAGE>
omissions of the Subcustodian. Upon receipt of instructions from the Custodian,
the Subcustodian shall terminate any Additional Subcustodians appointed
pursuant to the provisions of this paragraph in the manner provided in the
applicable agreement.
The Subcustodian shall transmit to Additional Subcustodians any
instructions received from the Custodian concerning the acquisition, custody or
disposition of securities by Additional Subcustodians and shall transmit to the
Custodian any notices or reports received from Additional Subcustodians in
respect of securities held by such Additional Subcustodians.
X. The Subcustodian may, from time to time, appoint (and may at any time
remove) any bank or trust company as its agent for purposes of acquiring or
disposing of securities or carrying out such provisions of this Agreement as the
Subcustodian may, from time to time, direct; provided that the Subcustodian
shall be fully liable to the Custodian for the acts or omissions of such agents
to the same extent as if the acts or omissions of the agents were the acts or
omissions of the Subcustodian.
-9-
<PAGE>
XI. On each day on which there is a cash or securities transaction over the
account of the Custodian as custodian for the Customer, the Subcustodian shall
dispatch to the Custodian (and to the Customer if requested) separate cash and
securities advices. The Subcustodian shall furnish the Custodian at the end of
every month with a statement of the cash and securities held by the
Subcustodian and any Additional Subcustodians. Such statements shall be sent by
air mail, telecommunications facilities or comparable means to the Custodian
within 15 days after the end of each month. The Subcustodian shall furnish the
Custodian with such additional statements as the Custodian may reasonably
request.
XII. As compensation for the services rendered pursuant to this Agreement,
the Custodian shall pay the Subcustodian a fee computed in accordance with the
schedule attached hereto as Exhibit B, as such schedule may be amended from time
to time by written agreement between the Custodian and the Subcustodian. The
Custodian shall reimburse the Subcustodian for any reasonable out-of-pocket
expenses incurred by the Subcustodian in connection with its obligations
hereunder (including the fees and reasonable
-10-
<PAGE>
out-of-pocket expenses of Additional Subcustodians and agents).
XIII. Upon request, the Custodian shall deliver, or shall request the
Customer to deliver, to the Subcustodian, such proxies, powers-of-attorney or
other instruments as may be necessary or desirable in connection with the
performance by the Subcustodian of its obligations under this Agreement.
XIV. So long as and to the extent that it is in the exercise of reasonable
care, the Subcustodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement. The Subcustodian shall not be liable
for any action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be genuine and to
be signed by the proper party or parties. The Subcustodian shall be obligated to
exercise reasonable care and diligence in carrying out the provisions of this
Agreement; provided that the Subcustodian shall not thereby be required to take
any action which is in contravention of the laws of Belgium or any other
applicable law. Notwithstanding the foregoing, the
-11-
<PAGE>
Subcustodian shall not be liable for (a) any violation by the Customer of any
limitation applicable to its powers to make expenditures, to invest in or pledge
securities or to borrow which does not involve action by the Subcustodian, and
(b) any violation by the Customer of any limitation applicable to its powers to
make investments, to invest in or pledge securities or to borrow which involves
action by the Subcustodian, provided that such action was authorized in
accordance with Paragraphs III, IV or V hereof. The Subcustodian shall be
entitled to and may act upon advice of counsel (who may be counsel for the
Customer) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
XV. This Agreement may be terminated at any time by the Custodian or the
Subcustodian by giving written notice to the other party at least thirty (30)
days prior to the date on which such termination is to become effective. Such
termination shall, inter alia, constitute a revocation of the Subcustodian's
authority to act on behalf of all Customers (including all authority granted to
the Subcustodian under any power-of-attorney executed in connection with this
Agreement). In the event of termination, the Subcustodian will deliver any
securities held
-12-
<PAGE>
by it or any Additional Subcustodians to the Custodian or to such successor
subcustodian as the Custodian shall instruct in a manner to be mutually agreed
upon by the parties hereto or in the failure of such agreement in a reasonable
manner. Further in the event of termination, the Subcustodian shall be entitled
to receive prior to the delivery of the securities held by it or any Additional
Subcustodians all accrued fees and unreimbursed expenses the payment of which is
contemplated by Paragraph XII hereof upon receipt by the Custodian of a final
statement setting forth such fees and expenses.
XVI. Except as the parties shall from time to time otherwise agree, all
instructions, notices, reports and other communications contemplated by this
Agreement shall be dispatched as follows:
If to the Custodian: Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Attention: Manager -
Securities Department
Telex No.: WUD 940709
If to the Subcustodian: Morgan Guaranty Trust Company
of New York
Avenue des Arts 35
Brussels 1040
Belgium
Attention:
Telex No.: ITT 84621752
-13-
<PAGE>
XVII. This Agreement constitutes the entire understanding and agreement of
the parties hereto, and neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated except by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
XVIII. This Agreement shall be binding upon and shall inure to the benefit
of the Custodian and the Subcustodian and their successors and assignees
provided that neither the Custodian nor the Subcustodian may assign this
Agreement or any of the rights or obligations hereunder without the prior
written consent of the other party.
XIX. This Agreement shall be construed in accordance with and governed by
the laws of the State of New York. The parties hereto agree that notwithstanding
any provision or provisions of this Agreement of apparent contrary effect, the
Subcustodian shall have no obligation to take any action which is contrary to
any or several provisions of the laws, orders or regulations of Belgium. The
Subcustodian shall not be liable for any expense or damage to the Custodian or
the Customer that may result from violation of any or several of the foregoing
laws, orders
-14-
<PAGE>
and regulations, except as such expense or damage is caused by the wilful
misconduct or negligence of the Subcustodian.
XX. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. This Agreement shall become effective when one or more
counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROWN BROTHERS HARRIMAN & CO.
(the "Custodian")
Per Pro /s/ [illegible]
----------------------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
BRUSSELS OFFICE
(the "Subcustodian")
By /s/ Herschel E. Post V.P.
--------------------------
<PAGE>
BROWN BROTHERS HARRIMAN & CO. 40 WATER STREET
BOSTON NEW YORK PHILADELPHIA CHICAGO ST. LOUIS BOSTON, MASSACHUSETTS 02109
PRIVATE BANKERS
December 17, 1976
Morgan Guaranty Trust Company of New York
Avenue Des Arts 35
Brussels 1040, Belgium
Attention: Mr. Herschel E. Post, Jr.
Dear Sirs:
Pursuant to the terms and conditions of the Master Subcustodian Agreement
(the "Agreement") dated as of November 15, 1976, between Brown Brothers Harriman
& Co. and yourself, you are hereby appointed subcustodian for Scudder
International Fund, Inc. a Maryland Corporation having its principal place of
business at 345 Park Avenue, New York, New York 10022.
In connection with your appointment, we hereby deliver the following
documents:
1. A certificate signed by the Assistant Secretary of the Company as
to resolutions adopted by the Board of Directors: and
2. A power of attorney signed by a duly authorized officer of the
Company
If you accept this appointment, please sign and return the enclosed copy of
the this letter, whereupon the appointment shall become a binding agreement.
Very truly yours,
per pro Brown Brothers Harriman & Co.
Accepted and agreed
Morgan Guaranty Trust Company of New York
Brussels Office
By /s/ Herschel Post Vice President
----------------------------------
Dated: January 4, 1977
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
THAT, the UNDERSIGNED hereby appoints Morgan Guaranty Trust Company of New
York, Brussels Office, Avenue des Arts 35, Brussels 1040, Belgium (the "Bank"),
as its true and lawful proxy in its behalf and authorizes the Bank to do the
following:
1. To arrange for the acquisition in the undersigned's name of shares,
bonds, debentures and any and all other types of securities
(hereinafter collectively referred to as "Securities"), in accordance
with the instructions given by Brown Brothers Harriman & Co. (the
"Custodian"), including, without limitation, filing applications for
any validation, license or approval required from the Belgian
government in connection with such acquisition;
2. To apply for and effect transfer of title to the undersigned's name in
the proper register with respect to the Securities acquired and to act
as the standing proxy in Belgium of the undersigned with regard to the
receipt of any and all notices related to the Securities and the
exercise of the undersigned's rights as the holder thereof;
3. To arrange for the sale or other disposal of the Securities on behalf
of the undersigned upon specific
<PAGE>
-2-
instructions of the Custodian, and to collect and receive the proceeds
from such sale or disposition;
4. To receive the payment of dividends, distributions of profits,
interest and/or any other income from the Securities owned by the
undersigned;
5. To perform, even in the absence of explicit instructions, any and all
matters necessary or advisable, in the sole discretion of the Bank,
for protection of the undersigned's interests with respect to the
Securities;
6. To perform any and all procedures necessary or incidental for the
preservation of the privilege and benefit with regard to the taxation
granted to foreign investors under the Belgian tax laws or
international treaties, agreements or conventions to which Belgium is
a party.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney on
this 17th day of December, 1976.
SCUDDER INTERNATIONAL FUND, INC.
By: /s/ David S. Lee
-----------------------------
/s/ [illegible]
- -------------------------------
Notary Public
(or equivalent Public official)
<PAGE>
CERTIFICATE
-----------
I hereby certify to Morgan Guaranty Trust Company of New York, Brussels
Office, that at a meeting of the Board of Directors of Scudder International
Fund, Inc., a corporation organized under the laws of Maryland, duly called and
held at 10:00 A.M., on the 20th day of October, 1976, the following resolutions
were duly adopted and are now in full force and effect:
"RESOLVED, that Morgan Guaranty Trust Company Tokyo Office and
Brussels Office (the "Bank") is designated as subcustodian for the
safekeeping of securities and funds of the Corporation pursuant to the
terms and conditions of the Master Subcustodian Agreement (the
"Agreement") dated as of November [*] , 1976. between Brown Brothers
Harriman & Co. (the "Custodian") and the Bank, such securities and funds
to be held and disposed of by the Bank as subcustodian for the Corporation
pursuant to the terms and conditions of the Agreement;
FURTHER RESOLVED, that securities so held by the Bank may be held,
endorsed and delivered in the name or names of its nominee or nominees; and
FURTHER RESOLVED, that deposits and withdrawals of securities and
funds into and from the subcustody accounts of the Corporation may be made
upon the authorization of the Custodian."
IN WITNESS WHEREOF, I have hereunto set my hand as assistant secretary
of said corporation and affixed the corporate seal this 17 day of December,
1976.
/s/ [illegible]
-------------------------
Assistant Secretary
[*] Contract executed as of November 15, 1976.
[CORPORATE SEAL]
Exhibit 8(c)(2)
MORGAN GUARANTY
BRUSSELS MARCH 1981.
CUSTODY - SCHEDULE OF CHARGES
1. ACTIVITY CHARGES.
Flat fee per transaction: $ 25.-
Are not included out-of-pocket expenses:
e.a. Telephone, telex or special transactions fees claimed by our
correspondants.
2. SAFEKEEPING CHARGES.
The annual safekeeping fees are:
- 0,75% for the first : $ 20.000.000.00
- 0,625% for the next : $ 20.000.000.00
- 0,50% for the rest
COLLECTION CHARGES
1. Activity charges will be collected monthly.
2. Safekeeping charges will be billed quarterly in advance on deposits
existing at the previous quarter-end.
3. Correspondant's charges will be collected at the time they are advised to
us.
4. Charges will be debited to the customer's Demand Current Account and will
be calculated at the prevailing rate of exchange where the account is
maintained in a currency other than Belgian Francs or US Dollar.
Exhibit 8(d)(1)
SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of January 30, 1979, between Brown Brothers Harriman &
Co. (the "Custodian"), and The Bank of New York, London Office (the
"Subcustodian").
WITNESSETH:
WHEREAS, the Custodian has entered into a custodian agreement with Scudder
International Fund, Inc. ("Fund") dated October 29, 1976;
WHEREAS, the Custodian desires to utilize Subcustodian for the purpose of
holding cash and securities outside the United States;
WHEREAS, the Subcustodian is a bank within the meaning of Section 2(a)(5)
of the Investment Company Act of 1940 having an aggregate capital, surplus and
undivided profits of not less than Two Million Dollars ($2,000,000);
NOW, THEREFORE, the Custodian and Subcustodian hereby agree as follows:
I. The Custodian may from time to time deposit securities or cash with the
Subcustodian. The Subcustodian shall not be responsible for any property of the
Fund not delivered to the Subcustodian.
<PAGE>
II. The Subcustodian shall hold and dispose of the securities hereafter held by
or deposited with the Subcustodian as follows:
A. The Subcustodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or corporations,
pursuant to the provisions hereof, all securities received by it for the account
of the Custodian as custodian for the Fund. If any securities are registered in
nominee name, such nominee name shall be used solely for the Fund. All such
securities are to be held or disposed of by the Subcustodian for, and subject at
all times to, the instructions of the Custodian pursuant to the terms of this
Agreement.
B. Upon receipt of instructions from the Custodian, the Subcustodian shall
release or deliver securities owned by the Fund only for the following purposes:
(1) upon sale of securities for the account of the Fund against
receipt of payment therefor by cash, certified or cashier's check, or bank
credit;
(2) to the issuer thereof or its agent when securities are called,
redeemed, retired or otherwise become payable, provided that the cash is to
be delivered to the Subcustodian;
(3) for exchange for a different number of bonds or certificates
representing the same aggregate face amount or number of units, for
exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of the
issuer of such securities, or pursuant to provisions for conversion
contained
-2-
<PAGE>
in such securities, or pursuant to any deposit agreement; provided that, in any
such case, the new securities and cash, if any, are to be delivered to the
Subcustodian;
(4) in the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities; provided that the surrender of interim receipts or temporary
securities for definitive securities may be made at any time; provided
that, in any such case, the new securities are to be delivered to the
Subcustodian;
(5) in the case of tender offers or similar offers to purchase
received in writing, the delivery of securities to the designated
depository or other receipt agent. The Subcustodian shall have full
responsibility for transmitting to the Custodian any such offers received
by it. Thereafter, the Custodian, if it desires to respond to such offer,
shall have full responsibility for providing the Subcustodian with all
necessary instructions in timely enough fashion for the Subcustodian to act
thereon prior to any expiration time for such offer;
(6) upon receipt from the Custodian of instructions directing
disposition of securities in a manner other than or for purposes other than
the manners and purposes enumerated in the foregoing five items; provided,
however, that disposition pursuant to this item (6) shall be made by the
Subcustodian only upon receipt of instructions from the Custodian
specifying
-3-
<PAGE>
the amount of such securities to be delivered, the purpose for which the
delivery is to be made, and the name of the person or persons to whom such
delivery is to be made.
III. The Subcustodian shall hold and dispose of cash hereafter held by or
deposited with the Subcustodian as follows:
A. The Subcustodian shall open and maintain a separate account or accounts
in the name of the Custodian as custodian for the Fund, subject only to draft or
order by the Subcustodian acting pursuant to the terms of this Agreement. The
Subcustodian shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it for the account of the Custodian as custodian
for the Fund.
B. Upon receipt of instructions from the Custodian, the Subcustodian shall
make payments of cash for the account of the Fund from such cash only for the
following purposes:
(1) upon the purchase of securities for the account of the Fund but
only against the delivery of such securities to the Subcustodian;
(2) in connection with the subscription, conversion, exchange, tender
or surrender 6f securities owned by the Fund as set forth in Paragraph IIB
hereof; and
(3) for deposit with the Custodian or with such other banking
institutions as may from time to time be approved by the Fund.
IV. All instructions shall be in writing executed by the Custodian, and the
Subcustodian shall not be required to act on instructions otherwise
communicated; provided, however, that the Sub-
-4-
<PAGE>
custodian may in its discretion act on the basis of instructions received via
telecommunications facilities if the Subcustodian reasonably believes such
instructions to have been dispatched by the Custodian. The Subcustodian may
require that instructions received via telecommunications facilities be
authenticated. The Subcustodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or paper
reasonably believed by it to be genuine and to have been properly executed. The
Subcustodian may receive and accept a signature circular signed by a partner of
the Custodian as conclusive evidence of the authority of any person to act on
behalf of the Custodian, and such signature circular may be considered as in
full force and effect until receipt by the Subcustodian of written notice to the
contrary.
V. Unless and until the Subcustodian receives instructions from the Custodian to
the contrary, the Subcustodian shall:
A. Present for payment all coupons and other income items held by it for
the account of the Custodian as custodian for the Fund which call for payment
upon presentation and hold the cash received by it upon such payment for the
account of the Custodian as custodian for the Fund;
B. Collect interest and cash dividends received, with notice the Custodian,
for the account of the Custodian as custodian the Fund;
C. Hold for the account of the Custodian as custodian for the Fund
hereunder all stock dividends, rights and similar securities issued with respect
to any securities held by it hereunder.
-5-
<PAGE>
VI. The Subcustodian shall execute on behalf of the Custodian, in the Fund's
name, any declarations, affidavits, or certificates of ownership which may be
necessary or useful from time to time for the Subcustodian to perform any or
several of its obligations arising under the provisions of this Agreement.
VII. If the Subcustodian shall receive any notices or reports in respect of
securities held by it hereunder, it shall promptly upon receipt thereof transmit
to the Custodian by airmail, telecommunications facilities, or comparable means
any such notices or reports.
VIII. The Subcustodian may, from time to time, appoint (and may at any time
remove) any bank or trust company as its agent for purposes of acquiring or
disposing of securities or carrying out such provisions of this Agreement as the
Subcustodian may, from time to time, direct; provided that the Subcustodian
shall be fully liable to the Custodian for the acts or omissions of such agents
to the same extent as if the acts or omissions of the agents were the acts or
omissions of the Subcustodian.
IX. On each day on which there is a cash or securities transaction over the
account of the Custodian as custodian for the Fund, the Subcustodian shall
dispatch to the Custodian (and to the Fund of requested) separate cash and
securities advices. The Subcustodian shall furnish to the Custodian, as
Custodian for the Fund, at the end of every month a statement of the cash and
securities held by the Subcustodian and any agent for the Subcustodian. Such
statements shall be sent by air mail, telecommunications facilities or
comparable means to the Custodian within 15 days after the end of each month.
-6-
<PAGE>
The Subcustodian shall furnish the Custodian with such additional statements as
the Custodian may reasonably request.
X. As compensation for the services rendered pursuant to this Agreement, the
Custodian shall pay the Subcustodian a fee computed in accordance with the
schedule attached hereto as Exhibit A, as such schedule may be amended from time
to time by written agreement between the Custodian and the Subcustodian. The
Custodian shall reimburse the Subcustodian for any reasonable out-of-pocket
expenses incurred by the Subcustodian in connection with its obligations
hereunder.
XI. Upon request, the Custodian shall deliver, or shall request the Fund to
deliver, to the Subcustodian, such proxies, powers-of-attorney or other
instruments as may be necessary or desirable in connection with the performance
by the Subcustodian of its obligations under this Agreement.
XII. So long as and to the extent that it is in the exercise of reasonable care,
the Subcustodian shall not be responsible for the title, validity or genuineness
of any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement. The Subcustodian shall not be liable for any action
taken or omitted in good faith upon any notice, request, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties. The Subcustodian shall be obligated to exercise
reasonable care and diligence in carrying out the provisions of this Agreement
and shall be without liability for any action taken or thing done by it in good
faith
-7-
<PAGE>
and without negligence, the standard for which shall be that applicable to a
bailee for hire under Massachusetts law. Notwithstanding the foregoing, the
Subcustodian shall not be liable for (a) any violation by the Fund of any
limitation applicable to its powers to make expenditures, to invest in or pledge
securities or to borrow which does not involve action by the Subcustodian, and
(b) any violation by the Fund of any limitation applicable to its powers to make
investments, to invest in or pledge securities or to borrow which involves
action by the Subcustodian, provided that such action was authorized in
accordance with Paragraphs II, III or IV hereof. The Subcustodian shall be
entitled to and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice.
XIII. This Agreement may be terminated at any time by the Custodian or the
Subcustodian by giving written notice to the other party at least thirty (30)
days prior to the date on which such termination is to become effective. In the
event of termination, the Subcustodian will deliver any securities held by it or
any agent to the Custodian or to such successor subcustodian as the Custodian
shall instruct in a manner to be mutually agreed upon by the parties hereto or,
in the absence of such agreement, in a reasonable manner. Further in the event
of termination, the Subcustodian shall be entitled to receive prior to the
delivery of the securities held by it or any agent all accrued fees and
unreimbursed expenses the payment of which is contemplated by
-8-
<PAGE>
Paragraph X hereof upon receipt by the Custodian of a final statement setting
forth such fees and expenses.
XIV. Except as the parties shall from time to time otherwise agree, all
instructions, notices, reports and other communications contemplated by this
Agreement shall be dispatched as follows:
If to the Custodian: Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Attention: Manager, Securities
Department
Telex No.: 940709
If to the Subcustodian: The Bank of New York
147 Leadenhall Street
London EC3V 4PN, England
Attention: Derrick H. Stubbs
Telex No.: 884501
XV. This Agreement constitutes the entire understanding and agreement of the
parties hereto, and neither this Agreement nor any provisions hereof may be
changes, waived, discharged or terminated except by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
XVI. This Agreement shall be binding upon and shall inure to the benefit of the
Custodian and the Subcustodian and their successors and assignees provided that
neither the Custodian nor the Subcustodian may assign this Agreement or any of
the rights or obligations hereunder without the prior written consent of the
other party.
XVII. This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts. The parties hereto agree that
notwithstanding any provision or provisions of this Agreement of apparent
contrary effect, the Sub-
-9-
<PAGE>
custodian shall have no obligations to take any action which is contrary to any
one or several provisions of the laws, orders or regulations of England. The
Subcustodian shall not be liable for any expense or damage to the Custodian or
the Fund that may result from violation of any or several of the foregoing laws,
orders and regulations, except as such expense or damage is caused by the wilful
misconduct or negligence of the Subcustodian.
XVIII. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument. This Agreement shall become effective when one or more counterparts
have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROWN BROTHERS HARRIMAN & CO.
(the "Custodian")
per pro /s/ [illegible]
-------------------------------
THE BANK OF NEW YORK
(the "Subcustodian")
By /s/ [illegible]
-------------------------------
-10-
Exhibit 8(d)(2)
SCHEDULE A
TO SUBCUSTODIAN AGREEMENT
BETWEEN BROWN BROTHERS HARRIMAN & CO.
AND THE BANK OF NEW YORK
The fee pursuant to Section X shall be $25.00 for each transfer of a
security into or out of the Subcustodian account.
Dated: January 30, 1979
-11-
Exhibit 8(e)(1)
MASTER SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of June 9, 1980 between Brown Brothers Harriman & Co., a
limited partnership organized under the laws of the State of New York (the
"Custodian"), and The Chase Manhattan Bank, N.A., Singapore office (the
"Subcustodian").
WITNESSETH:
WHEREAS, the Custodian has entered into certain custodian agreements and
may in the future enter into additional custodian agreements whereby cash and
securities will be held outside the United States;
WHEREAS, the Custodian desires to utilize subcustodians for the purpose of
holding cash and securities outside the United States; and
WHEREAS, the Subcustodian is willing to enter into an agreement whereby it
may, from time to time, be appointed as subcustodian for the Custodian's
customers (each such customer shall hereinafter be referred to as a "customer");
NOW, THEREFORE, the Custodian and Subcustodian hereby agree as follows:
I. Upon the terms and conditions set forth in this Agreement and subject in
each case to acceptance by the Subcustodian, the Subcustodian may, at any time
and from time to time, be appointed as subcustodian for a Customer by delivery
to the Subcustodian of a letter substantially in the form of Exhibit A hereto.
II. The Custodian may from time to time deposit securities or cash with the
Subcustodian. The Subcustodian shall not be
<PAGE>
-2-
responsible for any property of the Customer not delivered to the Subcustodian.
III. The Subcustodian shall hold and dispose of the securities hereafter
held by or deposited with the Subcustodian as follows:
A. The Subcustodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or
corporations, pursuant to the provisions hereof, all securities received by
it for the account of the Custodian as custodian for the Customer. All such
securities are to be held or disposed of by the Subcustodian for, and
subject at all times to the instructions of, the Custodian pursuant to the
terms of this Agreement.
B. Upon receipt of instructions from the Custodian, the Subcustodian shall
release or deliver securities owned by the Customer only for the following
purposes:
(1) upon sale of securities for the account of the Customer
against receipt of payment therefor by cash, certified or cashier's
check, or bank credit;
(2) to the issuer thereof or its agent when securities are
called, redeemed, retired or otherwise become payable, provided that
the
<PAGE>
-3-
cash is to be delivered to the Subcustodian;
(3) for exchange for a different number of bonds or certificates
representing the same aggregate face amount or number of units, for
exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Subcustodian;
(4) in the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities; provided that the surrender of interim receipts or
temporary securities for definitive securities may be made at any
time; provided that, in any such case, the securities are to be
delivered to the Subcustodian;
(5) in the case of tender offers or similar offers to purchase
received in writing, the delivery of securities to the designated
depository or other receiving agent. The
<PAGE>
-4-
Subcustodian shall have full responsibility for transmitting to the
Custodian any such offers received by it. Thereafter, the Custodian,
if it desires to respond to such offer, shall have full responsibility
for providing the Subcustodian with all necessary instructions in
timely enough fashion for the Subcustodian to act thereon prior to any
expiration time for such offer;
(6) upon receipt from the Custodian of instructions directing
disposition of securities in a manner other than or for purposes other
than the manners and purposes enumerated in the foregoing five items;
provided, however, that disposition pursuant to this item (6) shall be
made by the Subcustodian only upon receipt of instructions from the
Custodian specifying the amount of such securities to be delivered,
the purpose for which the delivery is to be made, and the name of the
person or persons to whom such delivery is to be made.
IV. The Subcustodian shall hold and dispose of cash hereafter held by or
deposited with the Subcustodian as follows:
A. The Subcustodian shall open and maintain with the Singapore office
of The Chase Manhattan Bank,
<PAGE>
-5-
N.A. a separate account or accounts in the name of the Custodian as
custodian for the Customer, subject only to draft or order by the
Subcustodian acting pursuant to the terms of this Agreement. The
Subcustodian shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it for the account of the Custodian
as custodian for the Customer.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall make payments of cash for the account of the Customer from such cash
only for the following purposes:
(1.) upon the purchase of securities for the account of the
Customer but only against the delivery of such securities to the
Subcustodian;
(2) in connection with the subscription, conversion, exchange,
tender or surrender of securities owned by the Customer as set forth
in Paragraph IIIB hereof, and
(3) for deposit with the Custodian or with such other banking
institutions as may from time to time be approved by the Customer.
V. All instructions shall be in writing executed by the Custodian, and the
Subcustodian shall not be required to act on instructions otherwise
communicated; provided, however, that the Subcustodian may in its dis-
<PAGE>
-6-
cretion act on the basis of instructions received via telecommunications
facilities if the Subcustodian reasonably believes such instructions to have
been dispatched by the Custodian. The Subcustodian may require that instructions
received via telecommunications facilities be authenticated. The Subcustodian
shall be protected in acting upon any instructions, notice, request, consent,
certificate or other instrument or paper reasonably believed by it to be genuine
and to have been properly executed. The Subcustodian may receive and accept a
certificate signed by a partner of the Custodian as conclusive evidence of the
authority of any person to act on behalf of the Custodian, and such certificate
may be considered as in full force and effect until receipt by the Subcustodian
of written notice to the contrary.
VI. Unless and until the Subcustodian receives instructions from the
Custodian to the contrary, the Subcustodian shall:
A. Present for payment all coupons and other income items held by it
for the account of the Custodian as custodian for the Customer which call
for payment upon presentation and hold the cash received by it upon such
payment for the account of the Custodian as custodian for the Customer;
B. Collect interest and cash dividends received, with notice to the
Custodian, for the account of the Custodian as custodian for the Customer;
<PAGE>
-7-
C. Hold for the account of the Custodian as custodian for the Customer
hereunder all stock dividends, rights and similar securities issued with
respect to any securities held by it hereunder.
VII. The Subcustodian shall execute on behalf of the Custodian, in the
Customer's name, any declarations, affidavits, or certificates of ownership
which may be necessary or useful from time to time for the Subcustodian to
perform any or several of its obligations arising under the provisions of this
Agreement.
VIII. If the Subcustodian shall receive any notices or reports in respect
of securities held by it hereunder, it shall promptly upon receipt thereof
transmit to the Custodian by airmail, telecommunications facilities, or
comparable means any such notices or reports.
IX. The Subcustodian may, from time to time, appoint other offices of The
Chase Manhattan Bank, N.A. (located outside the United States) and such other
persons as are approved in advance by the Custodian and the Customer
("Additional Subcustodians") for purposes of acquiring, holding or disposing of
securities outside of Singapore. The Subcustodian shall be fully liable to the
Custodian for the acts or omissions of such Additional Subcustodians to the same
extent as if the acts or omissions of the Additional Subcustodians were the acts
or omissions of the Subcustodian. Upon receipt of instructions from the
Custodian, the Subcustodian shall terminate any Additional Subcustodians
appointed pursuant to the provisions of this paragraph in the manner provided in
the applicable agreement.
<PAGE>
-8-
The Subcustodian shall transmit to Additional Subcustodians any
instructions received from the Custodian concerning the acquisition, custody or
disposition of securities by Additional Subcustodians and shall transmit to the
Custodian any notices or reports received from Additional Subcustodians in
respect of securities held by such Additional Subcustodians.
X. The Subcustodian may, from time to time, appoint (and may at any time
remove) any bank or trust company as its agent for purposes of acquiring or
disposing of securities or carrying out such provisions of this Agreement as the
Subcustodian may, from time to time, direct; provided that the Subcustodian
shall be fully liable to the Custodian for the acts or omissions of such agents
to the same extent as if the acts or omissions of the agents were the acts or
omissions of the Subcustodian.
XI. On each day on which there is a cash or securities transaction over the
account of the Custodian as custodian for the Customer, the Subcustodian shall
dispatch to the Custodian (and to the Customer if requested) separate cash and
securities advices. The Subcustodian shall furnish the Custodian at the end of
every month with a statement of the cash and securities held by the Subcustodian
and any Additional Subcustodians and a summary of all transactions effected over
the account. Such statements and summaries shall be sent by air mail,
telecommunications facilities or comparable means to the Custodian within 15
days after the end of each month. Upon request of the Custodian, additional
statements will be furnished at the expense of the Custodian.
<PAGE>
-9-
XII. As compensation for the services rendered pursuant to this Agreement,
the Custodian shall pay the Subcustodian a fee computed in accordance with the
schedule attached hereto as Exhibit B, as such schedule may be amended from time
to time by written agreement between the Custodian and the Subcustodian. The
Custodian shall reimburse the Subcustodian for any reasonable out-of-pocket
expenses incurred by the Subcustodian in connection with its obligations
hereunder (including the fees and reasonable out-of-pocket expenses of
Additional Subcustodians and agents).
XIII. Upon request, the Custodian shall deliver, or shall request the
Customer to deliver, to the Subcustodian, such proxies, powers-of-attorney or
other instruments as may be necessary or desirable in connection with the
performance by the Subcustodian of its obligations under this Agreement.
XIV. So long as and to the extent that it is in the exercise of reasonable
care, the Subcustodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement. The Subcustodian shall not be liable
for any action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be genuine and to
be signed by the proper party or parties. The Subcustodian shall be obligated to
exercise reasonable care and diligence in carrying out the provisions of this
Agreement; provided that the Subcustodian shall not thereby be required to take
any action which is in contravention of the laws of Singapore or any other
applicable law. Notwithstanding the foregoing, the
<PAGE>
-10-
Subcustodian shall not be liable for (a) any violation by the Customer of any
limitation applicable to its powers to make expenditures, to invest in or pledge
securities or to borrow which does not involve action by the Subcustodian, and
(b) any violation by the Customer of any limitation applicable to its powers to
make investments, to invest in or pledge securities or to borrow which involves
action by the Subcustodian, provided that such action was authorized in
accordance with Paragraphs III, IV or V hereof. The Subcustodian shall be
entitled to and may act upon advice of counsel (who may be counsel for the
Customer) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
XV. This Agreement may be terminated at any time by the Custodian or the
Subcustodian by giving written notice to the other party at least thirty (30)
days prior to the date on which such termination is to become effective. Such
termination shall, inter alia, constitute a revocation of the Subcustodian's
authority to act on behalf of all Customers (including all authority granted to
the Subcustodian under any power-of-attorney executed in connection with this
Agreement). In the event of termination, the Subcustodian will deliver any
securities held by it or any Additional Subcustodians to the Custodian or to
such successor subcustodian as the Custodian shall instruct in a manner to be
mutually agreed upon by the parties hereto or in the failure of such agreement
in a reasonable manner. Further in the event of termination, the Subcustodian
shall be entitled to receive prior to the delivery
<PAGE>
-11-
of the securities held by it or any Additional Subcustodians all accrued fees
and unreimbursed expenses the payment of which is contemplated by Paragraph XII
hereof upon receipt by the Custodian of a final statement setting forth such
fees and expenses.
XVI. Except as the parties shall from time to time otherwise agree, all
instructions, notices, reports and other communications contemplated by this
Agreement shall be dispatched as follows:
If to the Custodian: Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Attention: Manager-Securities Department
Telex No.: 940709
If to the Subcustodian: The Chase Manhattan Bank, N.A.
4 Shenton Way
Private Mail Bag 3012
Singapore 1
Telex No.: 78621370
XVII. This Agreement constitutes the entire understanding and agreement of
the parties hereto, and neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated except by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
XVIII. This Agreement shall be binding upon and shall inure to the benefit
of the Custodian and the Subcustodian and their successors and assignees
provided that neither the Custodian nor the Subcustodian may assign this
Agreement or any of the rights or obligations hereunder without the prior
written consent of the other party.
<PAGE>
-12-
XIX. This Agreement shall be construed in accordance with and governed by
the laws of the State of New York. The parties hereto agree that,
notwithstanding any provision or provisions of this Agreement of apparent
contrary effect, the Subcustodian shall have no obligation to take any action
which is contrary to any or several provisions of the laws, orders or
regulations of Singapore. The Subcustodian shall not be liable for any expense
or damage to the Custodian or the Customer that may result from violation of any
or several of the foregoing laws, orders and regulations, except as such expense
or damage is caused by the wilful misconduct or negligence of the Subcustodian.
XX. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. This Agreement shall become effective when one or more
counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROWN BROTHERS HARRIMAN & CO.
(the "Custodian")
per pro /s/ [illegible]
-------------------------------
THE CHASE MANHATTAN BANK, N.A.
SINGAPORE OFFICE
(the "Subcustodian")
By /s/ [illegible]
-------------------------------
Exhibit 8(e)(2)
CHASE MANHATTAN BANK, N.A., SINGAPORE
RATES SCHEDULE ON CUSTODIAN OF SHARES
-------------------------------------
All charges are in S$ :-
SERVICES
- --------
SAFEKEEPING OF SECURITIES 1. $0.50 per 1,000 shares.
Min. $20.
2. $20 per holding annum.
WITHDRAWAL OF SECURITIES 1/8% of Market Value.
Min. $20 - if with out receipt of
payment from broker.
Min. $25 - if with receipt of payment.
RECEIPT OF SECURITIES $15 per share counter holding if not
AT COUNTER against payment.
$20 per share - counter holding if
against payment.
DELIVERY OF SECURITIES $10/transaction.
AT COUNTER
REGISTRATION IN CLIENT'S $1 per 1,000 shares.
NAME Min. $20.
Max. $500.
REGISTRATION IN NOMINEES 1/4% of Market Value.
Min. $20.
PROCESS DIVIDEND CLAIMS 1%. Min. $15.
DIVIDEND PAYMENT $20 for amounts more than $100.
Min. $5.
HANDLING SHARES APPLICATION $20 per application in client's name.
$40 per application in Nominees' name.
<PAGE>
SERVICES
- --------
ISSUING SHARE STATEMENTS For the 1st two requests - free. From
the 3rd request, $10 per statement for
current year and $30 per statement for 1
to 5 years.
HANDLING CHARGE FOR RIGHTS, $20 per item. Upon receipt of shares,
BONUS ISSUES safekeeping charges will apply again if
applicable.
PAYMENT OF CALLS $20 per item
CONVERSION OF SHARES/ $20 per conversion. On receipt of new
EXCHANGE FOR NEW certificates, safekeeping charges will
apply again if applicable.
STAMPDUTY ON TRANSFER DEED $0.30 x Market Value divide by 100.
REQUEST FOR COMPANY ANNUAL $5 per report.
REPORT
Exhibit 8(f)(1)
MASTER SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of June 4, 1979, between Brown Brothers Harriman & Co.,
a limited partnership organized under the laws of the State of New York (the
"Custodian"), and The Chase Manhattan Bank, N.A., Hong Kong office (the
"Subcustodian").
WITNESSETH:
WHEREAS, the Custodian has entered into certain custodian agreements and
may in the future enter into additional custodian agreements whereby cash and
securities will be held outside the United States;
WHEREAS, the Custodian desires to utilize subcustodians for the purpose of
holding cash and securities outside the United States; and
WHEREAS, the Subcustodian is willing to enter into an agreement whereby it
may, from time to time, be appointed as subcustodian for the Custodian's
customers (each such customer shall hereinafter be referred to as a "customer");
NOW, THEREFORE, the Custodian and Subcustodian hereby agree as follows:
I. Upon the terms and conditions set forth in this Agreement and subject in
each case to acceptance by the Subcustodian, the Subcustodian may, at any time
and from time to time, be appointed as subcustodian for a Customer by delivery
to the Subcustodian of a letter substantially in the form of Exhibit A hereto.
II. The Custodian may from time to time deposit securities or cash with the
Subcustodian. The Subcustodian shall not be
<PAGE>
-2-
responsible for any property of the Customer not delivered to the Subcustodian.
III. The Subcustodian shall hold and dispose of the securities hereafter
held by or deposited with the Subcustodian as follows:
A. The Subcustodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or
corporations, pursuant to the provisions hereof, all securities received by
it for the account of the Custodian as custodian for the Customer. All such
securities are to be held or disposed of by the Subcustodian for, and
subject at all times to the instructions of, the Custodian pursuant to the
terms of this Agreement.
B. Upon receipt of instructions from the Custodian, the Subcustodian shall
release or deliver securities owned by the Customer only for the following
purposes:
(1) upon sale of securities for the account of the Customer
against receipt of payment therefor by cash, certified or cashier's
check, or bank credit;
(2) to the issuer thereof or its agent when securities are
called, redeemed, retired or otherwise become payable, provided that
the
<PAGE>
-3-
cash is to be delivered to the Subcustodian;
(3) for exchange for a different number of bonds or certificates
representing the same aggregate face amount or number of units, for
exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and
cash if any, are to be delivered to the Subcustodian;
(4) in the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities; provided that the surrender of interim receipts or
temporary securities for definitive securities may be made at any
time; provided that, in any such case, the securities are to be
delivered to the Subcustodian;
(5) in the case of tender offers or similar offers to purchase
received in writing, the delivery of securities to the designated
depository or other receiving agent. The
<PAGE>
-4-
Subcustodian shall have full responsibility for transmitting to the
Custodian any such offers received by it. Thereafter, the Custodian,
if it desires to respond to such offer, shall have full responsibility
for providing the Subcustodian with all necessary instructions in
timely enough fashion for the Subcustodian to act thereon prior to any
expiration time for such offer;
(6) upon receipt from the Custodian of instructions directing
disposition of securities in a manner other than or for purposes other
than the manners and purposes enumerated in the foregoing five items;
provided, however, that disposition pursuant to this item (6) shall be
made by the Subcustodian only upon receipt of instructions from the
Custodian specifying the amount of such securities to be delivered,
the purpose for which the delivery is to be made, and the name of the
person or persons to whom such delivery is to be made.
IV. The Subcustodian shall hold and dispose of cash hereafter held by or
deposited with the Subcustodian as follows:
A. The Subcustodian shall open and maintain with the Hong Kong office
of The Chase Manhattan Bank,
<PAGE>
-5-
N.A. a separate account or accounts in the name of the Custodian as
custodian for the Customer, subject only to draft or order by the
Subcustodian acting pursuant to the terms of this Agreement. The
Subcustodian shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it for the account of the Custodian
as custodian for the Customer.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall make payments of cash for the account of the Customer from such cash
only for the following purposes:
(1.) upon the purchase of securities for the account of the
Customer but only against the delivery of such securities to the
Subcustodian,
(2) in connection with the subscription, conversion, exchange,
tender or surrender of securities owned by the Customer as set forth
in Paragraph IIIB hereof, and
(3) for deposit with the Custodian or with such other banking
institutions as may from time to time be approved by the Customer.
V. All instructions shall be in writing executed by the Custodian, and the
Subcustodian shall not be required to act on instructions otherwise
communicated; provided, however, that the Subcustodian may in its dis-
<PAGE>
-6-
cretion act on the basis of instructions received via telecommunications
facilities if the Subcustodian reasonably believes such instructions to have
been dispatched by the Custodian. The Subcustodian may require that instructions
received via telecommunications facilities be authenticated. The Subcustodian
shall be protected in acting upon any instructions, notice, request, consent,
certificate or other instrument or paper reasonably believed by it to be genuine
and to have been properly executed. The Subcustodian may receive and accept a
certificate signed by a partner of the Custodian as conclusive evidence of the
authority of any person to act on behalf of the Custodian, and such certificate
may be considered as in full force and effect until receipt by the Subcustodian
of written notice to the contrary.
VI. Unless and until the Subcustodian receives instructions from the
Custodian to the contrary, the Subcustodian shall:
A. Present for payment all coupons and other income items held by it
for the account of the Custodian as custodian for the Customer which call
for payment upon presentation and hold the cash received by it upon such
payment for the account of the Custodian as custodian for the Customer;
B. Collect interest and cash dividends received, with notice to the
Custodian, for the account of the Custodian as custodian for the Customer;
<PAGE>
-7-
C. Hold for the account of the Custodian as custodian for the Customer
hereunder all stock dividends, rights and similar securities issued with
respect to any securities held by it hereunder.
VII. The Subcustodian shall execute on behalf of the Custodian, in the
Customer's name, any declarations, affidavits, or certificates of ownership
which may be necessary or useful from time to time for the Subcustodian to
perform any or several of its obligations arising under the provisions of this
Agreement.
VIII. If the Subcustodian shall receive any notices or reports in respect
of securities held by it hereunder, it shall promptly upon receipt thereof
transmit to the Custodian by airmail, telecommunications facilities, or
comparable means any such notices or reports.
IX. The Subcustodian may, from time to time, appoint other offices of The
Chase Manhattan Bank, N.A. (located outside the United States) and such other
persons as are approved in advance by the Custodian and the Customer
("Additional Subcustodians") for purposes of acquiring, holding or disposing of
securities outside of Hong Kong. The Subcustodian shall be fully liable to the
Custodian for the acts or omissions of such Additional Subcustodians to the same
extent as if the acts or omissions of the Additional Subcustodians were the acts
or omissions of the Subcustodian. Upon receipt of instructions from the
Custodian, the Subcustodian shall terminate any Additional Subcustodians
appointed pursuant to the provisions of this paragraph in the manner provided in
the applicable agreement.
<PAGE>
-8-
The Subcustodian shall transmit to Additional Subcustodians any
instructions received from the Custodian concerning the acquisition, custody or
disposition of securities by Additional Subcustodians and shall transmit to the
Custodian any notices or reports received from Additional Subcustodians in
respect of securities held by such Additional Subcustodians.
X. The Subcustodian may, from time to time, appoint (and may at any time
remove) any bank or trust company as its agent for purposes of acquiring or
disposing of securities or carrying out such provisions of this Agreement as the
Subcustodian may, from time to time, direct; provided that the Subcustodian
shall be fully liable to the Custodian for the acts or omissions of such agents
to the same extent as if the acts or omissions of the agents were the acts or
omissions of the Subcustodian.
XI. On each day on which there is a cash or securities transaction over the
account of the Custodian as custodian for the Customer, the Subcustodian shall
dispatch to the Custodian (and to the Customer if requested) separate cash and
securities advices. The Subcustodian shall furnish the Custodian at the end of
every month with a statement of the cash and securities held by the Subcustodian
and any Additional Subcustodians and a summary of all transactions effected over
the account. Such statements and summaries shall be sent by air mail,
telecommunications facilities or comparable means to the Custodian within 15
days after the end of each. month. Upon request of the Custodian, additional
statements will be furnished at the expense of the Custodian.
<PAGE>
-9-
XII. As compensation for the services rendered pursuant to this Agreement,
the Custodian shall pay the Subcustodian a fee computed in accordance with the
schedule attached hereto as Exhibit B, as such schedule may be amended from time
to time by written agreement between the Custodian and the Subcustodian. The
Custodian shall reimburse the Subcustodian for any reasonable out-of-pocket
expenses incurred by the Subcustodian in connection with its obligations
hereunder (including the fees and reasonable out-of-pocket expenses of
Additional Subcustodians and agents).
XIII. Upon request, the Custodian shall deliver, or shall request the
Customer to deliver, to the Subcustodian, such proxies, powers-of-attorney or
other instruments as may be necessary or desirable in connection with the
performance by the Subcustodian of its obligations under this Agreement.
XIV. So long as and to the extent that it is in the exercise of reasonable
care, the Subcustodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement. The Subcustodian shall not be liable
for any action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be genuine and to
be signed by the proper party or parties. The Subcustodian shall be obligated to
exercise reasonable care and diligence in carrying out the provisions of this
Agreement; provided that the Subcustodian shall not thereby be required to take
any action which is in contravention of the laws of Hong Kong or any other
applicable law. Notwithstanding the foregoing, the
<PAGE>
-10-
Subcustodian shall not be liable for (a) any violation by the Customer of any
limitation applicable to its powers to make expenditures, to invest in or pledge
securities or to borrow which does not involve action by the Subcustodian, and
(b) any violation by the Customer of any limitation applicable to its powers to
make investments, to invest in or pledge securities or to borrow which involves
action by the Subcustodian, provided that such action was authorized in
accordance with Paragraphs III, IV or V hereof. The Subcustodian shall be
entitled to and may act upon advice of counsel (who may be counsel for the
Customer) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
XV. This Agreement may be terminated at any time by the Custodian or the
Subcustodian by giving written notice to the other party at least thirty (30)
days prior to the date on which such termination is to become effective. Such
termination shall, inter alia, constitute a revocation of the Subcustodian's
authority to act on behalf of all Customers (including all authority granted to
the Subcustodian under any power-of-attorney executed in connection with this
Agreement). In the event of termination, the Subcustodian will deliver any
securities held by it or any Additional Subcustodians to the Custodian or to
such successor subcustodian as the Custodian shall instruct in a manner to be
mutually agreed upon by the parties hereto or in the failure of such agreement
in a reasonable manner. Further in the event of termination, the Subcustodian
shall be entitled to receive prior to the delivery
<PAGE>
-11-
of the securities held by it or any Additional Subcustodians all accrued fees
and unreimbursed expenses the payment of which is contemplated by Paragraph XII
hereof upon receipt by the Custodian of a final statement setting forth such
fees and expenses.
XVI. Except as the parties shall from time to time otherwise agree, all
instructions, notices, reports and other communications contemplated by this
Agreement shall be dispatched as follows:
If to the Custodian: Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Attention: Manager-Securities Department
Telex No.: 940709
If to the Subcustodian: The Chase Manhattan Bank, N.A.
G. P. 0. Box 104
Hong Kong B. C. C.
Attention: Custody Section
Telex No.: 73437
XVII. This Agreement constitutes the entire understanding and agreement of
the parties hereto, and neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated except by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
XVIII. This Agreement shall be binding upon and shall inure to the benefit
of the Custodian and the Subcustodian and their successors and assignees
provided that neither the Custodian nor the Subcustodian may assign this
Agreement or any of the rights or obligations hereunder without the prior
written consent of the other party.
<PAGE>
-12-
XIX. This Agreement shall be construed in accordance with and governed by
the laws of the State of New York. The parties hereto agree that,
notwithstanding any provision or provisions of this Agreement of apparent
contrary effect the Subcustodian shall have no obligation to take any action
which is contrary to any or several provisions of the laws, orders or
regulations of Hong Kong. The Subcustodian shall not be liable for any expense
or damage to the Custodian or the Customer that may result from violation of any
or several of the foregoing laws, orders and regulations, except as such expense
or damage is caused by the wilful misconduct or negligence of the Subcustodian.
XX. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. This Agreement shall become effective when one or more
counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROWN BROTHERS HARRIMAN & CO.
(the "Custodian")
per pro /s/ [illegible]
-------------------------------
THE CHASE MANHATTAN BANK, N.A.
(the "Subcustodian")
By /s/ [illegible]
-------------------------------
Exhibit 8(f)(2)
THE CHASE MANHATTAN BANK, N.A.
HONG KONG BRANCH
Schedule of Charges for Securities in Safe Custody
Effective July 1, 1978
Charges shall be levied in accordance with the following scale for securities in
Safe Custody irrespective of whether these are used to secure banking facilities
or not:-
Transaction Charge
- ------------------
A. On Deposits of stocks, shares, bonds, etc:-
On each board lot of part thereof deposited ......... HK$ 5-
Minimum ............................................. HK$ 10-
Maximum per day, per account, per stock ............. HK$ 1,000-
(payable at time of deposit)
B. On Deposits of title deeds, leases, sealed packages, wills, insurance
policies and other documents, the minimum charge is HK$50- on each item
payable in advance.
C. On Withdrawal of stocks, shares, bonds, etc:-
A charge of HK$2.50 will be levied on each board lot or part thereof
withdrawn which were deposited prior to July 1, 1975 (No maximum charge).
No withdrawal charge will be levied on share certificate after July 1,
1975.
Safe Custody Charge
- -------------------
A semi-annual safe custody charge shall be levied in accordance with the
following scale, to be calculated on portfolios as at June 1 and December 1 :-
12 cents per board lot or part thereof calculated on small board lots:-
Minimum ........................... HK$ 37.50 per portfolio
Maximum ........................... HK$ 1,250.00 per portfolio
Dividend Collection Charge
- --------------------------
A commission of 1/2% will be deducted from each dividend paid on scrip
registered in the name of a bank nominee company.
Minimum Charge .................... HK$ 5-
Maximum ........................... HK$ 2,500-
<PAGE>
-2-
Securities Statement Charge
- ---------------------------
Securities statement is provided twice a year free of charge.
Additional statement requested and be charged at HK$25.00 each.
Exhibit 8(g)(1)
AGREEMENT dated as of July 16, 1981, between Brown Brothers Harriman & Co.,
a limited partnership organized under the laws of the State of New York (the
"Custodian"), and Citibank, N.A., New York (the "Subcustodian").
WITNESSETH:
WHEREAS, the Custodian has entered into certain custodian agreements and
may in the future enter into additional custodian agreements whereby cash and
securities will be held outside the United States;
WHEREAS, the Custodian desires to utilize subcustodians for the purpose of
holding cash and securities outside the United States, and
WHEREAS, the Subcustodian is willing to enter into an agreement whereby it
may, from time to time, be appointed as subcustodian for the Custodian's
customers (each such customer shall hereinafter be referred to as a "Customer");
NOW, THEREFORE, the Custodian and Subcustodian hereby agree as follows:
I. Upon the terms and conditions set forth in this Agreement and subject
in each case to acceptance by
<PAGE>
the Subcustodian, the Subcustodian may, at any time and from time to time, be
appointed as subcustodian for a Customer by delivery to the Subcustodian of a
letter substantially in the form of Exhibit A hereto.
II. The Custodian may from time to time deposit securities or cash with the
Subcustodian. The Subcustodian shall not be responsible for any property of the
Customer not delivered to the Subcustodian.
III. The Subcustodian shall hold and dispose of the securities hereafter
held by or deposited with the Subcustodian as follows:
A. The Subcustodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or
corporations, pursuant to the provisions hereof, all securities received by
it for the account of the Custodian as custodian for the Customer. All such
securities are to be held or disposed of by the Subcustodian for, and
subject at all times to the instructions of, the Custodian pursuant to the
terms of this Agreement.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall release or deliver securities owned by the Customer only for
-2-
<PAGE>
the following purposes:
(1) upon sale of securities for the account of the Customer
against receipt of payment therefor by cash, certified or cashier's
check, or bank credit;
(2) to the issuer thereof or its agent when securities are
called, redeemed, retired or otherwise become payable, provided that
the cash is to be delivered to the Subcustodian;
(3) for exchange for a different number of bonds or certificates
representing the same aggregate face amount or number of units, for
exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Subcustodian;
(4) in the case of warrants, rights or similar securities, the
surrender thereof in
-3-
<PAGE>
the exercise of such warrants, rights or similar securities; provided
that the surrender of interim receipts or temporary securities for
definitive securities may be made at any time; provided that, in any
such case, the securities are to be delivered to the Subcustodian;
(5) in the case of tender offers or similar offers to purchase
received in writing, the delivery of securities to the designated
depository or other receiving agent. The Subcustodian shall have full
responsibility for transmitting to the Custodian any such offers
received by it. Thereafter, the Custodian, if it desires to respond to
such offer, shall have full responsibility for providing the
Subcustodian with all necessary instructions in timely enough fashion
for the Subcustodian to act thereon prior to any expiration time for
such offer;
(6) upon receipt from the Custodian of instructions directing
disposition of securities in a manner other than or for purposes other
than the manners and purposes enumerated in the foregoing five items;
provided, however,
-4-
<PAGE>
that disposition pursuant to this item (6) shall be made by the
Subcustodian only upon receipt of instructions from the Custodian
specifying the amount of such securities to be delivered, the purpose
for which the delivery is to be made, and the name of the person or
persons to whom such delivery is to be made.
IV. The Subcustodian shall hold and dispose of cash hereafter held by or
deposited with the Subcustodian as follows:
A. The Subcustodian shall open and maintain with the Citibank, N. A. a
separate account or accounts in the name of the Custodian as custodian for
the Customer, subject only to draft or order by the Subcustodian acting
pursuant to the terms of this Agreement. The Subcustodian shall hold in
such account or accounts, subject to the provisions hereof, all cash
received by it for the account of the Custodian as Custodian for the
Customer.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall make payments
-5-
<PAGE>
of cash for the account of the Customer from such cash only for the
following purposes:
(1) upon the purchase of securities for the account of the
Customer but only against the delivery of such securities to the
Subcustodian;
(2) in connection with the subscription, conversion, exchange,
tender or surrender of securities owned by the Customer as set forth
in Paragraph IIIB hereof; and
(3) for deposit with the Custodian or with such other banking
institutions as may from time to time be approved by the Customer.
V. All instructions shall be in writing executed by the Custodian, and the
Subcustodian shall not be required to act on instructions otherwise
communicated; provided, however, that the Subcustodian may in its discretion act
on the basis of instructions received via telecommunications facilities if the
Subcustodian reasonably believes such instructions to have been dispatched by
the Custodian. The Subcustodian may require that instructions received via
telecommunications facilities be authenticated. The Subcustodian shall be
protected in acting upon any instructions, notice, request, con-
-6-
<PAGE>
sent, certificate or other instrument or paper reasonably believed by it to be
genuine and to have been properly executed. The Subcustodian may receive and
accept a certificate signed by a partner of the Custodian as conclusive evidence
of the authority of any person to act on behalf of the Custodian, and such
certificate may be considered as in full force and effect until receipt by the
Subcustodian of written notice to the contrary.
VI. Unless and until the Subcustodian receives instructions from the
Custodian to the contrary, the Subcustodian shall:
A. Present for payment all coupons and other income items held by it
for the account of the custodian as custodian for the Customer which call
for payment upon presentation and hold the cash received by it upon such
payment for the account of the Custodian as custodian for the Customer;
B. Collect interest and cash dividends received, with notice to the
Custodian, for the account of the Custodian as custodian for the Customer;
C. Hold for the account of the Custodian as custodian for the Customer
hereunder all stock dividends, rights and similar securities issued with
-7-
<PAGE>
respect to any securities held by it hereunder.
VII. The Subcustodian shall execute on behalf of the Custodian, in the
Customer's name, any declarations, affidavits, or certificates of ownership
which may be necessary or useful from time to time for the Subcustodian to
perform any or several of its obligations arising under the provisions of this
Agreement.
VIII. If the Subcustodian shall receive any notices or reports in respect
of securities held by it hereunder, it shall promptly upon receipt thereof
transmit to the Custodian by airmail, telecommunications facilities, or
comparable means any such notices or reports.
IX. The Subcustodian may, from time to time, appoint other offices of
Citibank, N.A. (located outside the United States) and such other persons as
are approved in advance by the Custodian and the Customer ("Additional
Subcustodians") for purposes of acquiring, holding or disposing of securities.
The Subcustodian shall be fully liable to the Custodian for the acts or
omissions of such Additional Subcustodians to the same extent as if the acts or
omissions of the Additional Subcustodians were the acts or omissions of the
Subcustodian. Upon receipt
-8-
<PAGE>
of instructions from the Custodian, the Subcustodian shall terminate any
Additional Subcustodians appointed pursuant to the provisions of this paragraph
in the manner provided in the applicable agreement.
The Subcustodian shall transmit to Additional Subcustodians any
instructions received from the Custodian concerning the acquisition, custody or
disposition of securities by Additional Subcustodians and shall transmit to the
Custodian any notices or reports received from Additional Subcustodians in
respect of securities held by such Additional Subcustodians.
X. The Subcustodian may, from time to time, appoint (and may at any time
remove) any bank or trust company as its agent for purposes of acquiring or
disposing of securities or carrying out such provisions of this Agreement as
the Subcustodian may, from time to time, direct; provided that the Subcustodian
shall be fully liable to the Custodian for the acts or omissions of such agents
to the same extent as if the acts or omissions of the agents were the acts or
omissions of the Subcustodian.
-9-
<PAGE>
XI. On each day on which there is a cash or securities transaction over the
account of the Custodian as custodian for the Customer, the Subcustodian shall
dispatch to the Custodian (and to the Customer if requested) separate cash and
securities advices. The Subcustodian shall furnish the Custodian at the end of
every month with a statement of the cash and securities held by the Subcustodian
and any Additional Subcustodians and a summary of all transactions effected over
the account. Such statements and summaries shall be sent by air mail,
telecommunications facilities or comparable means to the Custodian within 15
days after the end of each month. Upon request of the Custodian, additional
statements will be furnished at the expense of the Custodian.
XII. As compensation for the services rendered pursuant to this Agreement,
the Custodian shall pay the Subcustodian a fee computed in accordance with the
schedule attached hereto as Exhibit B, as such schedule may be amended from time
to time by written agreement between the Custodian and the Subcustodian. The
Custodian shall reimburse the Subcustodian for any reasonable out-of-pocket
expenses incurred by the Subcustodian in connection with its obligations
hereunder (including the fees and reasonable
-10-
<PAGE>
Agents).
XIII. Upon request, the Custodian shall deliver, or shall request the
Customer to deliver, to the Subcustodian, such proxies, powers-of-attorney or
other instruments as may be necessary or desirable in connection with the
performance by the Subcustodian of its obligations under this Agreement.
XIV. So long as and to the extent that it is in the exercise of reasonable
care, the Subcustodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement. The Subcustodian shall not be liable
for any action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be genuine and to
be signed by the proper party or parties. The Subcustodian shall be obligated to
exercise reasonable care and diligence in carrying out the provisions of this
Agreement; provided that the Subcustodian shall not thereby be required to take
any action which is in contravention of any applicable law. Notwithstanding the
foregoing, the Subcustodian shall not be liable
-11-
<PAGE>
for (a) any violation by the Customer of any limitation applicable to its powers
to make expenditures, to invest in or pledge securities or to borrow which does
not involve action by the Subcustodian, and (b) any violation by the Customer of
any limitation applicable to its power to make investments, to invest in or
pledge securities or to borrow which involves action by the Subcustodian,
provided that such action was authorized in accordance with Paragraphs III, IV
or V hereof. The Subcustodian shall be entitled to and may act upon advice of
counsel (who may be counsel for the Customer) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
XV. This Agreement may be terminated at any time by the Custodian or the
Subcustodian by giving written notice to the other party at least thirty (30)
days prior to the date on which such termination is to become effective. Such
termination shall, inter alia, constitute a revocation of the Subcustodian's
authority to act on behalf of all Customers (including all authority granted to
the Subcustodian under any power-of-attorney executed in connection with this
Agreement). In the event of termination, the Subcustodian will deliver any
securities held
-12-
<PAGE>
to such successor subcustodian as the Custodian shall instruct in a manner to be
mutually agreed upon by the parties hereto or in the failure of such agreement
in a reasonable manner. Further in the event of termination, the Subcustodian
shall be entitled to receive prior to the delivery of the securities held by it
or any Additional Subcustodians all accrued fees and unreimbursed expenses the
payment of which is contemplated by Paragraph XII hereof upon receipt by the
Custodian of a final statement setting forth such fees and expenses.
XVI. Except as the parties shall from time to time otherwise agree, all
instructions, notices, reports and other communications contemplated by this
Agreement shall be dispatched as follows:
If to the Custodian: Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Attention: Manager-Securities Department
Telex No.: 940709
If to the Subcustodian: Citibank, N. A.
Global Custody Department
Citicorp Center, 24th Floor
153 East 53rd Street
New York, New York 10043
-13-
<PAGE>
XVII. This Agreement constitutes the entire understanding and agreement of
the parties hereto, and neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated except by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
XVIII. This Agreement shall be binding upon and shall inure to the benefit
of the Custodian and the Subcustodian and their successors and assignees
provided that neither the Custodian nor the Subcustodian may assign this
Agreement or any of the rights or obligations hereunder without the prior
written consent of the other party.
XIX. This Agreement shall be construed in accordance with and governed by
the laws of the State of New York. The parties hereto agree that notwithstanding
any provisions or provisions of this Agreement of apparent contrary; effect, the
Subcustodian shall have no obligation to take any action which is contrary to
any or several provisions of the laws, orders or regulations of the country in
which the Subcustodian is serving.
The Subcustodian shall not be liable for any expense or damage to the Custodian
or the Customer that may result from violation of any or several of the
foregoing laws, orders
-14-
<PAGE>
and regulations, except as such expense or damage is caused by the wilful
misconduct or negligence of the Subcustodian
XX. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. This Agreement shall become effective when one or more
counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROWN BROTHERS HARRIMAN & CO.
(the "Custodian")
per pro /s/ [illegible]
-------------------------------
CITIBANK, N.A., NEW YORK
(the "Subcustodian")
By /s/ P.A. Humbert
-------------------------------
P.A. HUMBERT
Vice President
-15-
Exhibit 8(g)(2)
FEE SCHEDULE FOR CITIBANK, N.A., NEW YORK
AA) SAFEKEEPING MEXICAN PESOS
UP TO PS1MM 2.5 PER MIL (Thousand)
BETWEEN PS1MM AND PS100MM 1.25 PER MIL
OVER PS100MM 0.625 PER MIL
MINIMUM PS500
NOTE: THIS FEE IS FOR EVERY THREE MONTHS OR FRACTION THEREOF, BASED ON PAR
VALUE OF THE SECURITY HELD BY CITIBANK N.A., CALCULATED ON AVERAGE QUARTERLY
BALANCES, AND MUST BE PAID WITHIN THE FIRST TEN DAYS AFTER CLOSING OF EACH
QUARTER (STOP)
BB) COUPON REDEMPTION 0.625 PERCENT
BASED ON GROSS AMOUNT OF INTEREST AND/OR DIVIDENDS COLLECTED
NOTE: THIS FEE MUST BE PAID WITHIN THE FIRST TEN DAYS AFTER THE CLOSING OF THE
MONTH IN WHICH INTEREST AND/OR DIVIDENDS WERE COLLECTED (STOP)
CC) MANAGEMENT 0.75 PER MIL
BASED ON TOTAL AMOUNT OF TRANSACTIONS.
NOTE: THE TERMS "MANAGEMENT" AND "TRANSACTION" SHALL INCLUDE ALL OPERATIONS THAT
IMPLY DELIVERY OF SECURITIES TO A THIRD PARTY AND/OR A TRANSFER OF SECURITIES
FROM ONE ACCOUNT OR SUBACCOUNT TO ANOTHER, AND MUST BE PAID WITHIN THE FIRST TEN
DAYS AFTER THE CLOSING OF THE MONTH IN WHICH THE TRANSACTION WAS PROCESSED
(STOP)
DD) REDEMPTION OF AMORTIZED CERTIFICATES (FIXED RENT)
AT MATURITY 0.625 PER CENT
MINIMUM PS25.00
<PAGE>
EE) EQUITY ISSUE (STOCK DIVIDEND) 0.625 PERCENT
MINIMUM PS25.0
FF) EXCHANGE OF TITLES AND/OR CERTIFICATES 0.625 PERCENT
MINIMUM PS25.00
GG) COLLECTION OR SHIPMENT OF SECURITIES ABROAD BASED ON PAR VALUE OF
SECURITIES 0.25 PERCENT (") (") PLUS INSURANCE, HANDLING AND
CORRESPONDENTS' COMMISSION CHARGES.
HH) ISSUANCE OF A "CERTIFICATE OF DEPOSIT" PS 25.00 WHEN SECURITIES ARE
DEPOSITED FOR SHAREHOLDERS' MEETINGS
II) OTHER
ADDITIONAL SERVICES RELATED TO THIS ACTIVITY WILL ALSO BE CHARGED. FEES
PERTAINING TO SECTIONS DD THROUGH II OF THIS FEE SCHEDULE MUST ALSO BE PAID
WITHIN THE FIRST TEN DAYS AFTER THE CLOSING OF THE MONTH IN WHICH THE
CORRESPONDING TRANSACTION [ILLEGIBLE].
EXHIBIT 9(a)(1)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
SCUDDER INTERNATIONAL FUND, INC.
and
SCUDDER SERVICE CORPORATION
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of October 2, 1989, by and between SCUDDER INTERNATIONAL
FUND, INC., a Maryland Corporation, having its principal office and place of
business at 345 Park Avenue, New York, NY 10154 (the "Company") and SCUDDER
SERVICE CORPORATION, a Massachusetts corporation, having its principal office
and place of business at 160 Federal Street, Boston, Massachusetts 02110 (the
"Agent").
WHEREAS, the Company desires to appoint the Agent as a transfer agent,
dividend disbursing agent and agent in connection with certain other activities
and the Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1. Terms of Appointment: Duties of the Agent.
1.01. Subject to the terms and conditions set forth in this Agreement, the
Company hereby employs and appoints the Agent to act as, and the Agent agrees to
act as, transfer agent for the Company's authorized and issued shares of common
stock $1.00 par value ("Shares"), dividend disbursing agent and agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of the Company ("Shareholders") and set out in a currently
effective prospectus ("Prospectus") or currently effective statement of
additional information ("Statement of Additional Information") of the Company,
including without limitation any periodic investment plan or periodic withdrawal
program. If the Company offers two or more series of Shares as of the date
hereof, the term "Company shall be deemed to apply to each series of Shares,
unless the context otherwise requires.
1.02. The Agent agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Company and the Agent, the Agent shall:
(i) Receive for acceptance orders for the purchase of Shares
and promptly deliver payment and appropriate
documentation thereof to the duly authorized custodian
of the Company (the "Custodian").
(ii) Pursuant to orders for the purchase of Shares, record
the purchase of the appropriate number of Shares in the
Shareholder's account and, if requested by the
Shareholder, and if the Board of Directors of the
Company has authorized the issuance of stock
certificates, issue a certificate for the appropriate
number of Shares;
<PAGE>
(iii) Pursuant to instructions provided by Shareholders,
reinvest income dividends and capital gain
distributions;
(iv) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(v) Provide an appropriate response to Shareholders with
respect to all correspondence and rejected trades;
(vi) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders;
(vii) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(viii) Prepare and transmit payments for dividends and
distributions declared by the Company;
(ix) Report abandoned property to the various states as
authorized by the Company in accordance with policies
and principles agreed upon by the Company and Agent;
(x) Maintain records of account for and advise the Company
and its Shareholders as to the foregoing;
(xi) Record the issuance of Shares of the Company and
maintain an accurate control book with respect to Shares
pursuant to SEC Rule 17Ad-10(e) under the Securities
Exchange Act of 1934. The Agent shall also provide the
Company on a regular basis with the total number of
Shares which are issued and outstanding and shall have
no obligation, when recording the issuance of Shares, to
monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole
responsibility of the Company;
(xii) Respond to all telephone inquiries from shareholders or
their authorized representatives regarding the status of
Shareholder accounts;
(xiii) Respond to correspondence from Shareholders or their
authorized representatives regarding the status of
Shareholder accounts or information related to
Shareholder accounts; and
-2-
<PAGE>
(xiv) Perform all Shareholder account maintenance updates.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Agent shall: (i) perform the
customary services of a transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic
withdrawal program). The detailed definition, frequency, limitations and
associated costs (if any) set out in the attached fee schedule, include but are
not limited to: maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxy statements and proxies, receiving and tabulating
proxies, mailing shareholder reports and prospectuses to current Shareholders,
and withholding all applicable taxes (including but not limited to all
withholding taxes imposed under the U.S. Internal Revenue Code and Treasury
regulations promulgated thereunder, and applicable state and local laws to the
extent consistent with good industry practice), preparing and filing U.S.
Treasury Department Forms 1099, Form 941 when applicable and other appropriate
forms required with respect to dividends, distributions and taxes withheld on
Shareholder accounts by federal authorities for all registered Shareholders,
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information, (ii) provide
daily and monthly a written report and access to information which will enable
the Company to monitor the total number of Shares sold and the aggregate public
offering price thereof in each State by the Company, added by sales in each
State of the registered Shareholder or dealer branch office, as defined by the
Company, and (iii) if directed by the Company, (A) each confirmation of the
purchase which establishes a new account will be accompanied by a Prospectus and
any amendment or supplement thereto, and (B) a Prospectus, and any amendment or
supplement thereto, will be mailed to each Shareholder at the time a
confirmation of the first purchase by such Shareholder, subsequent to the
effective date of a Prospectus or any amendment or supplement thereto, is mailed
to such Shareholders.
(c) In addition, the Company shall (i) identify to the Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting to the Company for each state and (ii) approve those transactions to
be included for each state on the blue sky system prior to activation and
thereafter monitor the daily activity for each state. The responsibility of the
Agent for the Company's blue sky State registration status is solely limited to
the initial establishment of transactions subject to blue sky compliance by the
Company and the reporting of such transactions as provided above.
-3-
<PAGE>
(d) The Agent shall utilize a system to identify all share
transactions which involve purchase and redemption orders that are processed at
a time other than the time of the computation of net asset value per share next
computed after receipt of such orders, and shall compute the net effect upon the
Company of such transactions so identified on a daily and cumulative basis.
(e) The Agent shall supply to the Company from time to time, as
mutually agreed upon, reports summarizing the transactions identified pursuant
to paragraph (d) above, and the daily and cumulative net effects of such
transactions, and shall advise the Company at the end of each month of the net
cumulative effect at such time. The Agent shall promptly advise the Company if
at any time the cumulative net effect exceeds a dollar amount equivalent to 1/2
of 1 cent per outstanding Share.
(f) The Agent shall make appropriate arrangements with banking
institutions in connection with effecting timely redemptions of shares by the
Write-a-Check redemption feature described in the Company's Prospectus and
Statement of Additional Information.
1.03. The Agent's offices, personnel and computer and other equipment
shall be adequate to perform the services contemplated by this Agreement for the
Company and for other investment companies advised by Scudder, Stevens & Clark,
Inc. and its affiliates. The Agent shall notify the Company in the event that it
proposes to provide such services for any investment companies or other entities
other than those managed by Scudder, Stevens & Clark, Inc. and its affiliates.
Article 2. Fees and Expenses
2.01. For the performance by the Agent pursuant to this Agreement, the
Company agrees to pay the Agent an annual maintenance fee for each Shareholder
account as set out in a fee schedule agreed to by both parties in writing. Such
fees and out-of-pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Company and the Agent, as approved by a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) of the
Company.
2.02. In addition to the fee paid under Section 2.01 above, the Company
agrees to reimburse the Agent for out-of-pocket expenses or advances incurred by
the Agent for the items set out in the fee schedule agreed to by both parties in
writing. In addition, any other expenses incurred by the Agent at the request or
with the consent of the Company will be reimbursed by the Company.
2.03. The Company agrees to pay all fees and reimbursable expenses
promptly, the terms, method and procedures for which are detailed on the fee
schedule agreed to by both parties in writing. Postage for mailing of dividends,
proxy statements, Company reports and other mailings to all Shareholders
accounts shall be advanced to
-4-
<PAGE>
the Agent by the Company at least two (2) days prior to the mailing date of such
materials.
2.04. The Company may engage accounting firms or other consultants to
evaluate the fees paid by the Company and quality of services rendered by the
Servicing Company hereunder, and such firms or other consultants shall be
provided access by the Servicing Company to such information as may be
reasonably required in connection with such engagement. The Servicing Company
will give due consideration and regard to the recommendations to the Company in
connection with such engagement, but shall not be bound thereby.
Article 3. Representations and Warranties of the Agent.
The Agent represents and warrants to the Company that:
3.01. It is a corporation duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
3.02. It has the legal power and authority to carry on its business in The
Commonwealth of Massachusetts.
3.03. It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04. All requisite proceedings have been taken to authorize it to enter
into and perform this Agreement.
3.05. It is duly registered as a transfer agent under Section 17A of the
Securities Exchange Act of 1934, as amended.
3.06. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4. Representations and Warranties of the Company.
The Company represents and warrants to the Agent that:
4.01. It is a corporation duly organized and existing and in good standing
under the laws of Maryland.
4.02. It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03. All proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04. It is an investment company registered under the Investment Company
Act of 1940, as amended.
-5-
<PAGE>
4.05. A registration statement under the Securities Act of 1933 is
currently effective (or will be effective prior to commencement by the Agent of
performance of services hereunder) and will remain effective, and appropriate
state securities law filings have been made and/or will continue to be made,
with respect to all Shares of the Company being offered for sale.
Article 5. Indemnification
5.01. To the extent that the Agent acts in good faith and without
negligence or willful misconduct, the Agent shall not be responsible for, and
the Company shall indemnify and hold the Agent harmless from and against, any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liabilities arising out of or attributable to:
(a) All actions of the Agent or its agents or subcontractors
required to be taken and correctly executed pursuant to this Agreement.
(b) The Company's lack of good faith, negligence or willful
misconduct or which arise out of the breach of any representation or warranty of
the Company hereunder.
(c) The reasonable reliance on or use by the Agent or its agents or
subcontractors of information, records and documents or services which are
received or relied upon by the Agent or its agents or subcontractors and
furnished to it or performed by or on behalf of the Company.
(d) The reasonable reliance on, or the carrying out by the Agent or
its agents or subcontractors of, any written instructions or requests of the
Company.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations, or the securities laws or
regulations of any state that such Shares be registered in such state, or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state, unless such violation is the result of the Agent's negligent or willful
failure to comply with the provisions of Section 1.02(b) of this Agreement.
5.02. The Agent shall indemnify and hold the Company harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable to the Agent's refusal
or failure to comply with the terms of this Agreement (whether as a result of
the acts or omissions of the Agent or of its agents or subcontractors) or
arising out of the lack of good faith, negligence or willful misconduct of the
Agent, or its agents or subcontractors, or arising out of the breach of any
representation or warranty of the Agent hereunder.
-6-
<PAGE>
5.03. At any time the Agent may apply to any officer of the Company for
instructions, and may consult with outside legal counsel with respect to any
matter arising in connection with the services to be performed by the Agent
under this Agreement, and the Agent and its agents or subcontractors shall not
be liable and shall be indemnified by the Company for any action reasonably
taken or omitted by it in reliance upon such instructions or upon the opinion of
such counsel. The Agent, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of
the Company, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records or
documents provided to the Agent or its agents or subcontractors by
machine-readable input, telex, CRT data entry or other similar means authorized
by the Company, and shall not be held to have notice of any change of authority
of any person, until receipt by the Agent of written notice thereof from the
Company. The Agent, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Company,
and the proper countersignature of any former transfer agent or registrar, or of
a co-transfer agent or co-registrar.
5.04. In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable to the other for
any damages resulting from such failure to perform or otherwise from such
causes.
5.05. Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement, but each shall
be liable for general damages resulting from breach of this Agreement. For the
purposes of this Agreement, the term "general damages" shall include but shall
not be limited to:
(a) All costs of correcting errors made by the Agent or its agents
or subcontractors in Company shareholder accounts, including
the expense of computer time, programming and personnel;
(b) Amounts which the Company is liable to pay to a person (or his
representative) who has purchased or redeemed, or caused to be
repurchased, Shares at a price which is higher, in the case of
a purchase, or lower, in the case of a redemption or
repurchase, than correct net asset value per Share, but only
to the extent that the price at which such Shares were
purchased, redeemed or repurchased was incorrect as a result
of either (i) one or more errors caused by the Agent or its
agents or subcontractors in processing shareholder accounts of
the Company or (ii) the posting by the Agent of the purchase,
redemption or repurchase of Shares subsequent to the time such
purchase, redemption or repurchase
-7-
<PAGE>
should have been posted pursuant to laws and regulations
applicable to open-end investment companies, if the delay is
caused by the Agent, its agents or subcontractors;
(c) The value of dividends and distributions which were not
credited on Shares because of the failure of the Agent or its
agents or subcontractors to timely post the purchase of such
Shares;
(d) The value of dividends and distributions which were
incorrectly credited on Shares because of the failure of the
Agent or its agents or subcontractors to timely post the
redemption or repurchase of such Shares;
(e) The value of dividends and distributions, some portion of
which was incorrectly credited, or was not credited, on Shares
because of the application by the Agent or its agents or
subcontractor of an incorrect dividend or distribution factor
or otherwise;
(f) Penalties and interest which the Company is required to pay
because of the failure of the Agent or its agents or
subcontractors to comply with the information reporting and
withholding (including backup withholding) requirements of the
Internal Revenue Code of 1986, as amended, and applicable
Treasury regulations thereunder, applicable to Company
Shareholder accounts; and
(g) Interest in accordance with the laws of The Commonwealth of
Massachusetts on any damages from the date of the breach of
this Agreement.
5.06. In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim or loss for which either
party may be required to indemnify the other, the party seeking indemnification
shall promptly notify the other party of such assertion or loss, and shall keep
the other party advised with respect to all developments concerning such claim.
The party who may be required to indemnify shall have the option to participate
at its expense with the party seeking indemnification in the defense of such
claim. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
5.07. Losses incurred by the Company arising from the Agent effecting a
share transaction at a trade (pricing) date prior to the processing date shall
be governed by a separate agreement between the Agent and the Company.
The obligations of the parties hereto under this Article 5 shall survive
the termination of this Agreement.
-8-
<PAGE>
Article 6. Covenants of the Company and the Agent.
6.01. The Company shall promptly furnish to the Agent the following:
(a) A certified copy of the resolution of the Board of Directors of
the Company authorizing the appointment of the Agent and the execution and
delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-laws of the
Company and all amendments thereto.
6.02. The Agent hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Company for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account, of such certificates,
forms and devices.
6.03. The Agent shall at all times maintain insurance coverage which is
reasonable and customary in light of its duties hereunder and its other
obligations and activities.
6.04. The Agent shall keep records relating to the services to be
performed hereunder in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
(the "Act") and the Rules thereunder, the Agent agrees that all such records
prepared or maintained by the Agent relating to the services to be performed by
the Agent hereunder and those records that the Company and the Agent agree from
time to time to be the records of the Company are the property of the Company
and will be preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Company on and in
accordance with its request. Records surrendered hereunder shall be in machine
readable form, except to the extent that the Agent has maintained such a record
only in paper form.
6.05. The Agent and the Company agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.06. In case of any requests or demands for the inspection of the
Shareholders records of the Company, the Agent will endeavor to notify the
Company and to secure instructions from an authorized officer of the Company as
to such inspection. The Agent reserves the right, however, to exhibit the
Shareholders records to any person whenever it is reasonably advised by its
counsel that it may be held liable for the failure to exhibit the Shareholders
records to such person.
-9-
<PAGE>
6.07. The Agent agrees to maintain or provide for redundant facilities or
a compatible configuration and to maintain or provide for backup of the
Company's master and input files and to store such files in a secure
off-premises location so that in the event of a power failure or other
interruption of whatever cause at the location of such files the Company's
records are maintained intact and transactions can be processed at another
location.
6.08. The Agent acknowledges that the Company, as a registered investment
company under the Act, is subject to the provisions of the Act and the rules and
regulations thereunder, and that the offer and sale of the Company's Shares are
subject to the provisions of federal and state laws and regulations applicable
to the offer and sale of securities. The Company acknowledges that the Agent is
not responsible for the Company's compliance with such laws and regulations. If
the Company advises the Agent that a procedure of the Agent related to the
discharge of its obligations hereunder has or may have the effect of causing the
Company to violate any of such laws or regulations, the Agent shall use its best
efforts to develop a mutually agreeable alternative procedure which does not
have such effect.
Article 7. Termination of Agreement.
7.01. This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02. Should the Company exercise its right to terminate, all reasonable
out-of-pocket expenses of the Agent associated with the movement of records and
materials required by this Agreement will be borne by the Company. Additionally,
the Agent reserves the right to charge for any other reasonable expenses
associated with such termination.
Article 8. Additional Series.
8.01. In the event that the Company establishes one or more series of
Shares with respect to which it desires to have the Agent render services as
transfer agent under the terms hereof, it shall so notify the Agent in writing,
and unless the Agent objects in writing to providing such services, the term
"Company" hereunder, unless the context otherwise requires, shall be deemed to
include each such series of Shares. All recordkeeping and reporting shall be
done separately for each series. Unless the Company and the Agent agree to an
amended fee schedule, the fee schedule attached hereto shall apply to each
series separately.
Article 9. Assignment.
9.01. Except as provided in Section 9.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
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<PAGE>
9.02. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9.03. The Agent may, with notice to and consent on the part of the
Company, which consent shall not be unreasonably withheld, subcontract for the
performance of certain services under this Agreement to qualified service
providers, which shall be registered as transfer agents under Section 17A of the
Securities Exchange Act of 1934 if such registration is required; provided,
however, that the Agent shall be as fully responsible to the Company for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
Article 10. Amendment.
10.01. This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of each party.
Article 11. Massachusetts Law to Apply.
11.01. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 12. Form N-SAR.
12.01. The Agent shall maintain such records as shall enable the Company
to fulfill the requirements of Form N-SAR or any successor report which must be
filed with the Securities and Exchange Commission.
Article 13. Merger of Agreement.
13.01. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
Article 14. Counterparts.
14.01. This Agreement may be executed by the parties hereto in any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: SCUDDER INTERNATIONAL FUND, INC.
/s/ Marilyn J. Hayes BY: /s/ David S. Lee
- ----------------------------- -------------------------------
Title: Vice President
ATTEST: SCUDDER SERVICE CORPORATION
/s/ Marilyn J. Hayes BY: /s/ David S. Lee
- ----------------------------- -------------------------------
Title: Vice President
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EXHIBIT 9(a)(2)
SCUDDER SERVICE CORPORATION
FEE INFORMATION FOR SERVICES PROVIDED UNDER
TRANSFER AGENCY AND SERVICE AGREEMENT
Scudder Family of Funds
Annual maintenance fee for each account
1/12th of the annual maintenance fee shall be charged and payable each month. It
will be charged for any account which at any time during the month had a share
balance in the fund. The minimum monthly charge to any portfolio is $1,000.
Money Market Funds * $28.90
Monthly Income Funds 25.00
Quarterly Distribution Funds 20.40
Annual Distribution Funds 17.55
Other fees
New Account Set Up $ 3.15 each
Disaster Recovery 0.25 per year
Closed Accounts 1.20 per year
TIN Certificates 0.15 each
TIN Maintenance 0.25 each
Check Writing:
Set Up 5.00 per account
Retail Check Clearance 0.96 per check
Corporate Check Clearance 0.46 per check
Payroll Deduction Processing System (PDPS):
Annual Base Fee 240,000.00
Annual Maintenance:
IRA 6.00 per account
403B 7.00 per account
401K 8.00 per account
Out of pocket expenses shall be reimbursed by the fund to Scudder Service
Corporation or paid directly by the fund. Such expenses include but are not
limited to the following:
Telephone (portion allocable to servicing accounts)
Postage, overnight service or similar services
Stationery and envelopes
Shareholder Statements - printing and postage
Checks - stock supply, printing and postage
Data circuits
Lease and maintenance of S.A.I.L. and Easy Access
Forms
Microfilm and microfiche
Expenses incurred at the specific direction of the fund
Payment
The above will be billed within the first five (5) business days of each month
and will be paid by wire within five (5) business days of receipt.
On behalf of the Funds listed in Attachment A: Scudder Service Corporation:
By /s/ David S. Lee By /s/ Daniel Pierce
------------------------- -------------------------
Date October 2, 1989 Date October 2, 1989
----------------------- -----------------------
* SCIT per account change is $25.78
Exhibit 9(b)
SCUDDER INTERNATIONAL FUND, INC. SCUDDER
345 PARK AVENUE, NEW YORK, N. Y. 10022 SCUDDER, STEVENS & CLARK
(212) 350-8200 INVESTMENT COUNSEL
January 23, 1978
Cazenove Inc.
67 Wall Street
New York, New York 10005
Gentlemen:
This will record our understanding concerning the services you have
undertaken to provide effective November 13, 1977 with respect to the pricing of
securities held by this Fund.
(1) You will ascertain daily the closing sales prices or if none, bid and asked
prices of such securities as quoted on the securities exchange on which the
securities are principally traded, or as quoted on such other market as the
officers of the Fund may from time to time designate as the appropriate market
for valuation of any security.
(2) You will communicate such prices to Brown Brothers, Harriman & Co., the
Custodian of the Fund, or its successor, by telephone or otherwise, as may be
necessary, promptly after the close of the relevant market.
(3) You will report promptly to such Custodian any price adjustments for the
securities of the Fund resulting from cash dividends, stock dividends, rights
issues or the like.
(4) You will be compensated for such services at an annual rate of $5,000 in
cash, such amount to be reduced by any payments made to you for brokerage
services performed by you with respect to the portfolio securities of the Fund
to the extent the total of such payments exceeds $5,000 in any year, on the
basis of $3.00 of brokerage dollars for each $1.00 of cash payment with respect
to pricing services. Such compensation shall be paid to you on or before
November 13, 1978, and annually thereafter.
(5) This agreement will remain in effect until cancelled by either of us on 30
days advance notice in writing to the other party without obligation by the Fund
to make payment beyond such 39 day period.
Please confirm your agreement with the above by signing and returning to us
the enclosed copy of this letter.
SCUDDER INTERNATIONAL FUND, INC.
BY: /s/ Juris Padegs
------------------------------------
Vice President
Agreed to and accepted
this 25th day of January, 1978.
CAZENOVE, INC.
BY: /s/ [ILLEGIBLE]
-----------------------------
PRESIDENT
EXHIBIT 9(c)(1)
COMPASS SERVICE AGREEMENT
THIS AGREEMENT made as of this 1st day of January, 1990, by and between
SCUDDER TRUST COMPANY, a New Hampshire banking corporation ("Trust Company") and
SCUDDER INTERNATIONAL FUND, INC., a Maryland Corporation ("the Fund").
WITNESSETH:
WHEREAS, Trust Company is engaged in the business of providing certain
recordkeeping and other services; and
WHEREAS, the Fund is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940, as amended; and
WHEREAS, Trust Company is willing to provide to the Fund certain
recordkeeping and other services in connection with certain omnibus accounts
maintained with the Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Terms of Appointment: Duties of the Service.
1.01. Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints Trust Company to act as, and Trust Company
agrees to act as, recordkeeping agent with respect to the authorized and issued
shares of beneficial interest of the Fund ("Shares") or units representing such
Shares ("Units") which are held in plan-level omnibus accounts (individually an
"Account" or collectively the "Accounts") in connection with certain retirement
and employee benefit plans established under the Internal Revenue Code of 1986
including but not limited to defined contribution plans, Section 403(b) plans,
individual retirement accounts and deferred compensation plans (each a "Plan" or
collectively the "Plans"), utilizing the Comprehensive Participant Accounting
Services ("COMPASS"), and established by plan administrators, employers,
trustees, custodians and other persons (each individually an "Administrator" or
collectively the "Administrators") on behalf of employers (each individually an
"Employer" or collectively the "Employers") and individuals for certain
participants in such Plans (each individually a "Participant" or collectively
the "Participants").
1.02. Trust Company agrees that it will perform the following services in
accordance with procedures established from time to time by agreement between
the Fund and Trust Company. Subject to instructions from the Administrators,
Trust Company shall:
(i) receive from Administrators instructions for the purchase of
Shares of the Fund, confirm compliance with such instructions and, as agent of
the respective Administrators, deliver
<PAGE>
within a reasonable time such instructions and any appropriate documentation
therefor to the Transfer Agent of the Fund duly appointed by the Directors of
the Fund (the "Transfer Agent");
(ii) record the purchase by Plans of the appropriate number of Shares
or Units and within a reasonable time allocate such Shares or Units among the
Participants' Accounts;
(iii) record dividends and capital gains distributions on behalf of
Participants;
(iv) receive from Administrators instructions for redemption and
repurchase requests and directions, confirm compliance with such instructions
and as agent of the respective Administrators deliver within a reasonable time
such instructions and any appropriate documentation therefor to the Transfer
Agent;
(v) record the redemption or repurchase by Plans of the appropriate
number of Shares or Units and within a reasonable time make the appropriate
adjustments among the Participants' accounts;
(vi) certify to the Fund no less frequently than annually the number
of Participants accounts for which records are maintained hereunder;
(vii) maintain records of account for and advise the Fund and
Administrators and Participants, when appropriate, as to the foregoing;
(viii) maintain all Plan and Participant accounts other than accounts
maintained by the Transfer Agent; and
(ix) maintain and mail administrative reports and Participant
statements.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and Trust Company.
Article 2. Fees and Expenses
2.01. For performance by Trust Company of services pursuant to this
Agreement, the Fund agrees to pay Trust Company an annual maintenance fee for
each Participant account as set out in the fee schedule, as amended from time to
time. Such fee schedule and out-of-pocket expenses and advances identified under
Section 2.02 below may be changed from time to time by mutual agreement between
the Fund and Trust Company.
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<PAGE>
2.02. In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse Trust Company for out-of-pocket expenses or advances incurred by
Trust Company for the items set out in the fee schedule. In addition, any other
expenses incurred by Trust Company, at the request or with the consent of the
Fund, will be reimbursed by the Fund.
2.03. The Fund agrees to pay all fees and reimbursable expenses promptly.
Postage and the cost of materials for mailing of administrative reports,
Participant statements and other mailings to all Employer accounts or
Participants shall be advanced to Trust Company by the Fund at least two (2)
days prior to the mailing date of such materials or paid within two (2) days of
the receipt by the Fund of a bill therefor.
Article 3. Representations and Warranties of Trust Company.
Trust Company represents and warrants to the Fund that:
3.01. It is a banking corporation duly organized and existing and in good
standing under the laws of The State of New Hampshire.
3.02. It has the legal power and authority to carry on its business in any
jurisdiction where it does business.
3.03. It is empowered under applicable laws and by its business and by-laws
to enter into and perform this Agreement.
3.04. All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4. Representations and Warranties of the Fund.
The Fund represents and warrants to Trust Company that:
4.01. It is a corporation duly organized and existing and in good standing
under the laws of Maryland.
4.02. It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
-3-
<PAGE>
4.03. All proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04. It is an investment company registered under the Investment Company
Act of 1940, as amended (the "Act").
4.05. It makes available its Shares in connection with certain Plans.
4.06. A majority of the Directors of the Fund who are not interested
persons have made findings to the effect that:
(a) the Agreement is in the best interest of the Fund and its
shareholders;
(b) the services to be performed pursuant to the Agreement are
services required for the operation of the Fund;
(c) Trust Company can provide services the nature and quality of which
are at least equal to those provided by others offering the same or similar
services; and
(d) the fees charged by Trust Company for such services are fair and
reasonable in the light of the usual and customary charges made by others for
services of the same nature and quality.
4.07. A registration statement under the Securities Act of 1933, as
amended, has been filed and has become effective, and appropriate state
securities law filings have been made with respect to all Shares of the Fund
being offered for sale. The Fund shall notify Trust Company (i) if such
registration statement or any state securities registration or qualification has
been terminated or a stop order has been entered with respect to the Shares or
(ii) if such registration statement shall have been amended to cover shares of
any additional Series (as hereinafter defined in Section 8.01).
Article 5. Indemnification
5.01. Trust Company shall not be responsible for, and the Fund shall
indemnify and hold Trust Company harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liabilities
arising out of or attributable to:
(a) All actions of Trust Company or its agents required to be taken
pursuant to this Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
-4-
<PAGE>
(c) The reliance on or use by Trust Company or its agents of
information, records and documents which (i) are received by Trust Company or
its agents and furnished to it by or on behalf of the Fund, and (ii) have been
prepared and/or maintained by the Fund or any other person or firm (except Trust
Company) on behalf of the Fund.
(d) The reliance on or the carrying out by Trust Company or its agents
of any written instructions or requests of the Fund or any person acting on
behalf of the Fund.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations, or the securities laws or
regulations of any state that such Shares be registered in such state, or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
5.02. Trust Company shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable to Trust Company's
refusal or failure to comply with the terms of this Agreement, or which arise
out of Trust Company's lack of good faith, negligence or willful misconduct or
which arise out of the breach of any representation or warranty of Trust Company
hereunder.
5.03. At any time Trust Company may apply to any officer of the Fund for
instructions, and may consult with legal counsel (which may also be legal
counsel for the Fund) with respect to any matter arising in connection with the
services to be performed by Trust Company under this Agreement, and Trust
Company shall not be liable and shall be indemnified by the Fund for any action
taken or omitted by it in reliance upon such instructions or upon the opinion of
such counsel. Trust Company and its agents shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper person
or persons, or upon any instruction, information, data, records or documents
provided Trust Company or its agents by telephone, in person, machine-readable
input, telex, CRT data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund.
5.04. Trust Company may at any time or times in its discretion appoint (and
may at any time remove) another individual, corporation, partnership, trust or
company as its agent to carry out such of the provisions of this Agreement as
Trust Company shall from time to time direct.
5.05. In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably
-5-
<PAGE>
beyond its control, or other causes reasonably beyond its control, such party
shall not be liable to the other for any damages resulting from such failure to
perform or otherwise from such causes.
5.06. In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the notion to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6. Covenants of the Fund and Trust Company.
6.01. Trust Company hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of records and for
the preparation or use, and for keeping account of, such records.
6.02. Trust Company shall at all times maintain insurance coverage which is
reasonable and customary in light of its duties hereunder and its other
obligations and activities, and shall notify the Fund of any changes in its
insurance coverage unless the Fund is covered by the same policy and such change
is also applicable to the Fund.
6.03. Trust Company shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
6.04. Trust Company and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05. In case of any requests or demands for the inspection of the records
relating to Plan Accounts and Participant accounts with the Fund, Trust Company
will endeavor to notify the Fund and to secure instructions from an authorized
officer of the Fund as to such inspection. Trust Company reserves the right,
however, to exhibit such records to any person whenever it is reasonably advised
by counsel to the Fund that it may be held liable for the failure to exhibit
such records to such person.
6.06. Trust Company acknowledges that the Fund, as a registered investment
company under the Act, is subject to the provisions of the Act and the rules and
regulations thereunder, and
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<PAGE>
that the offer and sale of the Fund's Shares are subject to the provisions of
federal and state laws and regulations applicable to the offer and sale of
securities. The Fund acknowledges that Trust Company is not responsible for the
Fund's compliance with such laws, rules and regulations. If the Fund advises
Trust Company that a procedure of Trust Company related to the discharge of its
obligations hereunder has or may have the effect of causing the Fund to violate
any of such laws or regulations, Trust Company shall use its best efforts to
develop an alternative procedure which does not have such effect.
6.07. Trust Company acknowledges to the Fund that, as the offeror of
COMPASS, Trust Company does not act as a plan administrator or as a fiduciary
under the Employee Retirement Income Security Act of 1974, as amended from time
to time, with respect to any Plan. Trust Company shall not be responsible for
determining whether the terms of a particular Plan or the Shares of the Fund are
appropriate for the Plan or Participant and does not guarantee the performance
of the Fund.
Article 7. Termination of Agreement.
7.01. This Agreement may be terminated by either party on the last day of
the month next commencing after thirty (30) days written notice to the other
party.
7.02. Upon termination of this Agreement, the Fund shall pay to Trust
Company such fees and expenses as may be due as of the date of such termination.
7.03. Should the Fund exercise its right to terminate this Agreement, Trust
Company reserves the right to charge for any other reasonable expenses
associated with such termination.
Article 8. Additional Series of the Fund.
8.01. Shares of the Fund are of a single class; however, Shares may be
divided into additional series ("Series") that may be established from time to
time by action of the Directors of the Fund. If the context requires and unless
otherwise specifically provided herein, the term "Fund" as used in this
Agreement shall mean in addition each separate Series currently existing or
subsequently created, and the term "Shares" shall mean all shares of beneficial
interest of the Fund, whether of a single class or divided into separate Series
of the Fund currently existing or hereinafter created.
8.02. In the event that the Fund establishes one or more or additional
Series of Shares in addition to the original Series with respect to which it
desires to have Trust Company render services as recordkeeping agent under the
terms hereof, it shall so notify Trust
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<PAGE>
Company in writing, and upon the effectiveness of a registration statement under
the Securities Act of 1933, as amended, relating to such Series of Shares and
unless Trust Company objects in writing to providing such services, such Series
shall be subject to this Agreement.
8.03. In the event that the Fund suspends the offering of Shares of any one
or more Series, it shall so notify Trust Company in writing to such effect.
Article 9. Assignment.
9.01. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
9.02. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
Article 10. Amendment.
10.01. This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 11. Massachusetts Law to Apply.
11.01. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 12. Entire Agreement.
12.01. This Agreement constitutes the entire agreement between the parties
hereto.
Article 13. Correspondence.
13.01. Trust Company will answer correspondence from Administrators
relating to Accounts and such other correspondence as may from time to time be
mutually agreed upon and notify the Fund of any correspondence which may require
an answer from the Fund.
Article 14. Further Actions.
14.01. Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
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<PAGE>
Article 15. Interpretive Provisions.
15.01. In connection with the operation of this Agreement, Trust Company
and the Fund may agree from time to time on such provisions interpretive of or
in addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions are to be signed by the parties and annexed hereto, but no
such provisions shall contravene any applicable federal or state law or
regulation and no such interpretive or additional provision shall be deemed to
be an amendment of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
SCUDDER TRUST COMPANY
BY: /s/ Dennis M. Cronin, Jr.
-----------------------------------
Title: Vice President/Treasurer
SCUDDER INTERNATIONAL FUND, INC.
BY: /s/ David S. Lee
-----------------------------------
Title: Vice President/Asst. Treasurer
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EXHIBIT 9(c)(2)
SCUDDER TRUST COMPANY
FEE INFORMATION FOR SERVICES PROVIDED UNDER
COMPASS SERVICE AGREEMENT
Annual maintenance fee for each participant in a retirement and employee benefit
plan:
First Each
Participant Additional
Account Account
----------- ----------
Money Market Funds $28.90 $14.45
Monthly Income Funds 25.00 12.50
Quarterly Distribution Funds 20.40 10.20
Annual Distribution Funds 17.55 8.78
l/12th of the annual maintenance fee shall be charged and payable each month. It
will be charged for any participant who at any time during the month had a share
or unit account balance in the fund.
Out of pocket expenses shall be reimbursed by the fund to Scudder Trust Company.
Such expenses include but are not limited to the following:
Supplies:
Paper and envelopes in connection with participant statements and
administrative reports
Telephone (portion allocable to servicing accounts)
Postage, overnight service or similar services
Microfilm
Microfiche
On behalf of the Funds listed in
Attachment A: Scudder Trust Company:
By /s/ David S. Lee By /s/ Dennis M. Cronin, Jr.
--------------------------- --------------------------------
Date January 1, 1990 Date January 1, 1990
-------------------------- -------------------------------
Exhibit 9(d)(1)
SHAREHOLDER
SERVICES AGREEMENT
This Agreement, made as of the 1st day of June, 1990 between SCUDDER
INTERNATIONAL FUND, INC. (the "Fund") an open-end Investment company which is
registered under the Investment Company Act of 1940, as amended, ("1940 Act"),
and CHARLES SCHWAB & CO., INC. ("Schwab"), a corporation organized under the
laws of California which is a Securities and Exchange Commission licensed
transfer agent which has its principal place of business at 101 Montgomery
Street, San Francisco, California 94104.
WHEREAS, Schwab has established the Charles Schwab & Co., Inc. Defined
Contribution Prototype Plan (the "Prototype Plan") pursuant to which employers
may establish or amend employee benefit plans and their related Trusts
("Trusts"), and Schwab will offer to provide record keeping and trustee services
with respect to participants in Prototype Plans; and
WHEREAS, participants in Prototype Plans may direct that all or a portion
of their accounts may be invested in shares of the Fund; and
WHEREAS, the Fund desires that Schwab perform certain services for it; and
WHEREAS, the performance of such services by Schwab will benefit the Fund
and those participants in Prototype Plans who have directed that all or a
portion of their accounts be invested in shares of the Fund; and
WHEREAS, Schwab is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of mutual promises set forth below, the
parties agree as follows:
1. Omnibus Account. The Fund will cause to be maintained on its shareholder
records a single account in the name of Schwab, which account shall include
all shares of the Fund held by "Trust Client Shareholders", as defined
below, for the benefit of participants in the Prototype Plans.
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<PAGE>
2. Trust Client Shareholders. Trusts which are related to Prototype Plans and
which acquire an interest in the Fund shall herein be referred to as
Schwab's "Trust Client Shareholders."
3. Services. Schwab will perform for the Fund the shareholder services set
forth in Exhibit A hereto. Schwab also agrees to perform for the Fund such
special services incidental to the performance of the services set forth
herein as agreed to by the parties from time to time. Schwab will perform
such additional services as are provided on an amendment to Exhibit A
hereof, in consideration of the fees set forth in Section 7 below.
4. Agents of Schwab. Upon 60 days prior written notice to the Fund, unless
waived by the Fund, Schwab may, in its discretion, appoint in writing other
parties qualified to perform shareholder services to carry out some or all
of its responsibilities under this Agreement.
5. Compliance With Law. The Fund assumes full responsibility for the
preparation and contents of each prospectus, annual report or proxy
statement of the Fund and for compliance thereof with all applicable
requirements of the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and any other laws, rules and regulations
of governmental authorities having jurisdiction. Schwab will comply with
all regulatory requirements applicable to it with respect to transmitting
orders to purchase or redeem Fund shares.
6. Mailing of Materials and Tabulation of Proxies. Subject to Section 5
hereof, the Fund specifically agrees that Schwab may designate a party for
the purpose of mailing the materials described in Section 5 hereof on
behalf of the Fund to Schwab's Trust Client Shareholders and for tabulation
of returned proxy ballots, with the Fund bearing the reasonable costs of
postage and mail house handling. Within a reasonable period prior to the
record date, the Fund shall contact such designated party to establish the
procedures for such mailing and tabulation of all returned proxy ballots.
7. Fee. For the services provided under this Agreement, the Fund will compute
and pay Schwab a monthly fee as follows:
$1.50 per month per participant account in each Trust Client Shareholder.
The fee shall be charged only for participant accounts which held shares in
the Fund during the month.
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<PAGE>
Schwab, through the recordkeeper for adopters of the Prototype Plan, will
provide the Fund with a monthly accounting of the assets and the number of
participants accounts on whose behalf Schwab's Trust Client Shareholders
have invested in Fund Shares. Such accounting shall be for the purpose of
computing the fee to be paid Schwab. Each month's fee shall be determined
independently of every other month's fee, and shall be paid to Schwab
monthly.
8. Nonexclusivity. The services furnished to the Fund by Schwab under this
agreement are not to be deemed exclusive and Schwab shall be free to
furnish similar services to other investment companies registered under the
1940 Act so long as its services under this Agreement are not impaired
thereby. Nothing under this Agreement shall limit or restrict the right of
any employee, officer or director of Schwab to engage in any other business
or to devote his or her time and attention in part of the management or
other aspects of any other business, whether of a similar or dissimilar
nature.
9. Proprietary Information. The Fund agrees that neither it nor its
representatives or agents will use or distribute the names of Schwab's
Trust Client Shareholders that it may obtain by reason of the relationship
with Schwab under this Agreement.
10. Schwab's Reliance on Records and Instructions. Schwab may rely on any
written records or instructions provided to it by the Fund.
11. Uncontrollable Events. Schwab assumes no responsibility hereunder, and will
not be liable, for any damage, loss of data, delay or any other loss
whatsoever caused by events beyond its reasonable control.
12. Standard of Care. Schwab will use its best efforts to ensure the accuracy
of all services performed under this Agreement, but will not be liable to
the Fund for any action taken or omitted by Schwab in the absence of bad
faith, willful misconduct or negligence. Schwab shall not be liable for any
losses to the Fund caused by the Fund but shall use reasonable efforts to
recover losses to the Fund.
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<PAGE>
13. Reports. Schwab will furnish to the Fund and to the Fund's properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the
Fund in writing, such reports at such times as are reasonably agreed upon
by the Fund and Schwab.
14. Rights of Ownership. All computer programs and procedures developed by
Schwab to perform services required to be provided by Schwab under this
Agreement are the property of Schwab, except such programs and procedures
developed by the Fund or Scudder, Stevens & Clark, Inc. and its affiliates.
15. Assignment. This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section shall not limit or in any way
affect Schwab's right to appoint an agent pursuant to Section 4 hereof.
16. Terms. This Agreement may be terminated by either party upon sixty (60)
days written notice mailed to the Fund at: c/o D.M. Cronin, Scudder Fund
Distributors Inc., 175 Federal Street, Boston, MA 02110 and to Schwab at
101 Montgomery Street, San Francisco, California 94101, Attention: General
Counsel.
17. If the Fund is a Massachusetts Business trust the obligations of the Fund
under this agreement are not binding upon any of the Trustees, officers,
agents or shareholders of the Fund individually, but bind only the trust
estate of the Fund, and all persons dealing with the Fund must look solely
to the Fund property for the enforcement of any claims against the Fund.
Furthermore, the parties hereto acknowledge that the Fund may be an
investment company whose assets may be allocated to two or more series. In
such a case, Schwab agrees to seek satisfaction of all obligations
hereunder solely out of the assets of the series on whose behalf the
transaction giving rise to the obligation was entered into.
18. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
as of the date and year first above written.
CHARLES SCHWAB & CO., INC.
Dated: June 4, 1990 By: /s/ David Krimm
-------------------- ----------------------------
David Krimm
Vice President
----------------------------
(Typed Name)
SCUDDER INTERNATIONAL FUND, INC.
Dated: 6/1/90 By: /s/ David S. Lee
-------------------- ----------------------------
David S. Lee
----------------------------
(Typed Name)
5
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 3rd day of June, 1997 between Scudder
International Fund, Inc. (the "Fund"), on behalf of Scudder International Growth
and Income Fund (hereinafter called the "Portfolio"), a registered open-end
management investment company with its principal place of business in New York,
New York and Scudder Fund Accounting Corporation, with its principal place of
business in Boston, Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need for certain accounting services which FUND
ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein made, the Fund and
FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this Agreement
as the Portfolio's fund accounting agent, and as such FUND ACCOUNTING
shall:
a. Maintain and preserve all accounts, books, financial records and
other documents as are required of the Fund under Section 31 of
the Investment Company Act of 1940 (the "1940 Act") and Rules
31a-1, 31a-2 and 31a-3 thereunder, applicable federal and state
laws and any other law or administrative rules or procedures
which may be applicable to the Fund on behalf of the Portfolio,
other than those accounts, books and financial records required
to be maintained by the Fund's custodian or transfer agent and/or
books and records maintained by all other service providers
necessary for the Fund to conduct its business as a registered
open-end management investment company. All such books and
records shall be the property of the Fund and shall at all times
during regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly authorized
officers of the Fund. All such books and records shall at all
times during regular business hours be open for inspection, upon
request of duly authorized officers of the Fund, by employees or
agents of the Fund and employees and agents of the Securities and
Exchange Commission.
b. Record the current day's trading activity and such other proper
bookkeeping entries as are necessary for determining that day's
net asset value and net income.
c. Render statements or copies of records as from time to time are
reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent public
accountants or by any other auditors employed or engaged by the
Fund or by any regulatory body with jurisdiction over the Fund.
e. Compute the Portfolio's net asset value per share, and, if
applicable, its public offering price and/or its daily dividend
rates and money market yields, in accordance with Section 3 of
the Agreement and notify the Fund and such other persons as the
Fund may reasonably request of the net asset value per share, the
public offering price and/or its daily dividend rates and money
market yields.
<PAGE>
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time to time
(hereinafter referred to as the "Registration Statement"); (b) the
resolutions of the Board of Directors of the Fund at the time in force
and applicable, as they may from time to time be delivered to FUND
ACCOUNTING, and (c) Proper Instructions from such officers of the Fund
or other persons as are from time to time authorized by the Board of
Directors of the Fund to give instructions with respect to computation
and determination of the net asset value. FUND ACCOUNTING may use one
or more external pricing services, including broker-dealers, provided
that an appropriate officer of the Fund shall have approved such use in
advance.
Section 3. Computation of Net Asset Value, Public Offering Price, Daily
Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset value,
including net income, in a manner consistent with the specific
provisions of the Registration Statement. Such computation shall be
made as of the time or times specified in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and money market
yields, if applicable, in accordance with the methodology set forth in
the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making the
necessary computations FUND ACCOUNTING shall be entitled to receive,
and may rely upon, information furnished it by means of Proper
Instructions, including but not limited to:
a. The manner and amount of accrual of expenses to be recorded on
the books of the Portfolio;
b. The source of quotations to be used for such securities as
may not be available through FUND ACCOUNTING's normal pricing
services;
c. The value to be assigned to any asset for which no price
quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be entitled to
rely upon, as conclusive proof of any fact or matter required to be
ascertained by it hereunder, a certificate, letter or other instrument
signed by an authorized officer of the Fund or any other person
authorized by the Fund's Board of Directors.
FUND ACCOUNTING shall be entitled to receive and act upon advice of
Counsel (which may be Counsel for the Fund) at the reasonable expense
of the Portfolio and shall be without liability for any action taken or
thing done in good faith in reliance upon such advice.
FUND ACCOUNTING shall be entitled to receive, and may rely upon,
information received from the Transfer Agent.
2
<PAGE>
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate, letter or
other instrument or telephone call reasonably believed by FUND
ACCOUNTING to be genuine and to have been properly made or signed by
any authorized officer of the Fund or person certified to FUND
ACCOUNTING as being authorized by the Board of Directors. The Fund, on
behalf of the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices as from time
to time agreed to by an authorized officer of the Fund and FUND
ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to the
appropriate person(s) within FUND ACCOUNTING a copy of the Registration
Statement as in effect from time to time. FUND ACCOUNTING may
conclusively rely on the Fund's most recently delivered Registration
Statement for all purposes under this Agreement and shall not be liable
to the Portfolio or the Fund in acting in reliance thereon.
Section 6. Standard of Care and Indemnification
FUND ACCOUNTING shall exercise reasonable care and diligence in the
performance of its duties hereunder. The Fund agrees that FUND
ACCOUNTING shall not be liable under this Agreement for any error of
judgment or mistake of law made in good faith and consistent with the
foregoing standard of care, provided that nothing in this Agreement
shall be deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its shareholders to
which FUND ACCOUNTING would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties
hereunder.
The Fund agrees, on behalf of the Portfolio, to indemnify and hold
harmless FUND ACCOUNTING and its employees, agents and nominees from
all taxes, charges, expenses, assessments, claims and liabilities
(including reasonable attorneys' fees) incurred or assessed against
them in connection with the performance of this Agreement, except such
as may arise from their own negligent action, negligent failure to act
or willful misconduct. The foregoing notwithstanding, FUND ACCOUNTING
will in no event be liable for any loss resulting from the acts,
omissions, lack of financial responsibility, or failure to perform the
obligations of any person or organization designated by the Fund to be
the authorized agent of the Portfolio as a party to any transactions.
FUND ACCOUNTING's responsibility for damage or loss with respect to the
Portfolio's records arising from fire, flood, Acts of God, military
power, war, insurrection or nuclear fission, fusion or radioactivity
shall be limited to the use of FUND ACCOUNTING's best efforts to
recover the Portfolio's records determined to be lost, missing or
destroyed.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed
upon in writing by the two parties. FUND ACCOUNTING shall be entitled
to recover its reasonable telephone, courier or delivery service, and
all other reasonable out-of-pocket, expenses as incurred, including,
without limitation, reasonable attorneys' fees and reasonable fees for
pricing services.
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<PAGE>
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until terminated
as hereinafter provided, may be amended at any time by mutual agreement
of the parties hereto and may be terminated by an instrument in writing
delivered or mailed to the other party. Such termination shall take
effect not sooner than ninety (90) days after the date of delivery or
mailing of such notice of termination. Any termination date is to be no
earlier than four months from the effective date hereof. Upon
termination, FUND ACCOUNTING will turn over to the Fund or its designee
and cease to retain in FUND ACCOUNTING files, records of the
calculations of net asset value and all other records pertaining to its
services hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such records and
documents which it determines appropriate or for its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are not to be
deemed to be exclusive, and it is understood that FUND ACCOUNTING may
perform fund accounting services for others. In acting under this
Agreement, FUND ACCOUNTING shall be an independent contractor and not
an agent of the Fund or the Portfolio.
Section 10. Notices
Any notice shall be sufficiently given when delivered or mailed to the
other party at the address of such party set forth below or to such
other person or at such other address as such party may from time to
time specify in writing to the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Scudder International Fund, Inc.
Scudder International Growth and Income Fund
Two International Place
Boston, Massachusetts 02110
Attn: President, Secretary or Treasurer
Section 11. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING without the
consent of the Fund as authorized or approved by resolution of its
Board of Directors.
In connection with the operation of this Agreement, the Fund and FUND
ACCOUNTING may agree from time to time on such provisions interpretive
of or in addition to the provisions of this Agreement as in their joint
opinions may be consistent with this Agreement. Any such interpretive
or additional provisions shall be in writing, signed by both parties
and annexed hereto, but no such provisions shall be deemed to be an
amendment of this Agreement.
4
<PAGE>
This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes any and all prior
understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized and its seal to be
hereunder affixed as of the date first written above.
[SEAL] SCUDDER INTERNATIONAL FUND, INC.,
on behalf of Scudder International
Growth and Income Fund, Inc.
By:/s/Nicholas Bratt
-------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:/s/Pamela A. McGrath
-------------------------------
Vice President
5
<PAGE>
Scudder Fund Accounting Corp.
Fund Accounting Fee Schedule
Fund Accounting Service--Maintain and preserve accounts, books, records and
other documents as are required of the Fund under Section 31 of the
Investment Company Act of 1940 and Rules 31a-1 and 31a-2. Record the
current day's trading activity and such other proper bookkeeping entries as
are necessary for determining that day's net asset value. Calculate net
asset value.
I. Annual Fees per Portfolio
Money Market Funds
Fund Net Assets Annual Fee
------------------------ ------------------
First $150 Million 2.00 Basis Points
Next $850 Million .60 Basis Points
Excess--Over $1 billion .35 Basis Points
A minimum monthly fee of $2,500 will be applied.
Domestic Fixed Income Funds
Fund Net Assets Annual Fee
------------------------ ------------------
First $150 Million 2.50 Basis Points
Next $850 Million .75 Basis Points
Excess--Over $1 billion .45 Basis Points
A minimum monthly fee of $3,125 will be applied.
Domestic Equity Funds
Fund Net Assets Annual Fee
------------------------ ------------------
First $150 Million 2.50 Basis Points
Next $850 Million .75 Basis Points
Excess--Over $1 billion .45 Basis Points
A minimum monthly fee of $3,125 will be applied.
International Equity Funds
Fund Net Assets Annual Fee
------------------------ ------------------
First $150 Million 6.50 Basis Points
Next $850 Million 4.00 Basis Points
Excess--Over $1 billion 2.00 Basis Points
A minimum monthly fee of $4,167 will be applied.
<PAGE>
Scudder Fund Accounting Corp.
Fund Accounting Fee Schedule
Scudder Funds
International Fixed Income Funds
Fund Net Assets Annual Fee
------------------------ ------------------
First $150 Million 8.00 Basis Points
Next $850 Million 6.00 Basis Points
Excess--Over $1 billion 4.00 Basis Points
A minimum monthly fee of $4,167 will be applied.
II. Holdings Charge
For each issue maintained--monthly charge $7.50
III. Portfolio Trades
Money Market Instruments $5.00
Domestic Fixed Income Securities $10.00
Domestic Equity Securities $10.00
Options, Futures and Forward Contracts $25.00
Foreign Equity and Fixed Income Securities $25.00
Foreign Currency Options and Futures Contracts $35.00
Foreign Options and Futures Contracts $35.00
IV. Out-of-Pocket Expenses
A billing for the recovery of applicable out-of-pocket expenses will be
made at the end of each month. Out-of-pocket expenses include, telephone,
courier or delivery service, legal fees, fees for pricing services and all
other reasonable out-of-pocket expenses.
Fund/Portfolio Scudder Fund Accounting Corp.
------------------------ --------------------------------
By:_____________________________ By:_____________________________
Title:__________________________ Title:__________________________
Date:___________________________ Date:___________________________
OBER | KALER
A Professional Corporation
Ober, Kaler, Grimes & Shriver
Attorneys at Law
120 East Baltimore Street
Baltimore, Maryland 21202-1643
410-685-1120 FAX 410-547-0699
1401 H Street, NW
Washington, DC 20005-3324
202-408-8400 FAX 202-408-0640
December 27, 1996
Scudder International Fund, Inc.
345 Park Avenue
New York, New York 10154
Re: Rule 24f-2 Notice
Gentlemen:
Scudder International Fund, Inc. ("Scudder") is a corporation organized
under the laws of the State of Maryland on June 23, 1975, having its principal
place of business in New York, New York. Scudder has five authorized series of
stock, the International Fund series, the Pacific Opportunities Fund series, the
Latin America Fund series, the Greater Europe Growth Fund series, and the
Emerging Markets Growth Fund series. The Pacific Opportunities Fund series
consists of one hundred million (100,000,000) authorized shares of capital
stock, with a par value of One Cent ($0.01) per share. The Latin America Fund
series consists of one hundred million (100,000,000) authorized shares of
capital stock with a par value of One Cent ($0.01) per share. The Greater Europe
Growth Fund series consists of one hundred million (100,000,000) authorized
shares of capital stock, with a par value of One Cent ($0.01) per share. The
Emerging Markets Growth Fund series consists of one hundred million
(100,000,000) authorized shares of capital stock, with a par value of One Cent
($0.01) per share. The Pacific Opportunities Fund, Latin America Fund, the
Greater Europe Growth Fund and Emerging Markets Growth Fund are hereinafter
sometimes individually referred to as a "Fund" and collectively referred to as
the "Funds."
We understand that, pursuant to Rule 24f-2 under the Investment Company
Act of 1940, Scudder registered an indefinite number of shares of its capital
stock,
<PAGE>
December 27, 1996
Page 2
effective December 1, 1980. We further understand that, pursuant to the
provisions of Rule 24f-2, you are about to file with the Securities and Exchange
Commission a notice making definite the registration of 37,658,732 shares of
capital stock of the Funds (the "Shares") sold in reliance upon Rule 24f-2
during the Funds' fiscal year ended October 31, 1996.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the Charter, By-Laws, as amended, and records of
corporate proceedings of Scudder, and such affidavits and advices from officers
of Scudder or from public officials, as we have deemed necessary or appropriate
for the purpose of this opinion.
We are of the opinion that all of the Shares were legally and validly
issued, and are fully paid and non-assessable. The opinion expressed in the
preceding sentence is based upon the assumptions that the consideration received
by Scudder for each such Share was in cash and in an amount not less than the
net asset value per share of the Fund to which such Share relates, determined in
accordance with the Charter, Bylaws and policies of the Board of Directors, and
at all times the net asset value per share of each of the Funds was not less
than One Cent ($0.01).
We express no opinion as to compliance with the Securities Act of 1933,
the Investment Company Act of 1940 or the securities laws of any state with
respect to the issuance of the Shares.
We consent to your filing this opinion with the Securities and Exchange
Commission in connection with the Rule 24f-2 Notice which you are about to file
pursuant to the Investment Company Act of 1940.
Sincerely,
/s/Ober, Kaler, Grimes & Shriver
a Professional Corporation
GWW/TSS
Coopers Coopers & Lybrand L.L.P.
& Lybrand
a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
To the Directors of Scudder International Fund, Inc.:
We consent to the incorporation by reference in Post-Effective Amendment No. 56
to the Registration Statement of Scudder International Fund, Inc. on Form N-1A
of our report dated May 16, 1997 on our audit of the financial statements and
financial highlights of Scudder International Fund, which report is included in
the Annual Report to Shareholders for the year ended March 31, 1997 which is
incorporated by reference in the Post-Effective Amendment to the Registration
Statement.
We also consent to the reference to our Firm under the caption "Experts."
/s/Coopers & Lybrand L.L.P.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
July 28, 1997
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland.
THE
SCUDDER
FLEXI-PLAN
---------------------
Plan Document
A profit sharing plan and
money purchase pension
plan
SCUDDER
SERVING INVESTORS SINCE 1919
<PAGE>
SCUDDER PROTOTYPE PLAN
TABLE OF CONTENTS
Page
----
SECTION 1 Introduction .................................................. 2
SECTION 2 Definitions ................................................... 2
SECTION 3 Eligibility ................................................... 3
SECTION 4 Contributions ................................................. 3
SECTION 5 Code Section 415 Limitations on Allocations ................... 4
SECTION 6 Time and Manner of Making Contributions ....................... 6
SECTION 7 Vesting ....................................................... 6
SECTION 8 Distribution Upon Death ....................................... 6
SECTION 9 Other Distributions ........................................... 6
SECTION 10 Loans ......................................................... 7
SECTION 11 Trust Provisions .............................................. 7
SECTION 12 Administration ................................................ 9
SECTION 13 Fees and Expenses ............................................. 9
SECTION 14 Benefit Recipient Incompetent or Difficult to
Ascertain or Locate .......................................... 9
SECTION 15 Designation of Beneficiary .................................... 9
SECTION 16 Spendthrift Provision ......................................... 10
SECTION 17 Necessity of Qualification .................................... 10
SECTION 18 Amendment or Termination ...................................... 10
SECTION 19 Transfers ..................................................... 10
SECTION 20 Owner-Employee Provisions ..................................... 10
SECTION 21 Top-Heavy Provisions .......................................... 10
SECTION 22 Waiver of Minimum Funding Standard ............................ 11
SECTION 23 Miscellaneous ................................................. 12
1
<PAGE>
SCUDDER PROTOTYPE PLAN
SECTION 1.
INTRODUCTION
The Employer has established this Plan (the "Plan"), consisting of the
Adoption Agreement and the following provisions (the "Prototype Plan") for the
exclusive benefit of its Employees and their Beneficiaries.
SECTION 2.
DEFINITIONS
Where the following words and phrases appear in this Plan, they shall have
the respective meanings set forth below, unless their context clearly indicates
a contrary meaning. The singular herein shall include the plural, and vice
versa, and the masculine gender shall include the feminine gender, and vice
versa, where the context requires.
2.1 "Account" shall mean the Trust assets held by the Trustee for the
benefit of a Participant, which shall be the sum of the Participant's Employer
Contribution Account, Nondeductible Voluntary Contribution Account, Deductible
Voluntary Contribution Account and Rollover Account.
2.2 "Act" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
2.3 "Administrator" shall mean the person or persons specified in Section
12.1.
2.4 "Adoption Agreement" shall mean the agreement by which the Employer has
most recently adopted or amended the Plan.
2.5 "Beneficiary" shall mean any person or legal representative entitled to
receive benefits on or after the death of a Participant.
2.6 "Code" shall mean the Internal Revenue Code of 1954, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.7 "Compensation" shall mean the amount paid during the Plan Year by the
Employer to the Employee for services rendered while a Participant, as
reportable to the Federal Government for the purpose of withholding Federal
income taxes, but not including amounts attributable to any category specified
in the Adoption Agreement. If so specified in the Adoption Agreement,
Compensation shall also mean amounts paid to the Employee for services rendered
for the entire Plan Year in which an Employee became a Participant whether or
not such an Employee was a Participant for the entire Plan Year. In the case of
a Self-Employed Individual, the above determination of Compensation shall be
made on the basis of the Self-Employed Individual's Earned Income.
Notwithstanding the previous sentence, for the purposes of the limitations
imposed by Section 4.1(a)(i)(B) below, Compensation of a Self-Employed
Individual shall be determined on the basis of the Self-Employed Individual's
Earned Income determined in accordance with the rules provided by Code Section
404(a)(8)(D).
2.8 "Current or Accumulated Earnings and Profits" of an Employer other than
a sole-proprietorship or partnership shall mean the Employer's current or
accumulated earnings and profits, as determined on the basis of the Employer's
books of account in accordance with generally accepted accounting practices,
without any deductions for Employer Contributions under the Plan (or any other
qualified plan) for the current Year or for income taxes for the current Year,
and without regard to the Employer's election to be taxed as a small business
corporation, if it has so elected. If the Employer is a sole-proprietorship or
partnership, "Current or Accumulated Earnings and Profits" shall mean the net
income of such Employer before deduction for income taxes and contributions made
hereunder.
2.9 "Deductible Voluntary Contribution Account" shall mean the separate
account maintained pursuant to Section 6.3(c) hereof for the Deductible
Voluntary Contributions made by the Participant and the income, expenses, gains
and losses attributable thereto.
2.10 "Deductible Voluntary Contributions" shall mean the contributions made
by Participants in accordance with Section 4.2 hereof, which respective
contributing Participants designate as "Deductible Voluntary Contributions" at
the time of contribution, and which comply with the requirements of Code Section
219.
2.11 "Designated Investment Company" shall mean a regulated investment
company for which Scudder, Stevens & Clark, its successor or any of its
affiliates, acts as investment adviser and which is designated by Scudder Fund
Distributors, Inc. or its successors, as eligible for investment under the Plan.
2.12 "Designation of Beneficiary" or "Designation" shall mean the document
executed by a Participant under Section 15.
2.13 "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to last for a continuous period of 12 months or
more, as certified by a licensed physician selected by the Participant and
approved by the Employer.
2.14 "Distributee" shall mean the Beneficiary or other person entitled to
receive the undistributed portion of the Participant's Account under Section 8
because of death or under Section 14 because of incompetency or inability to
ascertain or locate such individual.
2.15 "Distributor" shall mean Scudder Fund Distributors, Inc. or its
successor.
2.16 "Earned Income" shall mean the net earnings from self-employment in
the trade or business with respect to which the Plan is established, for which
personal services of the Owner-Employee or Self-Employed Individual are a
material income-producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer to a qualified
plan, including this Plan, to the extent deductible under Code Section 404.
2.17 "Effective Date" shall mean the date specified by the Employer in the
Adoption Agreement.
2.18 "Employee" shall mean an individual who performs services in the
business of the Employer in any capacity except for, (a) if specified in the
Adoption Agreement, non-resident aliens who receive no earned income from United
States sources (as described in Code Section 410(b)(3)(C)), (b) if specified in
the Adoption Agreement, individuals who are covered by a collective bargaining
contract between the Employer and a recognized bargaining agent, if contract
negotiations considered retirement benefits in good faith and unless such
contract specifically provides for participation in the Plan, and (c) such other
individuals as are excluded under the Adoption Agreement.
2.19 "Employer" shall mean the organization or other entity named as such
in the Adoption Agreement and any successor organization or entity which adopts
the Plan. Any two or more organizations or entities which are "related
businesses" within the meaning of Section 3.6 hereof may adopt and maintain the
plan as a single Plan.
2.20 "Employer Contribution Account" shall mean the separate account
maintained pursuant to Section 6.3(a) hereof for the Employer Contributions
allocated to a Participant and the income, expenses, gains and losses
attributable thereto.
2.21 "Employer Contributions" shall mean the contributions made by the
Employer in accordance with Section 4.1 hereof.
2.22 "Hour of Service" shall mean:
(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours shall be credited to the
Employee for the computation period in which the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including Disability), layoff, jury
duty, military duty or leave of absence. No more than 501 Hours of Service shall
be credited under this paragraph for any single continuous period (whether or
not such period occurs in a single computation period). Hours under this
paragraph shall be calculated and credited pursuant to section 2530.200b-2 of
the Department of Labor Regulations which are incorporated herein by this
reference; and
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service shall not
be credited both under paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (C). These hours shall be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
Where the Employer maintains the plan of a predecessor employer, service
for such predecessor employer shall be treated as Service of the Employer. Where
the Employer does not maintain the plan of a predecessor employer, employment by
a predecessor employer, upon the written election of the Employer made in a
uniform and non-discriminatory manner, shall be treated as Service for the
Employer.
2.23 "Integration Level" for a Plan Year shall mean the lesser of the
Social Security Wage Base or the dollar amount specified in the Adoption
Agreement.
2.24 "Integration Rate" for a Plan Year shall mean the lesser of the OASDI
Rate or the rate specified in the Adoption Agreement.
2.25 "Loan Trustee" shall mean the Trustee or, if the Employer has
specified otherwise in the Adoption Agreement, the individual or individuals so
appointed to act as trustee solely for the purpose of administering the
provisions of Section 10 and holding the Trust assets to the extent that they
are invested in loans pursuant to such Section.
2.26 "Nondeductible Voluntary Contribution Account" shall mean the separate
account maintained pursuant to the Section 6.3(b) hereof for Nondeductible
Voluntary Contributions made by the Participant and the income, expenses, gains
and losses attributable thereto.
2.27 "Nondeductible Voluntary Contributions" shall mean all Contributions
by Participants which are not Deductible Voluntary Contributions, Rollover
Contributions, or contributions of accumulated deductible employee contributions
made pursuant to Section 4.2(b)(vi) hereof.
2.28 "Normal Retirement Date" or "Normal Retirement Age" shall mean the
earlier of (a) the date selected by the Employer in the Adoption Agreement or,
(b) if the Employer enforces a mandatory retirement age, the first day of the
month in which the Participant reaches such age.
2.29 "OASDI Rate" for a Plan Year shall mean the tax rate applicable, on
the first day of the Plan Year, to employer contributions for old age,
survivors, and disability insurance under the Social Security Act.
2.30 "One-Year Break in Service" shall mean a 12-consecutive-month period
in which an Employee does not complete more than 500 Hours of Service unless the
number of Hours of Service specified in the Adoption Agreement for purposes of
determining a Year of Service is less than 501, in which case a
12-consecutive-month period in which an Employee has fewer than that number of
Hours of Service shall be a One-Year Break in Service. The computation period
over which One-Year Breaks in Service shall be measured shall be the same
computation period over which Years of Service are measured as selected in the
Adoption Agreement.
2.31 "Owner-Employee" shall mean an Employee who is a sole proprietor
adopting this Plan as the Employer, or who is a partner owning more than 10% of
either the capital or profits interest of a partnership adopting this Plan as
the Employer.
2.32 "Participant" shall mean an Employee who is eligible to participate in
the Plan under Section 3 and who has not, since becoming a Participant, died,
retired, otherwise terminated employment with the Employer or transferred from
an eligible class to a class of Employees ineligible to participate in the Plan.
2.33 "Plan" shall mean the Prototype Plan and Adoption Agreement.
2.34 "Plan Year" shall mean the fiscal year of the Employer or a different
12-consecutive-month period as specified in the Adoption Agreement.
2.35 "Prototype Plan" shall mean these Sections 1-23.
2.36 "Rollover Account" shall mean the separate account maintained pursuant
to Section 6.3(d) hereof for any Rollover Contributions (as described in Section
2
<PAGE>
4.3 hereof) made by the Participant and the income, expenses, gains and losses
attributable thereto.
2.37 "Rollover Contributions" shall mean contributions made to the Trust by
Participants in accordance with Section 4.3 hereof.
2.38 "Self-Employed Individual" shall mean an Employee who has Earned
Income for the Plan Year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income but for the fact
that the trade or business had no Current or Accumulated Earnings and Profits
for the Plan Year.
2.39 "Service" shall mean employment by the Employer and, if the Employer
is maintaining the plan of a predecessor employer, or if the Employer is not
maintaining the plan of a predecessor employer but has so elected in the manner
described in Section 2.22 above, employment by such predecessor employer.
2.40 "Social Security Wage Base" for a Plan Year means the maximum amount
of annual earnings which may be considered wages under Code Section 3121(a)(1)
as in effect on the first day of such Plan Year.
2.41 "Sponsor" shall mean any of the organizations (a) which have requested
a favorable opinion letter from the National Office of the Internal Revenue
Service for this Plan or (b) to which a favorable opinion letter for this Plan
has been issued by the National Office of the Internal Revenue Service.
2.42 "Trust" shall mean the trust established under Section 11 of this Plan
for investment of Trust assets.
2.43 "Trust Fund" shall mean the contribution to the Trust and any assets
into which such contributions shall be invested or reinvested in accordance with
Sections 11.1 and 11.3 of this Plan.
2.44 "Trustee" shall mean the person or persons, including any successor or
successors thereto, named in the Adoption Agreement to act as trustee of the
Trust and hold the Trust assets in accordance with Section 11 hereof.
2.45 "Valuation Date" shall mean the last day of each Plan Year.
2.46 "Vesting Years" shall be measured on the 12-consecutive-month period
specified in the Adoption Agreement. A Participant will have a Vesting Year
during such computation period only if the Participant completes the number of
Hours of Service selected in the Adoption Agreement for purposes of computing a
Year of Service or, if so specified in the Adoption Agreement, the Participant
will have a Vesting Year for each Plan Year for which the Participant shares in
the allocation of Employer Contributions for the Plan Year. However, when
determining Vesting Years, unless the Employer has otherwise specified in the
Adoption Agreement, there shall be excluded: (a) if this Plan is a continuation
of an earlier plan which would have disregarded such service, Service before the
first Plan Year to which the Act is applicable; (b) Service after a One-Year
Break in Service (but this exclusion shall apply only for the purpose of
computing the vested percentage of Employer Contributions made before such
break); (c) Service before a One-Year Break in Service, if the Participant had
no vested interest at the time of such break and the number of consecutive
One-Year Breaks in Service equals or exceeds the number of Vesting Year before
such break without counting Vesting Years excluded by an earlier application of
this provision; (d) Service before the first Plan Year in which the Participant
attained age 22; (e) Service before the Employer maintained this Plan or a
predecessor plan; and (f) Service before January 1, 1971, unless the Participant
has completed at least 3 Vesting Years after December 31, 1970.
2.47 "Year" shall mean the fiscal year of the Employer.
2.48 "Year of Service" shall mean a 12-consecutive-month period, beginning
on an Employee's initial date of employment or an anniversary thereof during
which the Employee completes the number of Hours of Service specified in the
Adoption Agreement. The initial date of employment is the first day on which the
Employee performs an Hour of Service.
SECTION 3.
ELIGIBILITY
3.1 Entry. Each Employee of the Employer, who on the Effective Date of this
Plan meets the conditions specified in the Adoption Agreement, shall become
eligible to participate in the Plan commencing with the Effective Date. Each
other Employee of the Employer, including future Employees, shall become
eligible to participate in the Plan when the eligibility requirements specified
in the Adoption Agreement are met.
3.2 Interrupted Service. All Years of Service with the Employer are counted
towards eligibility except the following:
(a) If the Employer has specified in the Adoption Agreement that more than
one Year of Service is required before becoming a Participant, and if the
individual has a One-Year Break in Service before satisfying the Plan's
eligibility requirements, Service before such break will not be taken into
account.
(b) In the case of a Participant who does not have any nonforfeitable right
to the Employer Contribution Account, Years of Service before a One-Year Break
in Service will not be taken into account in computing Years of Service for
purposes of eligibility if the number of consecutive One-Year Breaks in Service
equals or exceeds the aggregate number of such Years of Service before such
break. Such aggregate number of Years of Service before such break will not
include any Years of Service disregarded under this Section by reason of a prior
break in service.
3.3 Reentry. If a former Participant either (a) had a nonforfeitable right
to all or a portion of his or her Employer Contribution Account at the time of
termination from Service or (b) did not have any nonforfeitable right to his or
her Employer Contribution Account but does not have Service prior to the break
in Service disregarded by operation of Section 3.2(b) hereof, such former
Participant shall become a Participant immediately upon return to the employ of
the Employer as a member of an eligible class of Employees.
3.4 Transfer to Eligible Class. In the event an Employee who is not a
member of an eligible class of Employees becomes a member of an eligible class,
such Employee shall participate immediately if such Employee has satisfied the
minimum age and Service requirements and would have previously become a
Participant had he or she been a member of an eligible class throughout the
period of employ with the Employer.
3.5 Determination by Administrator. Eligibility shall be determined by the
Administrator and the Administrator shall notify each Employee upon his or her
admission as a Participant in the Plan.
3.6 Related Businesses. If the Employer is a member of (a) a controlled
group of corporations (as defined under Code Section 414(b)), (b) group of
trades or businesses (whether or not incorporated) which are under common
control (as defined under Code Section 414(c)), or (c) an affiliated service
group (as defined under Code Section 414(m)), all service of an Employee for any
member of such a group shall be treated as if it were Service for the Employer
for purposes of the eligibility requirements of the Adoption Agreement and this
Section 3.
In addition, all service for any individual who is considered a leased
employee of the Employer under Code Section 414(n) shall be treated as if it
were Service for the Employer for purposes of the eligibility requirements of
the Adoption Agreement and this Section 3. However, qualified plan contributions
or benefits provided by the leasing organization which are attributable to
Services performed for the Employer shall be treated as provided by the
Employer. The provisions of this paragraph shall not apply to any leased
employee if such employee is covered by a money purchase pension plan maintained
by the leasing organization providing: (a) a non-integrated employer
contribution rate of at least 7-1/2% of compensation, (b) immediate
participation, and (c) full and immediate vesting. For purposes of this section
3.6, the term "leased employee" means any person who pursuant to an agreement
between the recipient and any other person ("leasing organization") has
performed services for the Employer (or for the Employer and related persons
determined in accordance with Code Section 414(n)(6)) on a substantially
full-time basis for a period of at least 1 year and such services are of a type
historically performed by employees in the business field of the Employer.
SECTION 4.
CONTRIBUTIONS
4.1 Employer Contributions and Allocation.
(a) Profit Sharing Plan. If the Employer has adopted this Plan as a profit
sharing plan, the following provisions shall apply:
(i) Contribution. Beginning in the Plan Year in which the Plan is adopted,
and for each Plan Year thereafter, the Employer will contribute the amount
determined by it, in its discretion, for the Plan Year in question; provided,
however, that such Employer Contributions may not exceed the lesser of (A) the
Employer's Current or Accumulated Earnings and Profits for the Plan Year or (B)
15% (or such larger percentage as may be permitted by the Code as a current
deduction to the Employer with respect to any Plan Year) of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid to, or accrued by the Employer for,
Participants for that Plan Year plus any unused credit carryovers from previous
Plan Years. For this purpose, a "credit carryover" is the amount by which
Employer Contributions for a previous Plan Year was less than 15% of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid or accrued by the Employer to
Participants for such Plan Year, but such unused credit carryover shall in no
event permit the Employer Contributions for a Plan Year to exceed 25% (or such
larger percentage as may be permitted by the Code as a deduction to the
Employer) of the total Compensation (disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement) paid or
accrued by the Employer to Participants for the Plan Year in question.
(ii) Allocation Under Non-Integrated, Profit Sharing Plan. If the Employer
has adopted this Plan as a profit sharing plan under which allocations shall be
made on a non-integrated basis, Employer Contributions, plus any forfeitures
under Section 7.3, for a Plan Year shall be allocated according to the
provisions of this subsection (ii) as of the Valuation Date for such Plan Year.
Unless the Employer has specified otherwise in the Adoption Agreement, such
amount shall be allocated among the Employer Contribution Accounts of all
Participants and former Participants who were employed by the Employer during
the Plan Year. If the Employer has specified in the Adoption Agreement that a
minimum number of Hours of Service are necessary to share in the allocation of
Employer Contributions and forfeitures for a Plan Year in which the Plan is not
Top Heavy, Participants and former Participants, as the case may be, who fail to
complete the required number of Hours of Service during such a Plan Year shall
not share in the allocation. If the Employer has so specified in the Adoption
Agreement, Employer Contributions and forfeitures shall be allocated only among
otherwise entitled Participants who are employed by the Employer on such
Valuation Date. Employer Contributions and forfeitures shall be allocated to
Participants entitled to share in the allocation of Employer Contributions and
forfeitures for that Plan Year in proportion to their Compensation for such Plan
Year.
(iii) Allocation Under Integrated, Profit Sharing Plan. If the Employer has
adopted this Plan as a profit sharing plan under which allocations shall be made
on an integrated basis, Employer Contributions, plus any forfeitures under
Section 7.3, for a Plan Year shall be allocated according to the provisions of
this subsection (iii) as of the Valuation Date for such Plan Year. Unless the
Employer has specified otherwise in the Adoption Agreement, such amount shall be
allocated among all Participants and former Participants who were employed by
the Employer during the Plan Year. If the Employer has specified in the Adoption
Agreement that a minimum number of Hours of Service are necessary to share in
the allocation of Employer Contributions and forfeitures for a Plan Year in
which the Plan is not Top Heavy, Participants and former Participants, as the
case may be, who fail to complete the required number of Hours of Service during
such a Plan Year shall not share in the allocation. If the Employer has so
specified in the Adoption Agreement, Employer Contributions and forfeitures
shall be allocated only among otherwise entitled Participants who are employed
by the Employer on such Valuation Date. Employer Contributions and forfeitures
shall be allocated to Participants
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entitled to share in the allocation of Employer Contributions and forfeitures
for that Plan Year as follows:
(A) First, Employer Contributions and forfeitures will be allocated to
the Employer Contribution Account of each Participant entitled to share in
the allocation of such amounts in the ratio that each such Participant's
Compensation for the Plan Year in excess of the Integration Level bears to
the Compensation in excess of the Integration Level for all such
Participants, provided that the amount so credited to any such
Participant's Employer Contribution Account for the Plan Year shall not
exceed the product of the Integration Rate times the Participant's
Compensation in excess of the Integration Level.
(B) Next, any remaining Employer Contributions or forfeitures will be
allocated to the Employer Contribution Accounts of all Participants
entitled to share in the allocation of the Employer Contributions for the
Plan Year in the ratio that each such Participant's Compensation for the
Plan Year bears to all such Participants' Compensation for that Plan Year.
(b) Money Purchase Pension Plan. If the Employer has adopted this Plan as a
money purchase pension plan, the Employer will, beginning for the Plan Year in
which the Plan is adopted, and for each Plan year thereafter, contribute, for
allocation to the Employer Contribution Account of each Participant entitled to
share in the allocation of Employer Contributions, the amount specified in the
Adoption Agreement reduced by any forfeitures arising during the preceding Plan
Year pursuant to Section 7.3 hereafter.
(i) Employer has specified otherwise in the Adoption Agreement, the
amount of the Employer Contribution shall be calculated on the basis of the
Compensation of all Participants and former Participants who were employed
by the Employer during the Plan Year. If the Employer has specified in the
Adoption Agreement that a minimum number of Hours of Service are necessary
to receive an Employer Contribution in a Plan Year in which the Plan is not
Top Heavy, Participants and former Participants, as the case may be, who
fail to complete the required number of Hours of Service during such a Plan
Year shall not be considered when calculating the amount of the Employer
Contribution. If the Employer has so specified in the Adoption Agreement,
only Participants who are employed by the Employer on such Valuation Date
and who are otherwise entitled to receive an allocation shall be considered
when calculating the amount of the Employer Contribution. Employer
Contributions shall be allocated to the Employer Contribution Accounts of
only those Participants who were included in the calculation of the amount
of the Employer Contribution.
(ii) To the extent that the Employer Contribution for a Plan Year is
reduced by forfeitures, such forfeitures shall be added to such Employer
Contribution and allocated as a part thereof.
(iii) Any excess forfeitures not allocated pursuant to this Section
4.1(b) shall be carried over to future Plan Years.
4.2 Participant Contributions. If, in the Adoption Agreement, the Employer
has specified that Participants may make either Deductible Voluntary
Contributions or Nondeductible Voluntary Contributions, or both, a Participant
may make such permitted contributions to his or her Account; provided, however,
that a Participant's right to make such contribution(s) shall be subject to the
conditions and limitations specified below.
(a) The following conditions and limitations shall apply if the Employer
has specified that Participants may make Nondeductible Voluntary Contributions:
(i) The aggregate amount of a Participant's Nondeductible Voluntary
Contributions, plus any nondeductible voluntary contributions he or she
makes under any other qualified retirement plan maintained by the Employer,
shall not exceed 10% of his or her Compensation (disregarding any
exclusions from Compensation specified by the Employer in the Adoption
Agreement) for the period in which he or she has been a Participant in the
Plan.
(ii) The aggregate amount of a Participant's Nondeductible Voluntary
Contributions shall not cause the Annual Addition (as defined in Section
5.5(a) hereof) to his or her Account to exceed the limitations set forth in
Section 5.
(iii) A Participant's Nondeductible Voluntary Contributions shall be
allocated to his or her Nondeductible Voluntary Contribution Account under
Section 6.3 hereof.
(iv) A Participant's right to his or her Nondeductible Voluntary
Contribution Account shall be nonforfeitable and the Participant may
withdraw all or a portion of his or her Nondeductible Voluntary
Contribution Account upon 30 days written notice to the Administrator.
(b) The following conditions and limitations shall apply if the Employer
has specified that Participants may make Deductible Voluntary Contributions:
(i) The aggregate amount of a Participant's Deductible Voluntary
Contributions in any calendar year may not exceed the lesser of (1) $2,000
or (2) the Participant's compensation for calendar year for which the
contribution is made. Compensation for this purpose means all wages,
salaries, earned income and other amounts received or derived from personal
services actually rendered and includible in gross income, but does not
include amounts derived from or received as earnings or profits from
property or amounts received as a pension or annuity or as deferred
compensation. This limitation applies to all the Participants' Deductible
Voluntary Contributions made for the calendar year to all qualified
retirement plans maintained by the Employer.
(ii) A Participant may not make Deductible Voluntary Contributions for
the calendar year in which he or she attains age 70-1/2 or any calendar
year thereafter.
(iii) A Deductible Voluntary Contribution will be considered
contributed for the calendar year in which it is actually made. However, if
a Participant makes a Deductible Voluntary Contribution on or before April
15, he or she may notify the Administrator at the time the Deductible
Voluntary Contribution is made that it is made for the preceding calendar
year. A Deductible Voluntary Contribution may only be made for a calendar
year in which the Employee was a Participant, and in no event may a
Deductible Voluntary Contribution be made by an Employer after he or she
has ceased to be a Participant.
(iv) A Participant's Deductible Voluntary Contributions shall be
allocated to his or her Deductible Voluntary Contribution Account under
Section 6.3 hereof.
(v) A Participant's right to his or her Deductible Voluntary
Contribution Account shall be nonforfeitable and the Participant may
withdraw all or a portion of his or her Deductible Voluntary Contribution
Account upon written application to the Administrator. However, if at the
time the Participant receives the withdrawal, he or she has not attained
age 59-1/2 and is not disabled, the Participant will be subject to a
federal income tax penalty unless he or she rolls over the amount withdrawn
to a qualified retirement plan or individual retirement plan within 60 days
of the date he or she receives it.
(vi) The Administrator may, in its discretion, accept accumulated
deductible employee contributions (as defined in Code Section 72(o)(5))
that were distributed from a qualified retirement plan and rolled over
pursuant to Code Sections 402(a)(5), 402(a)(7), 403(a)(4), or 408(d)(3).
The rolled over amount will be added to the Participant's Deductible
Voluntary Contribution Account, but will not be taken into account in
applying the restrictions specified in Section 4.2(b)(i) and (ii) above. In
no case may the Administrator authorize the Plan to accept rollovers of
accumulated deductible employee contributions from a qualified plan under
which the Participant was covered as a Self-Employed Individual.
4.3 Rollover Contributions. The Administrator may, in its discretion,
direct the Trustee to accept a Rollover Contribution upon the express request of
the Participant wishing to make such Rollover Contribution, the same to be held,
administered and distributed by the Trustee in accordance with the terms of this
Plan, provided that the Trustee consents if the contribution includes property
other than cash. A Rollover Contribution shall only be a contribution, comprised
of money and/or property, which is a "rollover amount" within the meaning of
Code Section 402(a)(5) or a "rollover contribution" within the meaning of Code
Section 408(d)(3)(A)(ii) (as modified by Code Section 408(d)(3)(C)with respect
to which both of the following conditions are met:
(a) The transfer of such amount is being made within 60 days of its receipt
by the Participant and
(b) No part of such amount is attributable to contributions made on behalf
of the Participant while he or she was a Key Employee (as defined in Section
21.2(a) and applied to such other employer) in a Top-Heavy Plan (as defined in
Section 21.2(b) and applied to such other plan).
All Rollover Contributions made under this Section 4.3 must be accepted by
the Trustee within the 60-day period referred to in paragraph (a) above. A
Participant's Rollover Contribution shall at no time be included in the
computation of the maximum allocation to a Participant's Account as set forth in
Section 5 hereof. Each Rollover Contribution made by a Participant shall be
allocated to his or her Rollover Account pursuant to Section 6.3(d) hereof. Such
Rollover Account shall be invested by the Trustee as part of the Trust Fund,
pursuant to Section 11 hereafter, except as it may be held in kind as permitted
above. A Participant may withdraw all or a portion of his or her Rollover
Account upon 30 days' written notice to the Administrator.
4.4 Transfers from other Qualified Plans. The Administrator may, in its
discretion, direct the Trustee to accept the transfer of any assets held for a
Participant's benefit under a qualified retirement plan of a former employer of
such Participant. Such a transfer shall be made directly between the trustee or
custodian of the former employer's plan and the Trustee in the form of cash or
its equivalent, and shall be accompanied by written instruction showing
separately the portion of the transfer attributable to contributions by the
former employer and by the Participant respectively. To the extent that the
amount transferred is attributable to contributions by the former employer, it
shall be maintained in a Participant's Rollover Account. To the extent that the
amount transferred is attributable to contributions by the Participant, it shall
be maintained in the Participant's Nondeductible Voluntary Contribution Account
or Deductible Voluntary Contribution Account as is appropriate.
SECTION 5.
CODE SECTION 415 LIMITATIONS ON ALLOCATIONS
5.1 Employers Maintaining No Other Plan.
(a) If a Participant does not participate in, and has never participated in
another qualified plan maintained by the Employer, the amount of the Annual
Addition which may be credited to the Participant's Account for any Limitation
Year shall not exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in the Plan.
(b) If the Employer Contribution that would otherwise be allocated to a
Participant's Account would cause the Annual Addition for the Limitation Year to
exceed the Maximum Permissible Amount, the amount allocated will be reduced so
that any Excess Amount shall be eliminated and, consequently, the Annual
Addition for the Limitation Year will equal the Maximum Permissible Amount.
(c) Any Excess Amount shall be eliminated pursuant to the following
procedure:
(i) The portion of the Excess Amount consisting of Nondeductible
Voluntary Contributions which are a part of the Annual Addition (as defined
in Section 5.5(a)) shall be returned to the Participant as soon as
administratively feasible;
(ii) If after the application of subparagraph (i) an Excess Amount
still exists and the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's Account will be
used to reduce Employer Contributions (including any allocation of
forfeitures) for such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(iii) If after the application of subparagraph (i) an Excess Amount
still exists and the Participant is not covered by the Plan at the end of
the Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The
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suspense account will be applied to reduce proportionately future
Employer Contributions (including any allocation of forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year, if necessary. If a suspense account is in existence at any
time during the Limitation Year pursuant to this subparagraph, it will not
participate in the allocation of the Trust's investment gains and losses.
In the event of termination of the Plan, the suspense account shall revert
to the Employer to the extent it may not then be allocated to any
Participant's Account.
(d) Notwithstanding any other provision in subsections (a) through
(c), the Employer shall not contribute any amount that would cause an
allocation to the suspense account as of the date the contribution is
allocated.
5.2 Employers Maintaining Other Master or Prototype Defined Contribution
Plans.
(a) This Section applies if, in addition to this Plan, a Participant is
covered under another qualified Master or Prototype defined contribution plan
maintained by the Employer during any Limitation Year. The Annual Addition which
may be allocated to any Participant's Account for any such Limitation Year shall
not exceed the Maximum Permissible Amount, reduced by the sum of any portion of
the Annual Addition credited to the Participant's account under such other plans
for the same Limitation Year.
(b) If the Annual Addition with respect to a Participant under other
defined contribution plans maintained by the Employer of what would be portions
of the Annual Addition (if the allocations were made under the Plan) are less
than the Maximum Permissible Amount and the Employer Contribution that would
otherwise be contributed or allocated to the Participant's Account under this
Plan would cause the Annual Addition for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so that the
Annual Addition under all such plans for the Limitation Year will equal the
Maximum Permissible Amount.
(c) If the Annual Addition with respect to the Participant under such other
defined contribution plans in the aggregate are equal to or greater than the
Maximum Permissible Amount, no amount will be contributed or allocated to the
Participant's Account under this Plan for the Limitation Year.
(d) If an Excess Amount was allocated to a Participant under this Plan on a
date which coincides with the date an allocation was made under another plan,
the Excess Amount attributed to this Plan will be the product of,
(i) the total Excess Amount allocated as of such date, multiplied by
(ii) the quotient obtained by dividing
(A) the portion of the Annual Addition allocated to the
Participant for the Limitation Year as of such date by
(B) the total would-be and actual Annual Addition allocations to
the Participant for the Limitation Year as of such date under this and
all the other qualified Master or Prototype defined contribution plans
maintained by the Employer.
(e) Any Excess Amount attributed to the Plan will be disposed in the manner
described in Section 5.1.
5.3 Employers Maintaining Other Defined Contribution Plans. If a
Participant is covered under another qualified defined contribution plan which
is not a Master or Prototype plan, the Annual Addition credited to the
Participant's Account under this Plan for any Limitation Year will be in
accordance with the provisions of Section 5.2 as though the plan were a Master
or Prototype Plan, unless the Employer provides other limitations pursuant to
the Adoption Agreement.
5.4 Employers Maintaining Defined Benefit Plans. If the Employer maintains,
or at any time maintained, a qualified defined benefit plan covering any
Participant in this Plan, the sum of the Participant's Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any
Limitation Year. The Annual Addition which may be credited to the Participant's
Account under this Plan for any Limitation Year will be limited in accordance
with the provisions of Section 5.2, unless the Employer provides other
limitations pursuant to the Adoption Agreement.
5.5 Definitions. For the purposes of this Section 5, the following terms
shall be defined as follows:
(a) Annual Addition. With respect to any Participant, the "Annual Addition"
shall be the sum of the following amounts credited to a Participant's Account
for the Limitation Year:
(i) Employer Contributions;
(ii) forfeitures; and
(iii) the lesser of
(A) one-half (1/2) the allocated Nondeductible Voluntary
Contributions or
(B) the amount of allocated Nondeductible Voluntary Contributions
in excess of 6% of the Participant's Compensation for the Limitation
Year.
Any Excess Amount applied under subparagraphs (ii) or (iii) of subsection (c) of
Section 5.1 or subsection (e) of Section 5.2 in a Limitation Year to reduce
Employer Contributions will be considered part of the Annual Addition for such
Limitation Year.
(b) Compensation. For the purposes of this Section 5, a Participant's
"Compensation" shall include any earned income, wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the Plan
(including, but not limited to commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(i) Employer contributions to a plan of deferred compensation which
are not includible in the Participant's gross income for the taxable year
in which contributed, or Employer contributions under a simplified employee
pension plan to the extent such contributions are deductible by the
Participant, or any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a nonqualified stock
option, or when restricted property held by the Participant either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
(iii) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(iv) other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Code Section
403(b) (whether or not the amounts are actually excludable from the gross
income of the Participant).
For purposes of applying the limitations of this Section 5, Compensation
for a Limitation Year is the Compensation actually paid or includible in gross
income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant who
is permanently and totally disabled (as defined in Code Section 37(e)(3)) is the
Compensation such Participant would have received for the Limitation Year if the
Participant was paid at the rate of Compensation paid immediately before
becoming permanently and totally disabled; such imputed compensation for the
disabled Participant may be taken into account only if the Participant is not an
officer, an owner, or highly compensated, and contributions made on behalf of
such a Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. The "Defined Benefit Fraction" shall be a
fraction, the numerator of which is the sum of the Participant's Projected
Annual Benefits under all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the lesser of 125%
of the dollar limitation in effect for the Limitation Year under Code Section
415(b)(1)(A) or 140% of the Participant's Highest Average Compensation.
Notwithstanding the above, if the Participant was a participant in one or
more defined benefit plans maintained by the Employer which were in existence on
July 1, 1982, the denominator of this fraction will not be less than 125% of the
sum of the annual benefits under such plans which the Participant had accrued as
of the later of the end of the last Limitation Year beginning before January 1,
1983. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code Section 415
as in effect at the end of the 1982 Limitation Year. For purposes of this
paragraph, a Master or Prototype plan with an opinion letter issued before
January 1, 1983, which was adopted by the Employer on or before June 30, 1983,
is treated as a plan in existence on July 1, 1982.
(d) Defined Contribution Fraction. The "Defined Contribution Fraction"
shall be a fraction, the numerator of which is the sum of the Annual Additions
to the Participant's account under all the defined contribution plans (whether
or not terminated) maintained by the Employer for the current and all prior
Limitation Years (including the Annual Additions attributable to the
Participant's nondeductible employee contributions to all defined benefit plans,
whether or not terminated, maintained by the Employer), and the denominator of
which is the sum of the Maximum Aggregate Amounts for the current and all prior
Limitation Years of service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The Maximum Aggregate Amount
in any Limitation Year is the lesser of 125% of the dollar limitation in effect
under Code Section 415(C)(1)(A) or 35% of the Participant's Compensation for
such year.
If the Participant was a participant in one or more defined contribution
plans maintained by the Employer which were in existence on July 1, 1982, the
numerator of this fraction will be adjusted if the sum of this Defined
Contribution Fraction and the Defined Benefit Fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an amount equal to the
product of
(i) the excess of the sum of the fractions over 1.0, multiplied by
(ii) the denominator of this Defined Contribution Fraction, will be
permanently subtracted from the numerator of this fraction. The adjustment
is calculated using the fractions as they would be computed as of the later
of the end of the last Limitation Year beginning before January 1, 1983 or
September 30, 1983. This adjustment also will be made if at the end of the
last Limitation Year beginning before January 1, 1984, the sum of the
fractions exceeds 1.0 because of accruals or additions that were made
before the limitations of this Section 5 became effective to any plans of
the Employer in existence on July 1, 1982. For purposes of this paragraph,
a Master or Prototype plan with an opinion letter issued before January 1,
1983, which is adopted by the Employer on or before September 30, 1983, is
treated as a plan in existence on July 1, 1982.
(e) Employer. "Employer" means the Employer that adopts this Plan and all
members of (i) a controlled group of corporations (as defined in Code Section
414(b) as modified by Code Section 415(h)), (ii) commonly controlled trades or
businesses (whether or not incorporated) (as defined in Code Section 414(c) as
modified by Code Section 415(h)), or (iii) affiliated service groups (as defined
in Code Section 414(m)) of which the Employer is a part.
(f) Excess Amount. The "Excess Amount" is the excess of what would
otherwise be a Participant's Annual Addition for the Limitation Year over the
Maximum Permissible Amount. If at the end of a Limitation Year when the Maximum
Permissible Amount is determined on the basis of the Participant's actual
Compensation for the year, an Excess Amount results, the Excess Amount will be
deemed to consist of the portion of the Annual Addition last allocated.
(g) Highest Average Compensation. A Participant's "Highest Average
Compensation" is his or her average Compensation for the 3 consecutive Years of
Service with the Employer that produces the highest average. A Year of Service
with the Employer is the 12-consecutive-month period defined in the Adoption
Agreement.
(h) Limitation Year. A Limitation Year is the Plan Year or any other
12-consecutive-month period specified by the Employer in the Adoption Agreement.
All qualified plans maintained by the Employer must use the same Limitation
Year. If the Limitation Year is amended to a different 12-consecutive-month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
(i) Master or Prototype Plan. A "Master or Prototype" plan is a plan the
form of which is the subject of a favorable opinion letter from the Internal
Revenue Service.
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(j) Maximum Permissible Amount. For a Limitation Year, the "Maximum
Permissible Amount" with respect to any Participant shall be the lesser of
(i) $30,000 (or beginning January 1, 1986, such larger amount
determined by the Commissioner of Internal Revenue for the Limitation Year)
or
(ii) 25% of the Participant's Compensation for the Limitation Year.
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive-month period, the Maximum
Permissible Amount will not exceed the quotient determined by first
multiplying $30,000 by the number of months in the short Limitation Year
and then dividing the product by 12. Prior to determining the Participant's
actual Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant on the basis of a reasonable
estimation of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated. As soon as is
administratively feasible after the end of each Limitation Year, the
Maximum Permissible Amount for the Limitation Year will be determined on
the basis of Participants' actual Compensation for the Limitation Year.
(k) Projected Annual Benefit. The "Projected Annual Benefit" is the annual
retirement benefit (adjusted to an actuarilly equivalent straight life annuity
if such benefit is expressed in a form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant would be entitled
under the terms of the plan assuming:
(i) the Participant will continue employment until normal retirement
date under the plan (or current age, if later), and
(ii) the Participant's compensation for the current Limitation Year
and all other relevant factors used to determine benefits under the plan
will remain constant for all future Limitation Years.
SECTION 6.
TIME AND MANNER OF MAKING CONTRIBUTIONS
6.1 Manner. Unless otherwise agreed to by the Trustee, contributions to
said Trustee shall be made only in cash. All contributions may be made in one or
more installments.
6.2 Time. Employer Contributions and Participant Contributions with respect
to a Plan Year shall be made before the time limit, including extensions
thereof, for filing the Employer's federal income tax returns for the Year with
or within which the particular Plan Year ends (or such later time as permitted
by regulations authorized by the Secretary of the Treasury or delegate).
Rollover Contributions may be made at any time acceptable to the Administrator
in accordance with Section 4.3 hereof. All contributions shall be paid to the
Administrator for transfer to the Trustee, as soon as possible, or, if
acceptable to the Administrator and the Trustee, such contributions may be paid
directly to the Trustee. The Administrator shall transfer such contributions to
the Trustee as soon as possible. The Administrator may establish a payroll
deduction system or other procedure to assist the making of Participant
Contributions to the Trust, and the Administrator may from time to time adopt
rules or policies governing the manner in which such contributions may be made
so that the Plan may be conveniently administered.
6.3 Separate Accounts. For each Participant, a separate account shall be
maintained for each of the following types of contributions and the income,
expenses, gains and losses attributable thereto:
(a) Employer Contributions;
(b) Nondeductible Voluntary Contributions, if selected in the Adoption
Agreement;
(c) Deductible Voluntary Contributions, if selected in the Adoption
Agreement; and
(d) Rollover Contributions, if the Administrator accepts such contributions
pursuant to Section 4.3 hereof.
Notwithstanding the above, if a Participant's rights to Employer Contributions
are immediately and fully nonforfeitable, Employer Contributions allocated on
behalf of such Participant and his or her Nondeductible Voluntary Contributions
may be maintained in a single account.
SECTION 7.
VESTING
7.1 When Vested. A Participant's interest in his or her Nondeductible
Voluntary Contribution Account, Deductible Voluntary Contribution Account and
Rollover Account shall always be fully vested and nonforfeitable. A
Participant's interest in his or her Employer Contribution Account shall be
vested and nonforfeitable at Normal Retirement Date, death, Disability, upon
termination (including a complete discontinuance of Employer Contributions) or
partial termination of the Plan and otherwise only to the extent specified in
the Adoption Agreement.
7.2 Amendment of Vesting Schedule. If the Adoption Agreement has been
executed as an amendment to an existing plan, Participants with 5 or more
Vesting Years before the expiration of the election period described in the next
sentence shall have the right to elect the vesting schedule in effect on the day
before the election period. The election period shall commence on the date the
amendment is adopted and end on the latest of (a) 60 days after the amendment is
adopted, (b) 60 days after the Effective Date, or (c) 60 days after the
Participant is issued written notice of the amendment by the Administrator.
Failure to so elect shall be treated as a rejection and such election or
rejection shall be final.
7.3 Forfeitures. If a Participant's employment with the Employer is
terminated before his or her Employer Contribution Account is fully vested in
accordance with Section 7.1 hereof, the portion of the Employer Contribution
Account which is not vested shall be held in suspense until the Participant
becomes reemployed, dies, becomes disabled or completes a One-Year Break in
Service, whichever occurs first. If the Participant is reemployed, dies or
becomes disabled before a One-Year Break in Service, the amount held in suspense
shall be restored to the Employer Contribution Account. If the Participant is
reemployed by the Employer before a One-Year Break in Service and thereafter has
a One-Year Break in Service before the Employer Contribution Account has become
fully vested, the portion of the Employer Contribution Account which is then
vested shall be determined by adding to the then value of the Employer
Contribution Account, the amount, if any, previously distributed, applying the
vesting percentage then applicable, and then subtracting the amount previously
distributed. If a One-Year Break in Service occurs before reemployment with the
Employer, death or Disability, the portion of the Participant's Employer
Contribution Account held in suspense shall be forfeited and (a) if this Plan is
adopted as a profit sharing plan, allocated as of the next Valuation Date in the
same manner, and to the same Participants' Employer Contribution Accounts as the
Employer Contribution for that Plan Year is allocated pursuant to Section 4.1
hereof, or (b) if this Plan is adopted as a money purchase pension plan, applied
to reduce the Employer Contributions for the next Plan Year.
SECTION 8.
DISTRIBUTION UPON DEATH
8.1 Distribution to Beneficiary. If a Participant's employment terminates
because of death, the Trustee shall, upon the direction of the Administrator,
distribute the Participant's Account or the undistributed remainder thereof, as
the case may be, in accordance with the provisions of Section 8.2, to the
Beneficiary or Beneficiaries validly named in the most recent Designation of
Beneficiary form filed by the Participant with the Trustee before death in
compliance with Section 15. The Administrator's direction shall include
notification of the Participant's death, the identity of the Beneficiary or
Beneficiaries so named, and the appropriate manner of distribution.
8.2 Manner of Distribution. A distribution made under this Section 8 shall
be made in such manner as the Participant shall in his or her most recent
Designation of Beneficiary have validly elected. In the absence of such an
election, such distribution shall be made in such manner as the Participant's
Beneficiary (or Beneficiaries) may elect, or in the absence of such an election,
in such manner as the Administrator shall determine. If a Participant dies
before benefits commence and the surviving spouse is not the Beneficiary, the
Participant's entire Account balance must be distributed to the Participant's
Beneficiary within 5 years. However, if distributions have commenced to the
Participant before the Participant's death, distributions to the Participant's
surviving spouse, Beneficiary or estate may continue over the period selected by
the Participant.
SECTION 9.
OTHER DISTRIBUTIONS
9.1 Normal Distributions. The Account of any Participant, to the extent it
is vested pursuant to Section 7.1 hereof, will normally be distributed in
monthly installments which must commence at or within 60 days after the end of
the Plan Year in which occurs his or her Normal Retirement Date or in which his
or her Employment ceases, whichever is later, to continue over a period of 120
months; provided, however, that in the case of a Participant who is a Key
Employee (as defined in Section 21.2 hereafter), monthly installments to such a
Participant must commence no later than the last day of the Participant's
taxable year in which such Participant attains age 70-1/2, but only if this Plan
is Top-Heavy (as defined in Section 21.2 hereafter). The monthly amount shall
normally be the vested balance of the Participant's Account divided by the
remaining number of months in such 120 months, all rounded to the nearest cent.
However, the amount of each monthly installment may be recomputed and adjusted
from time to time no more frequently than monthly as the Trustee may reasonably
determine.
9.2 Optional Distribution. All Participants may request the Administrator
to approve, in its sole discretion, any of the following variations from the
normal pattern of distribution:
(a) Distribution made or commencing before the Participant's Normal
Retirement Date.
(b) Distributions made or commencing after the normal time of distribution
described in Section 9.1; provided, however, that any such deferred distribution
must commence no later than the last day of the Participant's taxable year in
which the Participant attains age 70-1/2.
(c) Distribution of the Participant's entire Account at one time.
(d) Installment payments of a fixed amount, such payments to be made until
exhaustion of the Participant's Account.
(e) Distribution in kind.
(f) Any reasonable combination of the foregoing or any reasonable time or
manner of distribution within the above stated limitations.
Notwithstanding the above, if this Plan is adopted as an integrated, profit
sharing plan, such distribution may not commence before termination of Service.
Furthermore, the minimum distribution to be made each calendar year shall be the
amount equal to the quotient obtained by dividing the Participant's Account
balance at the beginning of the year by the greater of the life expectancy of
the Participant or the joint life and last survivor expectancy of the
Participant and spouse. For purposes of this minimum distribution rule, life
expectancy and joint life and last survivor expectancy shall be determined as of
the date the Participant attained age 70, reduced by one for each calendar year
commencing after the Participant's attainment of age 70-1/2, reduced by one for
each calendar year commencing after the Participant's attainment of age 70-1/2.
In the case of a Participant who becomes a Key Employee (as defined in Section
21.2 hereafter) after age 70-1/2 but before termination of Employment, and if
this Plan is Top-Heavy (as defined in Section 21.2 hereafter), such Participant
must begin to receive distribution of his or her Account by the end of the
calendar year in which Participant becomes such a Key Employee.
9.3 Special One-Time Distribution Election. Notwithstanding any Plan
provision to the contrary, distribution on behalf of any Employee, including a
Key Employee (as defined in Section 21.2(a) below) in a Plan Year in which this
Plan is Top-Heavy, may be made in accordance with the following requirements
(regardless of when such distribution commences):
(a) The distribution is one which would not have disqualified the Plan
under Code Section 401(a)(9) as it was in effect prior to its amendment by the
Tax Equity
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and Fiscal Responsibility Act of 1982.
(b) The distribution is in accordance with a method of distribution
designated by the Participant whose interest in the Plan is being distributed
or, if the Participant has died, by a beneficiary of such Participant.
(c) Such designation was in writing, was signed by the Participant or the
beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of December 31,
1983.
(e) The method of distribution designated by the Participant or the
beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Participant's death, the Beneficiaries of the Participant are listed in
order of priority.
A distribution upon death will not be covered by this Section 9.3 unless the
information in the designation contains the required information described above
with respect to the distributions to be made upon the death of the Participant.
For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Participant, or the Beneficiary, to whom such
distribution is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirement in subsection (a) above.
If a designation is revoked, any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9) as amended by the Tax Equity and Fiscal
Responsibility Act of 1982. Any changes in the designation will be considered to
be a revocation of the designation. However, the mere substitution or addition
of another Beneficiary (one not named in the designation) under the designation
will not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for example, by
altering the relevant measuring life).
SECTION 10.
LOANS
10.1 Availability of Loans. If, in the Adoption Agreement, the Employer has
specified that loans to Participants are permitted, the Loan Trustee shall, upon
the direction of the Administrator, make one or more loans, including any
renewal thereof, to a Participant (other than a Participant who is an
Owner-Employee). Any such loan shall be subject to such terms and conditions as
the Administrator shall determine pursuant to a uniform policy adopted by the
Administrator for this purpose, which policy shall be at least as restrictive as
required by this Section 10.
10.2 Equivalent Basis. No such loan may be made to a disqualified person
within the meaning of Code Section 4975(3), unless such loans are available to
all Participants on a reasonably equivalent basis and are not made available to
officers, shareholders or highly paid Participants in an amount which, when
stated as a percentage of such Participant's Account, if greater than is
available to other Participants.
10.3 Limitation on Amount. The amount of any such loan, when added to the
outstanding balance of all other loans from the Plan (and any other qualified
retirement plans of the Employer's) to the Participant, shall not exceed the
following:
Participant's Vested Maximum Amount
Account Balance of Loan
- ------------------- -------------------------
$0-$10,000 100% of vested Account balance
$10,000-$20,000 $10,000
$20,000-$100,000 50% of vested Account balance
over $100,000 $50,000
The value of the Participant's Account balance shall be as determined by the
Administrator; provided, however, that such determination in no event take into
account the portion of the Participant's Account attributable to the
Participant's Deductible Voluntary Contribution Account.
10.4 Maximum Term. The term of any such loan shall not exceed 5 years;
provided, however, that such limitation shall not apply to any loan used to
acquire, construct, reconstruct, or substantially rehabilitate any dwelling unit
which within a reasonable time is to be used (determined at the time the loan is
made) as a principal residence of the Participant or a member of the
Participant's family (within the meaning of Code Section 267(c)(4)).
10.5 Promissory Note. Any such loan shall be evidenced by a promissory note
executed by the Participant and payable to the Loan Trustee, on the earliest of
(i) a fixed maturity date meeting the requirements of Section 10.4 above, but in
no event later than the Participant's Normal Retirement Date, (ii) the
Participant's death, or (iii) when distribution hereunder is to be made to the
Participant (other than a withdrawal which will not reduce the value of his or
her Account to the extent that the aggregate amount owing could not be made as a
new loan within the limitation set forth in Section 10.3 above). Such promissory
note shall be secured by an assignment of the Participant's Account to the Loan
Trustee. Such promissory note shall evidence such terms as are required by this
Section 10.
10.6 Interest. Any such loan shall be subject to a reasonable rate of
interest.
10.7 Repayment. If a note is not paid when the Participant's benefits
hereunder are to be distributed, then any unpaid portion of such loan and unpaid
interest thereon shall be deducted by the Loan Trustee from the Participant's
Account before benefits are paid from or purchased out of the Account. Such
deduction shall, to the extent thereof, cancel the indebtedness of the
Participant. If a note is not paid when it otherwise becomes payable under
Section 10.5, or if at any time the Administrator determines that the aggregate
amounts owing by a Participant upon such notes exceed the vested value of the
Participant's Account, the Participant shall be promptly notified in writing
that unless such loan or excess is repaid within 30 days, action will be taken
to collect the same plus any cost of collections.
10.8 Accounting. Loans shall be made only from the Account of the
Participant (exclusive of that portion of the Account attributable to the
Participant's Deductible Voluntary Contribution Account) requesting the loan,
and shall be treated as an investment of such Account. All interest payments
made with respect to such loan shall be credited to the Participant's Account.
10.9 Precedence. This Section 10 overrides Section 16 below.
SECTION 11.
TRUST PROVISIONS
11.1 Manner of Investment. All contributions to the Account of a
Participant shall be held in trust by the Trustee designated in the Adoption
Agreement. Except to the extent that a Participant's Account is invested in a
loan pursuant to Section 10 hereof, the Account of a Participant may only be
invested and reinvested in shares of Designated Investment Companies, unless the
Distributor permits less than 100% of the Trust assets to be so invested. If the
Administrator or the Participant, as the case may be, has elected to have a
portion of an Account invested in other than shares of Designated Investment
Companies and the Distributor has authorized the investment of less than 100% of
Trust assets in such shares, the Trustee shall invest such amount in such
investments as it is empowered to invest in under Section 11.3 hereof. The
Designated Investment Companies available for investment may be limited by the
Employer. Investment in the shares of more than one Designated Investment
Company is not permitted unless the value of the Participant's Account and the
value of the investment in each additional Designated Investment Company exceed
amounts from time to time determined by the Distributor.
11.2 Investment Decision.
(a) The decision as to the investment of an Account shall be made by the
person designated in the Adoption Agreement, and the Trustee shall have no
responsibility for determining how an Account is to be invested or to see that
investment directions communicated to it comply with the terms of the Plan. If
the decision is made by the Participant, the Participant shall convey investment
instructions to the Trustee. Further, if the decision is to be made by the
Participant, the right to make such a decision shall remain with the Participant
upon retirement and shall pass to the Distributee upon death.
(b) The person designated to make the decision as to the investment of an
Account may direct that the investment medium of an Account be changed, provided
that no such change may be made from or to an investment other than a Designated
Investment Company except to the extent permitted under Section 11.1 above and
by the terms of that other investment vehicle. If the Distributor determines in
its own judgment that there has been trading of shares of Designated Investment
Companies in the Accounts of the Participants, any Designated Investment Company
may refuse to sell its shares to such Accounts. When an investment is being made
or changed, the person designated to do so shall specify the type of Account to
which the change refers.
(c) If any decision as to investments is to be made by the Administrator,
it shall be made on a uniform basis with respect to all Participants.
(d) The Administrator and the Trustee may adopt procedures permitting
Participants to convey their investment instructions directly to the Trustee or
to the transfer agent for the Designated Investment Company or Companies or for
any other investment permitted by the Distributor.
(e) Whenever a Participant is the person designated to make the decision as
to the investment of an Account, the Administrator shall ascertain that the
Participant has received a copy of the current prospectus relating to the shares
of any Designated Investment Company in which such Account is to be invested
plus, where required by any state or federal law, the current prospectus
relating to any other investment in which the Account is to be invested. With
respect to contributions designated for investment by a Participant, by
remitting such a contribution to the Trustee, the Administrator shall be deemed
to warrant to the Trustee that the Participant has received all such
prospectuses. By remitting any other contribution to the Trustee, the
Administrator shall be deemed to warrant to the Trustee that the Administrator
has received a current prospectus of any Designated Investment Company in which
the contribution is to be invested, plus, where required by any state or federal
law, the current prospectus relating to any other investment in which
contributions are to be invested.
11.3 Investment Powers. To the extent that a portion of the Trust assets
are invested other than in shares of Designated Investment Companies pursuant to
Section 11.1 above, the Trustee is hereby granted full power and authority to
invest and reinvest the Trust assets in any property of any kind or nature
whatsoever (speculative or otherwise) or in any rights or interests therein, or
in any evidences or indicia thereof and whether real, personal or mixed, or
whether tangible or intangible (including for illustration but not to be limited
to the following, or anything of a similar kind, character or class: common or
preferred stocks, evidences or ownership in so-called Massachusetts business
trusts, fees, beneficial interests, leaseholds, bonds, mortgages, leases, notes
or obligations, oil and gas payments, oil and gas contracts and other
securities, instruments or commodities) without regard to any rule of law or
statute of the state of the Trustee designating investments eligible for trust
funds, and without respect to any custom or practice either as to types of
investments or diversification of investments, and to hold cash uninvested at
any time and from time to time in such amounts and to such extent as the Trustee
in its own uncontrolled discretion and judgment deems advisable; provided,
however, that the Trustee is to act with the care, skill and diligence, under
the circumstances then prevailing, which would characterize the actions of a
prudent man who is acting as such a Trustee and who is familiar with the duties
of such a Trustee; further provided that the Trustee shall diversify the
investments of the Trust Fund so as to minimize the risk of large losses unless,
under the circumstances, such diversification would not be prudent; further
provided that the Trustee is not empowered to enter into any investment which
would be prohibited under the Act or otherwise by the provisions of this Plan.
7
<PAGE>
Notwithstanding the above, the following restrictions on he investment of a
Participant's Accounts shall apply:
(a) No part of a Participant's Deductible Voluntary Contribution Account
may be used to purchase life insurance.
(b) No more than one-half of the aggregate Employer Contributions allocated
to a Participant's Employer Contributions Account may be used to pay premiums
attributable to the purchase of ordinary life insurance contracts (life
insurance contracts with both nondecreasing death benefits and nonincreasing
premiums).
(c) No more than one-quarter of aggregate Employer Contributions allocated
to a Participant's Employer Contribution Account may be used to pay premiums on
term life insurance contracts, universal life insurance contracts, and all other
life insurance contracts which are not ordinary life insurance contracts.
(d) One-half of the amount used to pay premiums on ordinary life insurance
contracts plus the amount used to pay premiums on all other life insurance
contracts may not exceed an amount equal to one-quarter of the aggregate
Employer Contributions allocated to a Participant's Employer Contribution
Account.
11.4 Appointment of Investment Manager. To the extent that a portion of the
Trust assets is invested other than in shares of Designated Investment Companies
pursuant to Sections 11.1 and 11.3 above, the Employer may designate Scudder,
Stevens & Clark, or its successor or any affiliate, to act as investment manager
(within the meaning of the Act), and may at any time revoke such designation. If
an investment manager is so designated, the Trustee shall follow all investment
directions given by the investment manager with respect to the retention,
investment and reinvestment of the Plan assets to the extent they are under the
control of such investment manager. If permitted by the Trustee, the investment
manager may issue orders for the purchase and sale of securities, including
orders through any affiliate of such investment manager. Such an investment
manager is specifically allowed to direct or make investments in shares of any
Designated Investment Company. The Trustee shall not be liable for following any
direction given by, or any actions of, an investment manager so appointed.
11.5 Trustee: Number, Qualifications and Majority Action.
(a) The number of Trustees shall be one, two or three. Any natural person
and any corporation having power under applicable law to act as a trustee of a
pension or profitsharing plan may be a Trustee. No person shall be disqualified
from being a Trustee by being employed by the Employer, by being the
Administrator, by being a trustee under any other qualified retirement plan of
the Employer or by being a Participant in this Plan or such other qualified
plan.
(b) A Trustee holding office as sole Trustee hereunder shall have all the
powers and duties herein given the Trustees. When the number of Trustees
hereunder is three, any two of them may act, but the third Trustee shall be
promptly informed of the action. When there are two or three Trustees hereunder,
they may, by written instrument communicated to the Employer and the
Administrator, allocate among themselves the powers and duties herein given to
the Trustee hereunder. If such an allocation is made, to the extent permitted by
applicable law, no Trustee shall be liable either individually or as a trustee
for loss to the Plan from the acts or omissions of another Trustee with respect
to duties allocated to such other Trustee.
11.6 Change of Trustee.
(a) Any Trustee may resign as Trustee upon notice in writing to the
Employer, and the Employer may remove any Trustee upon notice in writing to each
Trustee. The removal of a Trustee shall be effective immediately, except that a
corporation serving as a Trustee shall be entitled to 60 days' notice which it
may waive, and the resignation of a Trustee shall be effective immediately,
provided that, if the Trustee is the sole Trustee, neither a removal nor a
resignation of the Trustee shall be effective until a successor Trustee has been
appointed and has accepted the appointment. If within 60 days of the delivery of
the written resignation or removal of a sole Trustee another Trustee shall not
have been appointed and have accepted, the resigning or removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee or may terminate the Plan pursuant to Section 18 of the Prototype Plan.
The Trustee shall not be liable for the acts and omissions of any successor
trustee.
(b) At any time when the number of Trustees is one or two the Employer may
but need not appoint one or two additional Trustees, provided that the number of
Trustees shall not be more than three. Such an appointment and the acceptance
thereof shall be in writing, and shall take effect upon the delivery of written
notice thereof to all the Trustees and the Administrator and such acceptance by
the appointed Trustee, provided that if a corporation is a Trustee then in the
absence of its consent, such an appointment of an additional or successor
Trustee shall not become effective until 60 days after its receipt of notice.
(c) Although any Employer adoption the Plan may choose any Trustee who is
willing to accept the Trust, the Distributor or its successors may make or may
have made tentative standard arrangements with any bank or trust company with
the expectation it will be used as the Trustee by a substantial group of
Employers. It is also contemplated that more favorable results can be obtained
with a substantial volume of business, and that it may become advisable to
remove such bank or trust company as Trustee and substitute another Trustee.
Therefore, anything in the prior two subsections of this Section 11.6
notwithstanding, each Employer adopting this Plan hereby agrees that the
Distributor may, upon a date specified in a notice of at least 30 days to the
affected Employer and in absence of written objection by the Employer received
by the Distributor before such date, (i) remove any such Trustee and in that
case, or if such a Trustee has resigned as to a group of Employers, (ii) appoint
such a successor Trustee, provided such action is taken with respect to all
Employers similarly circumstanced of which the Distributor has knowledge, and
provided such notice is given in writing mailed postage prepaid to the Employer
at the latest address furnished to the Distributor directly or supplied to it by
such Trustee which is to be succeeded. If within 60 days after such Trustee's
resignation or removal, the Employer has not appointed a successor which has
accepted such appointment (unless the appointment of a successor Trustee is
waiting for action by the Distributor pursuant to the next preceding sentence
according to notice which has been given), the Trustee may petition an
appropriate court for the appointment of its successor. The Trustee shall not be
liable for the acts and omissions of such successor.
(d) Successor Trustees qualifying under this Section 11.5 shall have all
rights and powers and all the duties and obligations of original Trustees.
11.7 Valuation. Annually, on the Valuation Date, or more frequently in the
discretion of the Trustee, the assets of the Trust shall be revalued at fair
market value and the accounts of the Trust shall be proportionately adjusted to
reflect income, gains, losses or expenses, if the system of accounting does not
directly accomplish all such adjustments. The Trust Fund shall be administered
separately from, and shall not include any assets being administered under, any
other plan of an Employer. Interim valuations, if any, shall be applied
uniformly and in a non-discriminatory manner for all Employees.
11.8 Registration. Any assets in the Trust Fund may be registered in the
name of the Trustee or any nominee designated by the Trustee.
11.9 Certifications and Instructions.
(a) Any pertinent vote or resolution of the Board of Directors of the
Employer (if it is a corporation) shall be certified to the Trustee over the
signature of the Secretary or an Assistant Secretary of the Employer and under
its corporate seal. The Employer shall promptly furnish to the Trustee
appropriate certification evidencing the appointment and termination of the
individual or individuals serving as Administrator under Section 12.1 of the
Plan.
(b) The Administrator shall furnish to the Trustee appropriate
certification of the individual or individuals authorized to give notice on
behalf of the Administrator and providing specimens of their signatures. All
requests, directions, requisitions for money and instructions by the
Administrator to the Trustee shall be in writing and signed. There may be
standing requests, directions, requisitions or instructions to the extent
acceptable to the Trustee.
11.10 Accounts and Approval.
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder, and
all books and record relating thereto shall be open at all reasonable times to
inspection and audit by any person or persons designated by the Administrator or
by the Employer.
(b) Within 90 days following the close of each Plan Year the Trustee may,
and upon the request of the Employer or the Administrator shall, file with the
Administrator and the Employer a written report setting forth all securities or
other investments (including insurance contracts) purchased and sold, all
receipts, disbursements and other transactions effected by it during the period
since the date covered by the next prior report, and showing the securities and
other property held at the end of such period, and such other information about
the Trust Fund as the Administrator shall request. Unless the Employer or
Administrator, within 90 days from the date of mailing of such report, objects
to the contents of such report, the report shall be deemed approved. Any such
objection shall set forth the specific grounds on which they are based.
11.11 Taxes. The Trustee may assume that any taxes assessed on or in
respect of the Trust Fund are lawfully assessed unless the Administrator shall
in writing advise the Trustee that in the opinion of counsel for the Employer
such taxes are not lawfully assessed. In the event that the Administrator shall
so advise the Trustee, the Trustee, if so requested by the Administrator and
suitable provision for their indemnity having been made, shall contest the
validity of such taxes in any manner deemed appropriate by the Administrator or
counsel for the Employer. The word "taxes" in this Section 11 shall be deemed to
include any interest or penalties that may be levied or imposed in respect to
any taxes assessed. Any taxes, including transfer taxes incurred in connection
with the investment or reinvestment of the assets of the Trust Fund that may be
levied or assessed in respect to such assets shall, if allocable to the Accounts
of specific Participants, be charged to such Accounts, and if not so allocable,
they shall be equitably apportioned among all such Participants' Accounts.
11.12 Employment of Counsel. The Trustee may employ legal counsel (who may
be counsel for the Employer) and shall be fully protected in acting or
refraining from acting, upon such counsel's advice in respect to any legal
questions.
11.13 Compensation of Trustee. An individual Trustee who is an Employee of
the Employer shall not be compensated for services as Trustee. A corporation, or
an individual who is not an Employee of the Employer, serving as a Trustee shall
be entitled to reasonable compensation for services; such compensation shall be
paid in accordance with Section 13.
11.14 Limitation of Trustee's Liability.
(a) The Trustee shall have no duty to take any action other than as herein
specified, unless the Administrator shall furnish it with instructions in proper
form and such instructions shall have been specifically agreed to by it, or to
defend or engage in any suit unless it shall have first agreed in writing to do
so and shall have been fully indemnified to its satisfaction.
(b) The Trustee may conclusively rely upon and shall be protected in acting
in good faith upon any written representation or order from the Administrator or
any other notice, request, consent, certificate or other instrument or paper
believed by the Trustee to be genuine and properly executed, or any instrument
or paper if the Trustee believes the signature thereon to be genuine.
(c) The Trustee shall not be liable for interest on any reasonable cash
balances maintained in the Trust.
(d) The Trustee shall not be obligated to, but may, in its discretion,
receive a contribution from a Participation unless forwarded by the
Administrator.
11.15 Successor Trustee. Any corporation into which a corporation acting as
a Trustee hereunder may be merged or with which it may be consolidated, or any
corporation resulting from any merger, reorganization or consideration to which
such Trustee may be a party, shall be the successor of the Trustee hereunder,
without the necessity of any appointment or other action, provided the Trustee
does not resign and is not removed.
11.16 Enforcement of Provisions. To the extent permitted by applicable law,
the Employer and the Administrator shall have the exclusive right to enforce any
and all provisions of this Agreement on behalf of all Employees or former
Employees of the Employer or their Beneficiaries or other persons having or
claiming to have
8
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an interest in the Trust Fund or under the Plan. In any action or proceeding
affecting the Trust Fund or any property constituting a part or all thereof, or
the administration thereof or for instructions to the Trustee, the Employer, the
Administrator and the Trustee shall be the only necessary parties and shall be
solely entitled to any notice of process in connection therewith; any judgment
that may be entered in such action or proceeding shall be binding and conclusive
on all persons having or claiming to have any interest in the Trust Fund or
under the Plan.
11.17 Voting. The Trustee shall deliver, or cause to be executed and
delivered, to the Administrator all notices, prospectuses, financial statements,
proxies and proxy soliciting materials received by the Trustee relating to
securities held by the Trust. The Administrator shall deliver these to the
appropriate Participant or Beneficiary of a deceased Participant, but only if
the Employer has specified in the Adoption Agreement that investment decisions
shall be made by Participants pursuant to Section 11.2 hereof. The Trustee shall
not vote any securities held by the Trust except in accordance with the written
instructions of the person or persons entitled to make investment decisions
pursuant to Section 11.2.
11.18 Applicability to Loan Trustee. Where appropriate, the foregoing
provisions of this Section 11 shall apply to the Loan Trustee on the same basis
as if the Loan Trustee were the Trustee.
SECTION 12.
ADMINISTRATION
12.1 Appointment of Administrator. From time to time, the Employer may, by
identifying such person(s) in writing to both the Trustee and the Participants,
appoint one or more persons as Administrator (hereinafter referred to in the
singular). Such Administrator shall have all power and authority necessary to
carry out the terms of the Plan. A person appointed as Administrator may also
serve in any other fiduciary capacity, including that of Trustee, with respect
to the Plan. The Administrator may resign upon 15 days advance written notice to
the Employer, and the Employer may at any time revoke the appointment of the
Administrator with or without cause. The Employer shall exercise the power and
fulfill the duties of the Administrator if at any time, an Administrator has not
been properly appointed in accordance with this Section 12.1 or the position is
otherwise vacant.
12.2 Named Fiduciaries. The "Named Fiduciaries" within the meaning of the
Act shall be the Administrator and the Trustee.
12.3 Allocation of Responsibilities. Responsibilities under the Plan shall
be allocated among the Trustee, the Administrator and the Employer as follows:
(a) Trustee: The Trustee shall have exclusive responsibility to hold,
manage and invest, pursuant to instructions communicated to it in accordance
with Section 11.2 above, the funds received by it subject to the powers granted
to it under Section 11 hereof. To the extent that loans are made to Participants
in accordance with Section 10 hereof, these responsibilities shall fall to the
Loan Trustee.
(b) The Administrator: The Administrator shall have the responsibility and
authority to control the operation and administration of the Plan in accordance
with its terms including, without limiting the generality of the foregoing, (i)
any investment decisions assigned to it under the Adoption Agreement or
transmission to the Trustee of any Participant investment decision under Section
11.2; (ii) interpretation of the Plan, conclusive determination of all questions
of eligibility, status, benefits and rights under the Plan and certification of
the Trustee of all benefit payments under the Plan; (iii) hiring of persons to
provide necessary services to the Plan not provided by Employees; (iv)
preparation and filing of all statements, returns and reports required to be
filed by the Plan with any agency of Government; (v) compliance with all
disclosure requirements of all state or federal law; (vi) maintenance and
retention of all Plan records as required by law, except those required to be
maintained by the Trustee; and (vii) all functions otherwise assigned to it
under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of the Plan,
as adopted or amended, the designation of the Administrator and Trustee (and, if
appropriate, the Loan Trustee) as provided in the Plan, the delivery to the
Administrator and the Trustee of Employee information necessary for operation of
the Plan, the timely making of the Employer Contributions pursuant to Section
4.1 hereof, and the exercise of all functions provided in or necessary to the
Plan except those assigned in the Plan to other persons.
(d) This Section 12.3 is intended to allocate individual responsibility for
the prudent execution of the functions assigned to each of the Trustees, the
Loan Trustee, the Administrator and the Employer and none of such
responsibilities or any other responsibility shall be shared among them unless
specifically provided in the Plan. Whenever one such person is required by the
Plan to follow the directions of another, the two shall not be deemed to share
responsibility, but the person who gives the direction shall be responsible for
giving it and the responsibility of the person receiving the direction shall be
to follow it insofar as it is on its face proper under applicable law.
12.4 More Than One Administrator. If more than one individual is appointed
as Administrator under Section 12.1, such individuals shall either exercise the
duties of the Administrator in concert, acting by a majority vote or allocate
such duties among themselves by written agreement delivered to the Employer and
the Trustee. In such a case, the Trustee may rely upon the instruction of any
one of the individuals appointed as Administrator regardless of the allocation
of duties among them.
12.5 No Compensation. The Administrator shall not be entitled to receive
any compensation from the funds held under the Plan for its services in that
capacity unless so determined by the Employer or required by law.
12.6 Record of Acts. The Administrator shall keep a record of all its
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the Employer
at any time. The Employer shall supply, and the Administrator may rely on the
accuracy of, all Employee data and other information needed to administer the
Plan.
12.7 Bond. The Administrator shall be required to give bond for the
faithful performance of its duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
12.8 Agent for Service of Legal Process. The Administrator shall be agent
for service of legal process on the Plan.
12.9 Rules. The Administrator may adopt or amend and shall publish to the
Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
12.10 Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of its responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of all such delegates.
12.11 Claims Procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claim. A claim for benefits by a Participant or
Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or by
course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within 60 days after the original
claim was filed. This notice of denial shall set forth in a manner calculated to
be understood by the claimant (i) the reason or reasons for denial, (ii)
specific reference to pertinent plan provisions on which the denial is based,
(iii) a description of any additional information needed to perfect the claim
and an explanation of why such information is necessary, and (iv) an explanation
of the Plan's claim procedure.
(c) The Participant or Beneficiary shall have 60 days from receipt of the
denial notice in which to make written application for review by the
Administrator. The Participant or Beneficiary may request that the review be in
the nature of a hearing. The Participant or Beneficiary shall have the rights
(i) to have representation, (ii) to review pertinent documents, and (iii) to
submit comments in writing.
(d) The Administrator shall issue a decision on such review within 60 days
after receipt of an application for review, except that such period may be
extended for a period of time not to exceed an additional 60 days if the
Administrator determines that special circumstances (such as the need to hold a
hearing) requires such extension. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner calculated
to be understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based.
SECTION 13.
FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or Trustee incurred
in the performance of their duties hereunder or under the Trust shall be paid by
the Employer; and to the extent not so paid by the Employer, said fees and
expenses shall be deemed to be an expense of the Trust and the Trustee is
authorized to charge the same to the Accounts of the Participants, and unless
allocable to the Accounts of specific Participants, they shall be charged
against the respective accounts of all or a reasonable group of Participants in
such reasonable manner as the Trustee shall determine.
SECTION 14.
BENEFIT RECIPIENT INCOMPETENT OR DIFFICULT TO
ASCERTAIN OR LOCATE
14.1 Incompetency. If any portion of the Trust Fund becomes distributable
to a minor or to a Participant or Beneficiary who, as determined in the sole
discretion of the Administrator, is physically or mentally incapable of handling
his or her financial affairs, the Administrator may direct the Trustee to make
such distributions either to the legal representative or custodian of, or any of
the relatives and friends of, the incompetent or to apply such distribution
directly for the incompetent's support and maintenance. Payments which are made
in good faith shall completely discharge the Employer, Administrator and Trustee
from liability therefore.
14.2 Difficulty to Ascertain or Locate. If it is impossible or difficult to
ascertain the person who is entitled to receive any benefit under the Plan, the
Administrator in its discretion may direct that such benefit be (i) paid to
another person in order to carry out the Plan's purposes; or (ii) retained in
the Trust; or (iii) paid to a court pending judicial determination of the right
thereto.
SECTION 15.
DESIGNATION OF BENEFICIARY
Each Participant may submit to the Trustee a properly executed Designation
of Beneficiary form. In order to be effective, such Designation must have been
properly executed and submitted to the Trustee before the death of the
Participant. The last effective Designation accepted by the Trustee shall be
controlling, and whether or not fully dispositive of the Participant's Account,
thereupon shall revoke all Designations previously submitted by the Participant.
Each such executed Designation is hereby specifically incorporated herein by
reference and shall be construed and enforced in accordance with the laws of the
state in which the Employer has its principal place of business. To the extent
that any portion of an Account of
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a deceased Participant is not governed by an effective Designation which names
at least one living Beneficiary designated by the Participant, that portion of
the Account shall be distributed to the deceased Participant's surviving spouse,
or if that is not possible, to the estate of the deceased Participant.
SECTION 16.
SPENDTHRIFT PROVISION
No interest of any Participant or Beneficiary shall be assigned,
anticipated or alienated in any manner nor shall it be subject to attachment,
bankruptcy proceedings or to any other legal process or to the interference or
control of creditors or others, except to the extent that Participants may
secure loans from the Trust with their Accounts pursuant to Section 10 hereof.
SECTION 17.
NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall qualify under Code
Section 401(a) as that Section exists at the time the Plan is established. If
the Plan as adopted by the Employer fails to attain such qualification, the Plan
will no longer participate in this Prototype Plan and will be considered an
individually designed plan. If that the Plan as adopted by the Employer fails to
attain or retain such qualification, the Employer shall promptly either amend
the Plan under Code Section 401(b) so that it does qualify, or direct the
Trustee to terminate the Plan and distribute all the assets of the Trust
equitably among the contributors thereto in proportion to their contributions,
and the Plan shall be considered to be rescinded and of no force and effect.
SECTION 18.
AMENDMENT OR TERMINATION
18.1 Amendment or Termination. The Employer may at any time, and from time
to time amend this Prototype Plan and the Adoption Agreement (including a change
in any election it has made in the Adoption Agreement), or suspend or terminate
this Plan by giving written notice to the Trustee, but the Trust may not thereby
be diverted from the exclusive benefit of the Participants, their Beneficiaries,
survivors or estates, or the administrative expenses of the Plan, nor revert to
the Employer, nor may an allocation or contribution theretofore made be changed
thereby, nor may any amendment directly or indirectly deprive a Participant of
such Participant's nonforfeitable rights to benefits accrued to the date of the
amendment, nor may any amendment otherwise operate retroactively beyond the
first day of the Plan Year in which such amendment is made except as the same
may be deemed necessary in order to make the Plan qualify under Code Section
401(a). An amendment shall be deemed necessary for this purpose if counsel for
the Employer certifies and advises that in its opinion the written ruling of the
Commissioner of Internal Revenue that the Plan meets such requirements can be
obtained within a reasonable time only with such retroactive amendment. Any
amendment by the Employer which is other than the amendment of the Employer's
prior designation of an option or provision set forth or referred to in the
Adoption Agreement will constitute a substitution by the Employer of an
individually designed plan for this Prototype Plan and the general amendment
procedure of the Internal Revenue Service governing individually designed plans
will be applicable. Nothing contained herein shall constitute an agreement or
representation by the Distributor that it will continue to maintain its
sponsorship of the Plan indefinately.
18.2 Delegation. The Employer hereby delegates to the Sponsor the authority
to amend so much of the Adoption Agreement and this Prototype Plan as is in
prototype form and, to the extent to which the Employer could effect such
amendment, the Employer shall be deemed to have consented to any amendment so
made. The Sponsor, in turn, delegates to the Distributor such authority to amend
so much of the Adoption Agreement and this Prototype Plan as is in prototype
form and, to the extent to which the Sponsor could effect such amendment, it
shall be deemed to have consented to any amendment so made. When an election
within the prototype form has been made by the Employer, it shall be deemed to
continue after amendment of the prototype form unless and until the Employer
expressly further amends the election, notwithstanding that the provision for
the election in the amended prototype form is in a different form or place;
provided, however, that if the amended form inadvertently fails to provide means
to duplicate exactly the earlier election, such earlier election shall continue
until such further amendment. The immediately preceding sentence is subject to
the qualification that each Employer hereby delegates to the Distributor, in the
event of such an amendment of the prototype form, authority to determine
conclusively that such a continuation of an earlier election by the Employer is
not advisable and to make the election for the Employer in the amended prototype
form which in the judgment of the Distributor most nearly corresponds with the
election made by the Employer before the amendment of the prototype form,
provided the following procedure is followed: the election for the Employer may
be made with respect to any specified Employers as to whom it may be applicable
singly, or such election may be made with respect to all Employers as to whom it
may be applicable as a group; and the election shall be made as of an effective
date which has been specified in a notice mailed or delivered, at the last
address(es) of the Employer(s) on the records of the Distributor, to the
Employer(s) at least 20 days before the end of the remedial amendment period.
Such notice may be mailed to Employers to whom it cannot be applicable by reason
of a previous election made by the Employer or otherwise, but it shall be
effective only as to those Employers who have received the notice and have not
themselves made a new election with respect to that item since the amendment of
the prototype form and previous to the effective date of such election by the
Distributor. The foregoing delegations of authority to make elections, or to
make amendments, shall not impose any duty on the Distributor to make them nor
shall it affect the interpretation of the Plan if they are not used.
18.3 Distribution of Accounts Upon Termination. Upon termination of the
Plan or complete discontinuance of Employer Contributions under it, the
Administrator shall determine whether to pay the interests of Participants,
former Participants and Beneficiaries immediately, to retain such interest in
the Trust and pay them in the future according to Section 9, or to use what
other methods the Administrator deems advisable in order to furnish whatever
benefits the Trust will provide, subject to the limitations of Section 9.2
limiting the length of the period over which an Account can be paid.
SECTION 19.
TRANSFERS
Nothing contained herein shall prevent the merger or consolidation of the
Plan with, or transfer of assets or liabilities of the Plan to, another plan
meeting the requirements of Code Section 401(a) or the transfer to the Plan of
assets or liabilities of another such plan so qualified under the Code. Any such
merger, consolidation or transfer shall be accompanied by the transfer of such
existing records and information as may be necessary to properly allocate such
assets among Participants, including any tax or other information necessary for
the Participants or persons administering the plan which is receiving the
assets. The terms of such merger, consolidation or transfer must be such that if
this Plan is then terminated, each Participant would receive a benefit
immediately after the merger, consolidation or transfer equal to or greater than
the benefit he or she would have received if the Plan had terminated immediately
before the merger, consolidation or transfer.
SECTION 20.
OWNER-EMPLOYEE PROVISIONS
20.1 Purpose of Section. This Section is intended to insure that the Plan
complies with Code Section 401(d). Any ambiguity herein will be construed to
that end, and this Section 20 will override any other provision of the Plan with
which it may be inconsistent.
20.2 Control. For purposes of this Section 20, "Control" means the
ownership directly or indirectly of more than 50% of either the capital interest
or the profits interest in a partnership or on unincorporated trade or business.
20.3 Limitations. No benefits shall be provided to an Owner-Employee under
this Plan unless:
(a) if an Owner-Employer or group of Owner-Employees Controls the trade or
business covered by this Plan and also Control as an Owner-Employee or
Owner-Employees one or more other trades or businesses, this Plan and the plans
established for such other trades or businesses, when taken together, form a
single plan which satisfies the requirements of Section 401(a) and (d) of the
Code with respect to the employees of all the controlled trades or businesses;
and
(b) if an Owner-Employee or group of Owner-Employees controls another trade
or business but does not control the trade or business covered by this Plan, the
employees of such other trades or businesses are included in a plan which
satisfies the requirements of Sections 401(a) and (d) of the Code and which
provides contributions and benefits for such employees which are not less
favorable than those provided for Owner-Employees under this Plan.
SECTION 21.
TOP-HEAVY PROVISIONS
21.1 Purposes of Section. This Section is intended to insure that the Plan
complies with Code Section 4.16. If the Plan is or becomes Top-Heavy in any Plan
Year beginning after December 31, 1983, the provisions of this Section will
supersede any conflicting provision in the Plan.
21.2 Definitions. The terms used in this Section shall have the following
meanings:
(a) Key Employee: Any Employee or former Employee (and the Beneficiaries of
such Employee) who at any time during the determination period was an officer of
the Employer having an annual compensation greater than 1.5 multiplied by the
amount in effect under Code Section 415(C)(1)(A) for the Plan Year, an owner (or
considered an owner under Code Section 318) of 1 of the 10 largest interests in
the Employer if such individual's compensation exceeds the dollar limitation
under Code Section 415(C)(1)(A), a five-percent owner of the Employer, or a
one-percent owner of the Employer who has an annual compensation of more than
$150,000. The determination period is the Plan Year containing the Determination
Date and the 4 preceding Plan Years. The determination of who is a Key Employee
will be made in accordance with Code Section 416(i)(1) and the regulations
thereunder.
(b) Top-Heavy Plan. For any Plan Year beginning after December 31, 1983,
this Plan is Top-Heavy if any of the following conditions exists:
(i) If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is
not part of any Required Aggregation Group or Permissive Aggregation Group
of plans.
(ii) If this Plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group and the Top-Heavy Ratio for the Required
Aggregation Group of plans exceeds 60%.
(iii) If this Plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(c) Top-Heavy Ratio.
(i) If the Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan within the meaning of Code
Section 408(k)) and the Employer has never maintained any defined benefit
plan which has covered or could cover a Participant in this Plan, the
Top-Heavy Ratio is a fraction, the numerator of which is the sum of the
account balances of all Key Employees under all of the plans as of the
Determination
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Date (including any part of any account balance distributed in the
five-year period ending on the Determination Date), and the denominator of
which is the sum of all account balances (including any part of any account
balance distributed in the five-year period ending on the Determination
Date) of all Participants as of the Determination Date. Both the numerator
and denominator of the Top-Heavy Ratio are adjusted to reflect any
contribution which is due but unpaid as of the Determination Date.
(ii) If the Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan within the meaning of Code
Section 408(k)) and the Employer maintains or has maintained one or more
defined benefit plans which have covered or could cover a Participant in
this Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the
sum of account balances under the defined contribution plans for all Key
Employees and the present value of accrued benefits under the defined
benefit plans for all Key Employees, and the denominator of which is the
sum of the account balances under the defined contribution plans for all
participants and the present value of accrued benefits under the defined
benefit plans for all participants. Both the numerator and denominator of
the Top-Heavy Ratio are adjusted for any distribution of an account balance
or an accrued benefit made in the five-year period ending on the
Determination Date and any contribution due but unpaid as of the
Determination Date.
(iii) For purposes of (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be determined as of
the most recent Valuation Date and falls within or ends with the
twelve-month period ending on the Determination Date. The account balances
and accrued benefits of a Participant who is not a Key Employee but who was
a Key Employee in a prior Plan Year will be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance with Code
Section 416 and the regulations thereunder. Deductible Voluntary
Contributions and any deductible employee contributions under any other
qualified plan maintained by the Employer will not be taken into account
for purposes of computing the Top-Heavy Ratio. When aggregating plans the
value of account balances and accrued benefits will be calculated with
reference to the Determination Dates that fall within the same calendar
year.
(d) Permissive Aggregation Group. The Required Aggregation Group of plans
plus any other plan or plans of the Employer which, when considered as a group
with the Required Aggregation Group, would continue to satisfy the requirements
of Code Sections 401(a)(4) and 410.
(e) Required Aggregate Group. (i) Each qualified plan of the Employer in
which at least one Key Employee participates, and (ii) any other qualified plan
of the Employer which enables a plan described in (I) to meet the requirements
of Code Sections 401(a)(4) and 410.
(f) Determination Date. For any Plan Year subsequent to the first Plan
Year, the last day of the preceding Plan Year. For the first Plan Year, the last
day of that Year.
(g) Valuation Date. See Section 2.45.
(h) Present Value. Present value shall be based only on the interest rate
employed as of the date in question by the Pension Plan Benefit Guaranty
Corporation to value immediate annuities and the mortality rate specified in
Table LN at Treas. Reg. [s]20.2031-10, unless otherwise specified in the most
recently adopted or amended defined benefit plan maintained by the Employer.
21.3 Minimum Allocation.
(a) In any Plan Year in which this Plan is Top-Heavy, except as otherwise
provided in (d), (e) and (f) below, the Employer Contributions and forfeitures
allocated on behalf of any Participant who is not a Key Employee shall not be
less than the lesser of 3% of such Participant's Compensation or, in the case
where the Employer has no defined benefit plan which designates this Plan to
satisfy Code Section 401, the largest percentage of Employer Contributions and
forfeitures stated as a percentage of the first $200,000 of a Key Employee's
Compensation, allocated on behalf of any Key Employee for that Plan Year. The
minimum allocation is determined without regard to any Social Security
contribution by the Employer.
(b) For purposes of computing the minimum allocation, "Compensation" will
have the same meaning as in Section 2.7, disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement.
(c) During any Plan Year for which a minimum allocation is required under
subsections (a) or (f) to a plan under which allocations shall be made on an
integrated basis, Employer Contributions and forfeitures will be allocated to
each Participant's Employer Contribution Account in the ratio that each
Participant's Compensation for the Plan Year bears to all Participants'
Compensation for the Plan Year but not in excess of 3% of such Compensation. The
provisions of this Section 21.3(C) shall take precedence over any conflicting
provisions of Section 4.1. To the extent any amount of Employer Contributions
and forfeitures remains unallocated after the application of this Subsection
(C), such amount shall be allocated in accordance with the provisions of Section
4.1 hereof.
(d) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(e) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan (other
than a plan which incorporates this Prototype Plan) or plans of the Employer,
and the Employer has provided in the Adoption Agreement that the minimum
allocation or benefit requirement applicable to Top-Heavy Plans will be met in
such other plan or plans.
(f) The provision in subsection (a) above shall not apply in the case of a
Participant who is an Employee of an Employer who has adopted both a profit
sharing plan and a money purchase pension plan which incorporates this Prototype
Plan. In such case, the aggregate total of the Employer Contributions and
forfeitures under both plans allocated to the Employer Contribution Account of a
Participant who is not a Key Employee shall not be less than 3% of such
Participant's Compensation. Unless the Employer has specified otherwise in the
Adoption Agreement and such specification is sufficient to satisfy the minimum
allocation requirement referred to in the preceding sentence, subsection (c)
above shall apply to the allocation of Employer Contributions and forfeitures
under the money purchase pension plan and, only to the extent that such
allocation is insufficient to satisfy the minimum allocation requirement
referred to in the preceding sentence, the profit sharing plan.
21.4 Non-forfeitability of Minimum Allocation. The minimum allocation
required (to the extent required to be nonforfeitable under Code Section 416(b))
may not be forfeited under Code Section 411(a)(3)(B) or 411(A)(3)(D).
2.15 Limitation on Compensation. For any Plan Year in which the Plan is
Top-Heavy, only the first $200,000 (or such larger amount as may be prescribed
by the Secretary of the Treasury or his or her delegate) of a Participant's
Compensation for the Plan Year shall be taken into account for purposes of
allocation Employer Contributions under the Plan.
21.6 Minimum Vesting Schedule. Unless the Employer has specified a more
rapid vesting schedule in the Adoption Agreement, for any Plan Year in which
this Plan is Top-Heavy, the following minimum vesting schedule shall apply:
Nonforfeitable Percentage
Vesting Years of Employer Contribution Account
- ------------------------------- -----------------------------------
1 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
The minimum vesting schedule applies to all benefits within the meaning of Code
Section 411(a)(7) attributable to Employer Contributions and forfeitures,
including benefits accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became Top-Heavy. Further, no reduction in
vested benefits may occur in the event the Plan's status as Top-Heavy changes
for any Plan Year. However, this Section 21.6 does not apply to the Employer
Contribution Account balances of any former Participant who does not have an
Hour of Service after the Plan has initially become Top-Heavy and such former
Participant's vested Employer Contribution Account balance will be determined
without regard to this Section.
21.7 Effect on Code Section 415 Limitations. Notwithstanding anything to
the contrary in Section 5 above, the following provisions apply if the Plan is
Top-Heavy.
(a) In any Plan Year in which the Top-Heavy ratio exceeds 90% (and the Plan
therefore becomes super Top-Heavy) the denominators of the Defined Benefit
Fraction (as defined in Section 5.5(C) above) and the Defined Contribution
Fraction (as defined in Section 5.5(d) above) shall be computed using 100% of
the dollar limitation stated therein instead of 125%.
(b) In any Plan Year in which the Top-Heavy Ratio exceeds 60%, but is less
than 90%, the denominators of the Defined Benefit Fraction (as defined in
Section 5.5(c) above) and the Defined Contribution Fraction (as defined in
Section 5.5(d) above) shall be computed using 100% of the dollar limitation
described therein instead of 125%, unless the Employer has specified in the
Adoption Agreement that the minimum allocation provisions of Section 21.3 above
shall be computed using 4% of a Participant's Compensation instead of 3%, in
which case the dollar limitations of the Defined Benefit Fraction (as defined in
Section 5.5(c) above) and the Defined Contribution Fraction (as defined in
Section 5.5(d) above) shall continue to be computed using 125% of the dollar
limitations.
21.8 Termination of Top-Heavy Status. If the Plan ceases to be Top-Heavy
for any Plan Year and if the Employer has not specified otherwise in the
Adoption Agreement, the minimum vesting schedule described in Section 21.6 shall
continue to apply. If the Employer has specified in the Adoption Agreement that,
upon conversion of the Plan to non-Top-Heavy status, Participants' vested
benefits are to be determined according to a schedule other than the minimum
vesting schedule described in Section 21.6, such change in vesting schedules
shall be treated as an amendment, and the election referred to in Section 7.2
hereof shall apply.
SECTION 22.
WAIVER OF MINIMUM FUNDING STANDARD
If an Employer who has adopted this Prototype Plan as a money purchase
pension plan is unable to satisfy the minimum funding standard (as described in
Code Section 412) for a given Plan Year, it may apply to the Internal Revenue
Service for a waiver of such minimum funding standard. If the waiver is granted,
the following provisions apply:
(a) An adjusted Account balance shall be maintained for each Participant
whose actual Account balance is less than or equal to his or her adjusted
Account balance.
(i) For the Plan Year for which the first waiver is granted, the
adjusted Account balance as of the Valuation Date for each affected
Participant equals:
(A) the Participant's actual Account balance, plus
(B) the amount that such Participant would have received if the
amount waived had been contributed.
(ii) For each Plan Year following the Plan Year for which a waiver is
granted, the adjusted Account balance for each Participant affected by such
waiver (calculated as of the Valuation Date for that Plan Year) equals:
(A) the adjusted Account balance as of the Valuation Date in the
prior Plan Year, plus
(B) the amount equal to the actual investment return credited or
charged to the Participant's actual Account balance, plus
(C) the amount equal to 5% of the excess of the amount in (A)
over the Participant's actual Account balance calculated as of the
same date, plus
(D) the amount equal to such Participant's allocated share of the
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required Employer Contribution (whether or not waived) for the Plan
Year (determined without regard to adjusted waiver payments and
discretionary Employer Contributions), minus
(E) the amount of the Participant's adjusted Account balance
forfeited during the Plan Year under the Plan's provisions.
(b) For a given Year, the Employer is required to contribute a certain
amount in order to satisfy the minimum funding standard for such Plan Year. For
each Plan Year which follows a Plan Year for which a waiver of the minimum
funding standard was granted the amount equals:
(i) the amount due as determined under Section 4.1(b) above (without
regard to this Section), plus
(ii) the adjusted waiver amount.
(c) The adjusted waiver amount for given Plan Year equals:
(i) the sum of the amounts necessary to amortize each waived funding
deficiency over a period of 15 Plan Years (measured from the Valuation Date
of the Plan Year for which the corresponding waiver was granted) at 5%
interest, compounded annually, minus
(ii) the sum of the amounts necessary to amortize the total of each
Plan Year's forfeitures (which have arisen since the first waiver was
granted) over a period of 15 Plan Years (measured from the Valuation Date
of the Plan Year in which the corresponding forfeitures arose) at 5%
interest, compounded annually.
(d) An amount equal to the adjusted waiver amount must be contributed only
until each Participant's actual Account balance equals the Participant's
adjusted Account balance.
(e) Any Plan provision which provides that Employer Contributions shall be
reduced immediately by forfeitures is revoked until each Participant's actual
Account balance equals that Participant's adjusted Account balance.
(f) Discretionary Employer Contributions, which are in addition to the
amounts contributed to satisfy the minimum funding standard, can be made in any
given Plan Year. However, the total Employer Contribution for the Plan Year
cannot exceed the then remaining underfunded amount (the sum of Participants'
adjusted Account balances minus total Plan assets).
(g) The adjusted waiver payments, discretionary Employer contributions and
the forfeitures of actual Account balances for the current Plan Year shall be
allocated as of that Plan Year's Valuation Date to the actual Account balances
of the affected Participants.
(h) Each time a waiver is granted, an original waiver account ("OWA") will
be determined for each affected Participant. The OWA equals the Participant's
portion of the amount which was waived.
(i) Commencing with the Valuation Date of the Plan Year for which a waiver
is granted, a remaining original waiver amount ("ROWA") must be calculated for
each affected Participant. As of such Valuation Date the OWA equals the ROWA. On
the Valuation Date of a succeeding Plan Year the ROWA equals the prior Plan
Year's ROWA multiplied by 1.05, minus the forfeiture of amounts in the prior
Plan Year's ROWA incurred in the current Plan Year. For each waiver that is
granted one OWA and a corresponding ROWA will be established for each affected
Participant.
(j) The sum of the adjusted waiver payments, discretionary Employer
Contributions and forfeitures of actual Account balances for a given Plan Year
are allocated to those Participants who have ROWAs by multiplying the sum of
these three amounts by the fraction:
(i) the numerator of which equals the sum of OWAs for a particular
Participant, and
(ii) the denominator of which equals the sum of the OWAs for all
Participants.
To determine the portion of this allocation which is to be assigned to a given
ROWA, multiply the allocation by the corresponding OWA, then divide by the sum
of the OWAs for the particular Participant.
(k) If the calculation of a ROWA results in a value which is less than
zero, then
(i) the ROWA is set equal to zero,
(ii) the corresponding OWA is set equal to zero, and
(iii) the excess payments will be reallocated to the remaining ROWAs.
(l) A distribution is determined by multiplying a Participant's vested
percentage by his or her adjusted Account balance. However, distributions from
the Plan may not exceed a Participant's actual Account balance. If so limited,
plan Participants shall receive subsequent distributions derived from future
adjusted waiver payments.
SECTION 23.
MISCELLANEOUS
23.1 Misrepresentation. Notwithstanding any other provisions herein, if an
Employee misrepresents his or her age or any other fact, any benefit payable
hereunder shall be the smaller of: (i) the amount that would be payable if no
facts had been misrepresented, or (ii) the amount that would be payable if the
facts were as misrepresented.
23.2 Legal or Equitable Action. If any legal or equitable action with
respect to the Plan is brought by or maintained against any person, and the
results of such action are adverse to that person, attorney's fees and all other
costs to the Employer, the Administrator or the Trust of defending or bringing
such action shall be charged against the interest, if any, of such person under
the Plan.
23.3 No Enlargement of Plan Rights. It is a condition of the Plan, and each
Participant by participating herein expressly agrees, that he or she shall look
solely to the assets of the Trust for the payment of any benefit under the Plan.
23.4 No Enlargement of Employment Rights. Nothing appearing in or done
pursuant to the Plan shall be construed (a) to give any person a legal or
equitable right or interest in the assets of the Trust or distribution
therefrom, nor against the Employer, except as expressly provided herein or (b)
to create or modify any contract of employment between the Employer and any
Employee or obligate the Employer to continue the services of any Employee.
23.5 Written Orders. In taking or omitting to take any action under this
Plan, the Trustee may conclusively rely upon and shall be protected in acting
upon any written orders from or determinations by the Employer or the
Administrator as appropriate, or upon any other notices, requests, consents,
certificates or other instruments or papers believed by it to be genuine and to
have been properly executed, and so long as it acts in good faith, in taking or
omitting to take any other action.
23.6 No Release from Liability. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the Act.
Subject thereto, neither the Trustee, the Loan Trustee, or the Administrator nor
any other person shall have any liability under the Plan, except as a result of
negligence or willful misconduct, and in any event the Employer shall fully
indemnify and save harmless all persons from any liability except that resulting
from their negligence or willful misconduct.
23.7 Discretionary Actions. Any discretionary action, including the
granting of a loan pursuant to Section 10 hereof, to be taken by the Employer or
the Administrator under this Plan shall be non-discriminatory in nature and all
Employees similarly situated shall be treated in a uniform manner.
23.8 Headings. Headings herein are primarily for convenience of reference,
and if they conflict with the text, the text shall control.
23.9 Applicable Law. This Plan shall, to the extent state law is
applicable, be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the state in which (a) if the Trustee
is a corporation, the Trustee has its principal place of business; (b) if the
Trustee is an individual, the Trustee resides; or (c) if the Trustee is
individuals, where a majority of the individuals serving as Trustees reside. The
Employer's execution of the Adoption Agreement may be acknowledged where
required by applicable law.
23.10 No Reversion. Notwithstanding any other contrary provision of the
Plan, but subject nevertheless to Sections 5 and 16, no part of the assets in
the Trust shall revert to the Employer, and no part of such assets, other than
that amount required to pay taxes or administrative expenses, shall be used for
any purpose other than exclusive benefit of Employees or their Beneficiaries.
23.11 Notices. The Employer will provide the notice to other interested
parties contemplated under Code Section 7476 before requesting a determination
by the Secretary of the Treasury or his or her delegate with respect to the
qualification of the Plan.
23.12 Conflict. In the event of any conflict between the provisions of this
Plan and the terms of any contract or agreement issued thereunder or with
respect thereto, the provisions of the Plan shall control.
12
<PAGE>
SCUDDER
- -------
This booklet is not to be used in connection
with the offering of any of the Scudder funds
unless preceded or accompanied by the
appropriate current prospectuses. Scudder
Fund Distributors, Inc. is the underwriter
of the Scudder no-load mutual funds.
11-10-104 (C) Scudder Fund Distributors, Inc.
Scudder
IRA
============================
Plan and
Disclosure Statement
- ----------------------------
SCUDDER
SERVING INVESTORS SINCE 1919
<PAGE>
Introduction
When Congress approved IRAs as a tax incentive to save for retirement, it
required that all IRA investments be held by an IRA Custodian or Trustee. The
job of the Custodian or Trustee is to hold and safeguard your IRA assets until
you withdraw them.
The Custodian of the Scudder IRA is State Street Bank and Trust Company.
As Custodian, State Street Bank and Trust Company is the registered owner of
your investments in Scudder fund shares and holds them for your benefit.
This booklet and the accompanying adoption agreement comprise the agreement
between you and State Street Bank and Trust Company. It gives a detailed
explanation of the procedures governing the Scudder IRA. These procedures are
set by Congress and the Internal Revenue Service and are common to all IRAs.
Accompanying this document is "Scudder IRA: A guide to saving taxes while
building retirement income", which explains the Scudder IRA in plain English.
It is intended for your use as an easy reference guide for your Scudder IRA
investment.
If you have any questions, please call 1-800-225-2470.
2
<PAGE>
Form 5305-A OMB No. 1545-0365
(Rev. November 1983) -----------------
Department of the Treasury DO NOT FILE
Internal Revenue Service with Internal
Revenue Service
READ BUT DO NOT COMPLETE
Individual Retirement Custodial Account
Scudder IRA Form 12084 for use with the Scudder Funds
(Under Section 408(a) of the Internal Revenue Code)
- --------------------------------------------------------------------------------
See Adoption Agreement, Article IX,
Paragraph 1 hereof (hereafter referred
to as A/A)
State of ____________________________________________________ SS
County of ____________________________________________________
[_] Amendment
- --------------------------------------------------------------------------------
Depositor's name See A/A
------------------------------------------------------------
Depositor's date of birth See A/A
-----------------------------------------------------
Depositor's social security number See A/A
-------------------------------------------
Depositor's address See A/A
----------------------------------------------------------
Custodian's name State Street Bank & Trust Company
--------------------------------------------------------------
Custodian's address or principal place of business
Boston, Massachusetts
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Depositor whose name appears above is establishing an individual
retirement account (under section 408(a) of the Internal Revenue Code) to
provide for his or her retirement and for the support of his or her
beneficiaries after death.
The Custodian named above had given the Depositor the disclosure statement
required under the Income Tax Regulations under section 408(i) of the Code.
The Depositor has deposited with the Custodian See A/A dollars
($ See A/A ) in cash.
The Depositor and the Custodian make the following agreement:
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8),
405(d)(3), 408(d)(3), or 409(b)(3)(C) of the Code or an employer contribution to
a simplified employee pension plan as described in section 408(k).
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
- --------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see back of this form.
3
<PAGE>
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) of the Code).
Article IV
1. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed before the end of the tax year in which the Depositor
reaches age 70 1/2. By the end of that tax year, the Depositor may elect, in a
manner acceptable to the Custodian, to have the balance in the custodial account
distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
The payments must begin by the end of that tax year.
(c) An annuity contract that provides equal monthly, quarterly, or annual
payments over the joint and last survivor lives of the Depositor and
his or her spouse. The payments must begin by the end of the tax
year.
(d) Equal or substantially equal monthly, quarterly, or annual payments
over a specified period that may not be longer than the Depositor's
life expectancy.
(e) Equal or substantially equal monthly, quarterly, or annual payments
over a specified period that may not be longer than the joint life and
last survivor expectancy of the Depositor and his or her spouse.
Even if distributions have begun to be made under option (d) or (e), the
Depositor may receive a distribution of the balance in the custodial account at
any time by giving written notice to the Custodian. If the Depositor does not
choose any of the methods of distribution described above by the end of the tax
year in which he or she reaches age 70 1/2, distribution to the Depositor will
be made before the end of that tax year by a single-sum payment. If the
Depositor elects as a means of distribution (b) or (c) above, the annuity
contract must satisfy the requirements of section 408(b)(1), (3), (4), and (5)
of the Code. If the Depositor elects as a means of distribution (d) or (e)
above, figure the payments made in tax years beginning in the tax year the
Depositor reaches age 70 1/2 as follows:
(i) For the minimum payment, divide the Depositor's entire interest in the
custodial account at the beginning of each year by the life expectancy
of the Depositor (or the joint life and last survivor expectancy of
the Depositor and his or her spouse, or the period specified under (d)
or (e), whichever applies). Determine the life expectancy in either
case on the date the Depositor reaches 70 1/2 minus the number of
whole years passed since the Depositor became 70 1/2.
(ii) For the minimum monthly payment, divide the result in (i) above by 12.
(iii) For the minimum quarterly payment, divide the result in (i) above by
4.
2. If the Depositor dies before his or her entire interest in the account
is distributed to him or her, or if distribution is being made as provided in
(e) above to his or her surviving spouse, and the surviving spouse dies before
the entire interest is distributed, the entire remaining undistributed interest
will, within 5 years after
4
<PAGE>
the Depositor's death or the death of the surviving spouse, be distributed to
the beneficiary or beneficiaries of the Depositor or the Depositor's surviving
spouse.
Article V
Unless the Depositor dies, is disabled (as defined in section 72(m) of the
Code), or reaches age 59 1/2 before any amount is distributed from the account,
the Custodian must receive from the Depositor a statement explaining how he or
she intends to dispose of the amount distributed.
Article VI
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section 408(i)
of the Code and the related regulations.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
Article VII
Notwithstanding any other articles which may be added to or incorporated,
the provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with section 408(a) of the Code
and related regulations will be invalid.
Article VIII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
- --------------------------------------------------------------------------------
Note: The following space (Article IX) may be used for any other provisions
you wish to add. If you do not wish to add any other provisions, draw
a line through this space. If you add provisions, they must comply
with applicable requirements of State law and the Internal Revenue
Code.
- --------------------------------------------------------------------------------
Article IX
1. These provisions of Article IX are set forth in the Adoption Agreement
which is incorporated herein by reference and which Depositor acknowledges
having received and read.
2.-13. The remaining provisions of Article IX are set forth in Appendix
"A" to this Adoption Agreement, which is incorporated herein by reference, and
which Depositor acknowledges having received and read. Paragraph 7 thereof
amplifies Article IV and Paragraph 9 thereof amplifies Article VIII.
- --------------------------------------------------------------------------------
Depositor's Signature See A/A
-------------------------------------------------------
Custodian's Signature See A/A
-------------------------------------------------------
Date See A/A
-----------------------------------------
Witness See A/A
----------------------------------------------------------------------
(Use only if signature of Depositor or Custodian is required to be witnessed.)
- --------------------------------------------------------------------------------
Instructions
(Section references are to the Internal Revenue Code unless otherwise noted.)
Paperwork Reduction Act Notice
The Paperwork Reduction Act of 1980 says that we must tell you why we are
collecting this information, how it is to be used, and whether you have to
provide it. The information is
5
<PAGE>
used to determine if you are entitled to a deduction for contributions to this
custodial account. Your completing this information is only required if you
want to adopt this model custodial account.
Purpose of Form
This model custodial account may be used by an individual who wishes to
adopt an individual retirement account under section 408(a). When fully
executed by the Depositor and the Custodian not later than the time prescribed
by law for filling the federal income tax return for the Depositor's tax year, a
Depositor will have an individual retirement account (IRA) custodial account
which meets the requirements of Section 408(a). This custodial account must be
created in the United States for the exclusive benefit of the Depositor or
his/her beneficiaries.
Definitions
Custodian. -- The Custodian must be a bank or a savings and loan
association, as defined in section 408(n), or other person who has the approval
of the Internal Revenue Service to act as Custodian.
Depositor. -- The Depositor is the person who establishes the account.
IRA for Non-Working Spouse
Contributions to an IRA custodial account for a non-working spouse must be
made to a separate IRA custodial account established by the non-working spouse.
This form may be used to establish the IRA custodial account for the non-
working spouse.
An employee's social security number will serve as the identification
number of his or her individual retirement account. An employer identification
number is not required for each individual retirement account, nor for a common
fund created for individual retirement accounts.
For more information get a copy of the required disclosure statement from
your Custodian or get Publication 590, Individual Retirement Arrangements,
IRA's.
Specific Instructions
Article IV. -- Distributions made under this Article may be made in a
single sum, periodic payment, or a combination of both. The distribution option
should be reviewed in the year the Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met. For example, if a Depositor
elects distributions over a period permitted in (d) or (e) of Article IV, the
period may not extend beyond the life expectancy of the Depositor at age 70 1/2
(under option (d)) or the joint life and last survivor expectancy of the
Depositor (at age 70 1/2) and the Depositor's spouse (under option e)). For
this purpose, life expectancies must be determined by using the expected return
multiples in section 1.72-9 of the Income Tax Regulations (26 CFR Part 1). The
balance in the account as of the beginning of each tax year beginning on or
after the Depositor reaches age 70 1/2 will be used in computing the payments
described in (d) and (e) of Article IV. Article IV does not preclude a mode of
distribution different from those described in (a) through (e) of Article IV
prior to the close of the tax year of the Depositor in which he/she attains age
70 1/2.
Article IX. -- This article and any that follow it may incorporate
additional provisions that are agreed upon by the Depositor and Custodian to
complete the agreement. These may include, for
6
<PAGE>
example: definitions, investment powers, voting rights, exculpatory provisions,
amendment and termination, removal of custodian, custodian's fees, state law
requirements, beginning date of distributions, accepting only cash, treatment of
excess contributions, prohibited transactions with the depositor, etc. Use
additional pages if necessary, and add them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
U.S. Government Printing Office: 1984--421-108/258.
7
<PAGE>
Appendix "A" Incorporated Into
Article IX of Agreement on
Scudder IRA Form 12-84
Between Custodian and Depositor
----------------------
1. Please refer to Scudder IRA Adoption Agreement.
2. Depositor's Selection of Investments
Depositor directs Custodian to invest all custodial funds in
investment funds issued by the "Mutual Fund(s)," or in the other investments
which have been designated by Scudder Fund Distributors, Inc. (or its
successors) as eligible for investment hereunder, which have been selected by
Depositor until Depositor hereafter gives Custodian contrary instructions
pursuant to Article IX, paragraph ("para.") 6 below, which governs investment of
the custodial account in "Mutual Fund" shares or other investments.
3. Contributions
(a) Period Contributions. Periodic contributions which Depositor
intends to be tax-deductible under Internal Revenue Code Section 219 shall be in
cash and are to be invested under this Agreement. Depositor contemplates future
periodic contributions within the tax-deductible limits and in accordance with
the rules for tax-deductibility specified in the Internal Revenue Code.
Depositor assumes full and sole responsibility for making sure that the sum of
periodic contributions during a single taxable year of Depositor does not exceed
those limits or violate those rules. Depositor should not contribute to the
custodial account after it ceases to be exempt by reason of either section
408(e) or 415(g) of the Internal Revenue Code.
(b) Rollover Contributions From an Individual Retirement Account or
Individual Retirement Annuity Funded Exclusively With Deductible Contributions.
A rollover contribution by Depositor from an individual retirement account or
individual retirement annuity funded exclusively with deductible contributions
shall be a deposit in cash to be invested under this agreement, with respect to
which contribution, Depositor warrants that
(1) it meets the requirements for a rollover contribution from such an
individual retirement account or individual retirement annuity as are contained
in Code Section 408(d) and that
(2) no portion of such rollover contribution is attributable to a distribution
from an employees' trust, an employee annuity, an annuity contract or a U.S.
retirement bond as described in Internal Revenue Code Sections 402(a)(5),
403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C).
(c) Rollover Contributions Attributable to Distributions From
Employer Plans. A rollover contribution by Depositor other than a contribution
described in paragraph (b) above shall be a deposit in cash to be invested under
this Agreement with respect to which contribution Depositor warrants that (1)
the amount rolled over is attributable to a distribution from an employees'
trust, an employee annuity, an annuity contract, a qualified bond purchase plan,
or a U.S. retirement bond, which meets the requirements of Code sections
402(a)(5), 403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C); and (2) Depositor
will make no additional contributions to the custodial account in which such
contribution is deposited, except as otherwise permitted by Scudder Fund
Distributors, Inc.
If permitted by Scudder Fund Distributors, Inc., rollover
contributions may be received under this Agreement with respect to qualified
voluntary employee contributions as defined in Internal Revenue Code Section
219(e)(2) and such contributions shall thereafter be held and administered
hereunder by the Custodian in accordance with all applicable law with respect to
accumulated deductible employee contributions as defined in Internal Revenue
Code Section 72(o)(5)(B).
8
<PAGE>
(d) Transfer from an Individual Retirement Account or Individual
Retirement Annuity. Depositor may make an opening contribution hereunder by
directing the transfer of a cash amount from a custodian or trustee of an
individual retirement account or individual retirement annuity to the Custodian
be made for investment under this Agreement.
(1) From IRA Funded with Deductible Contributions. Where no portion
of such transferred amount is attributable to a distribution from an
employees' trust, an employee annuity, an annuity contract or a U.S.
retirement bond as described in Internal Revenue Code Sections
402(a)(5), 403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C), Depositor
warrants that Depositor did not inherit the account or annuity, or if
Depositor did inherit the account or annuity, that Depositor is the
surviving spouse of the individual for whose benefit the account was
originally maintained or the annuity was originally purchased.
(2) From IRA Funded with Distributions Attributable to an Employer
Plan. With respect to any other transferred amount, Depositor:
(A) agrees that no additional contributions will be made to the
custodial account in which such contribution is deposited, except
as otherwise permitted by Scudder Fund Distributors, Inc.;
(B) that the entire amount of such transferred amount is
attributable to a distribution from an employees' trust, an
employee annuity, an annuity contract, a qualified bond purchase
plan, or a U.S. retirement bond, as described in Internal Revenue
Code Sections 402(a)(5), 403(a)(4), 403(b)(8), 405(d)(3), or
409(b)(3)(C), or other applicable law:
(3) that if the transferred amount had been a rollover contribution,
it would have complied with the requirements of subparagraph (b) or
(c) above.
4. Tax and Other Legal Matters
DEPOSITOR ACKNOWLEDGES HAVING READ THE SECTIONS ENTITLED
"INSTRUCTIONS" AT BOTTOM ON PAGE 5 OF I.R.S. FORM 5305-A (of which this is a
part), which describe some of the tax and other matters important to Depositor,
and "ADDITIONAL INSTRUCTIONS" preceding Appendix "A".
5. Custodian's Fees
(a) Custodian shall be entitled to receive such reasonable fees with
respect to the establishment and administration of this custodial account as are
established by it from time to time.
(b) Upon thirty (30) days prior written notice, Custodian may change
its fee schedule.
Custodian's fees, any income, gift, estate and inheritance taxes or
other taxes of any kind whatsoever, including transfer taxes incurred in
connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by Custodian in the performance of its duties
including fees for legal services rendered to Custodian, may be charged to the
custodial account, with the right to liquidate Mutual Fund shares or other
investments for this purpose, or (at Custodian's option) to the Depositor.
6. Custodial Account
(a) This Agreement shall take effect only when accepted and signed by
Custodian. As directed, Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Mutual Fund(s) or other investments selected by Depositor in
Article IX Para. 1. "Mutual Fund" means a regulated investment company which is
defined in Internal Revenue Code Section 851(a) and which has been designated by
Scudder Fund Distributors, Inc. (or its successors) as appropriate for
investment hereunder.
9
<PAGE>
(b) Every subsequent contribution shall be invested in accordance
with instructions authorized by Depositor indicating Depositor's choice of the
Mutual Funds or other investments designated by Scudder Fund Distributors, Inc.
(or its successors) as appropriate for investment hereunder. Depositor agrees
that the listing shall not be construed as an endorsement by Custodian of the
Mutual Funds or other investments in which contributions may be invested, final
choice of which is in the sole discretion of Depositor. The Custodian does not
undertake to render any investment advice whatsoever to Depositor; its sole
duties are those prescribed in Article IX, para. 8(c).
(c) The Custodian shall invest subsequent contributions as directed.
However, if any such instructions authorized by Depositor are not received as
required, or if received, are in the opinion of Custodian unclear, or if the
accompanying contribution would cause the Depositor to exceed the maximum
limitation on tax deductibility, Custodian may hold or return all or a portion
of the contribution uninvested without liability for loss of income or
appreciation or for other loss, and without liability for interest, pending
receipt of written instructions or clarification.
(d) All dividends and capital gains distributions received on shares
of a Mutual Fund held in the custodial account shall (unless received in
additional such shares) be reinvested in shares of that Mutual Fund, if
available, which shall be credited to the account. If any distribution on such
shares may be received at the election of the shareholder in additional such
shares or in cash or other property, Custodian shall elect to receive it in
additional such shares. All accumulations on account of other investments shall
be reinvested in Depositor's custodial account.
(e) All Mutual Fund shares or other investments acquired by Custodian
hereunder shall be registered in the name of Custodian (with or without
identifying Depositor) or of its nominee. Custodian shall deliver, or cause to
be executed and delivered, to Depositor all notices, prospectuses, financial
statements, proxies, and proxy soliciting materials relating to such Mutual Fund
shares or other investments held in the custodial account. Custodian shall not
vote any such Mutual Fund shares or other investments except in accordance with
any written instructions received from Depositor.
7. Distributions.
(This paragraph 7 supplements Article IV on Scudder IRA Form 12-84 of
the Agreement and must be read in conjunction with it.)
(a) Distribution of the custodial account assets in accordance with
Article VI shall be made in a manner set forth in subparagraph (c)(1) or (2),
whichever applies, except as Article IV otherwise requires and at such time as
Depositor (or Depositor's Beneficiary if Depositor is deceased) shall elect by
written order to Custodian, provided that distribution (except for distribution
on account of Depositor's disability or death, return of an "excess
contribution" referred to in subparagraph (d) or a "rollover" from this
account), must be no earlier than age 59 1/2 if Depositor wants to avoid an
"early distribution additional tax" under Code section 408(f) or other
applicable law. For that purpose, Depositor will be considered disabled if
Depositor can prove, as provided in Code section 72(m)(7), that Depositor is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or be of long-continued and indefinite duration. Depositor (or
Depositor's Beneficiary if Depositor is deceased) will order distribution in the
manner and at the time permitted or required by Article IV and this paragraph.
Custodian assumes no responsibility for the tax treatment of any distribution
from the custodial account; such responsibility accrues solely to the person
ordering the distribution.
(b) Custodian assumes (and shall have) no responsibility to make any
distribution on order of Depositor (or Depositor's Beneficiary if Depositor is
deceased) unless and until such order specifies the occasion for
10
<PAGE>
such distribution, the elected manner of distribution, and any declaration
required by Article V. Also, before making any such distribution or before
honoring any assignment of the custodial account, Custodian shall be furnished
with any and all application, certificates, tax waivers, signature guarantees,
and other documents (including proof of any legal representative's authority)
deemed necessary or advisable by Custodian, but Custodian shall not be
responsible for complying with an order which appears on its face to be genuine,
or for refusing to comply if not satisfied it is genuine, and assumes no duty of
further inquiry.
(c) Upon receipt of a proper written order as required above,
Custodian shall distribute the assets of the custodial account in cash or kind
as follows:
(1) Distribution to Depositor. If the distribution order calls for
the custodial account to be paid to Depositor under Article IV, then
distribution shall be made in one or more of the following ways as
specified in the order.
(A) In a lump sum.
(B) In installments pursuant to a cash withdrawal plan, provided
that such a plan suitable for prearranging the distributions
described in this subparagraph (B) is available for Custodian's
use under the rules governing the investments held in the
custodial account. A suitable cash withdrawal plan will provide
for periodic liquidation of some of investments held in the
custodial account to yield the cash necessary to pay each
installment. Prior to January 1, 1985, a suitable cash
withdrawal plan will provide for payment of installments over a
period not longer than the life expectancy of Depositor and
Depositor's spouse. Subsequent to December 31, 1984, a suitable
cash withdrawal plan will provide for payment of installments
ratably over a period of not longer than the life expectancy of
the Depositor or the joint life and last survivor expectancy of
the Depositor and the Depositor's Beneficiary (as defined in
subparagraph (c)(2) of this Para. 7). The life expectancies
referred to in this Agreement shall be determined by using
applicable Internal Revenue Service tables. The amount
distributed each year shall be at least equal to the quotient
obtained by dividing the entire custodial account remaining at
the beginning of that year by the adjusted life expectancy of
Depositor and Depositor's spouse, or the joint life and last
survivor expectancy of Depositor's Beneficiary (whichever is
applicable). Prior to January 1, 1985, the life or joint life
expect and last survivor expectancy used to calculate the minimum
amount to be distributed in a given year shall be equal to the
relevant expectancy as it was determined as of when Depositor
attained age 70 1/2 reduced by the number of whole years elapsed,
if any, since Depositor attained age 70 1/2. Subsequent to
December 31, 1984, the adjusted life or joint life and last
survivor expectancy used to calculate the minimum amount to be
distributed in a given year shall be, at the Depositor's
election, either determined by referring to the applicable
Internal Revenue Service table and determining the relevant
expectancy as of the particular year in question or by using a
previously determined expectancy and reducing such expectancy by
the number of whole years elapsed since it was determined.
Notwithstanding any implication to the contrary in this
subsection (B), no distribution need be made in any year, or a
lesser amount may be distributed during such year, if the
aggregate amounts distributed through the end of such year are at
least equal to the aggregate of the minimum amounts required by
this sub-
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paragraph (B) to have been so distributed. Moreover, during
Depositor's lifetime the entire custodial account remaining for
distribution at any time under this subparagraph (B) may,
pursuant to a proper supplementary written order as specified
above, be distributed to Depositor.
(c) By the purchase and distribution of a single-premium
contract meeting the requirements of Code section 408(b)(1), (3),
(40 and, prior to January 1, 1985, (5) applicable to an
"individual retirement annuity".
(2) Distribution upon Death of Depositor or Depositor's Spouse. Prior
to January 1, 1985, if Custodian receives a proper written order for
distribution on account of the Depositor's death, or the spouse's
death, if distributions were being made to the spouse over the joint
life and last survivor expectancy, Custodian shall distribute the
then- remaining custodial account to Depositor's (of, if applicable,
the spouse's) Beneficiary within five (5) years of Depositor's (or, if
applicable, the spouse's) death either in a lump sum or installments;
provided, however, that if distributions have already begun before
Depositor's death for a specified term, the Custodian may instead
continue to make the distribution in the same manner and without
regard to the foregoing five-year limitation; provided further, that
if Depositor's Beneficiary is Depositor's spouse and if Depositor's
Beneficiary elects to treat the account as if Depositor's Beneficiary
were the Depositor, then the Custodian may distribute the account as
directed by the Depositor's Beneficiary as if such person were the
Depositor and in accordance with Articles IV and IX. Subsequent to
December 31, 1984, if Custodian receives a proper written order for
distribution on account of the Depositor's death or, the spouse's
death, if distributions were being made to the Depositor's surviving
spouse, then the Custodian shall distribute the then-remaining
custodial account to the Depositor's (or, if applicable, the spouse's)
Beneficiary over the life of the Depositor's (or, if applicable, the
spouse's) Beneficiary or within a period not greater than the greater
of five (5) years after the Depositor's (or, if applicable, the
spouse's) death or the life expectancy of Depositor's (or, if
applicable, the spouse's) Beneficiary; provided, however, that if
distributions have already begun before Depositor's death for a
specified term, Custodian shall continue to distribute the custodial
account over a period at least as rapid as that specified term. The
term "Depositor's Beneficiary" means the person or persons designated
as such by the "designating person" (as defined below) on a form
acceptable to Custodian for use in connection with this Agreement,
signed by the designating person, and filed with the Custodian in
accordance with this subparagraph (2). The form may name persons or
estates to take upon the contingency of survival. However, the term
"Depositor's Beneficiary" means the designating person's estate to the
extent no such designation on such a form effectively disposes of the
custodial account as of when such distribution is to commence.
Moreover, a form shall not become effective for that purpose until it
is filed with the Custodian during the lifetime of the designating
person. The form last accepted by Custodian before such distribution
is to commence, upon becoming effective during the designating
person's lifetime, shall be controlling, and, whether or not fully
dispositive of the custodial account, thereupon shall revoke all such
forms previously filed by that person. The term "designating person"
means Depositor; after Depositor's death, it also means the person or
persons (other than Depositor's estate) who begin to receive a portion
of the custodial account pursuant to such a designation by Depositor,
and designations by such a person shall relate solely to the balance
of that
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portion remaining in the custodial account as of when distribution
pursuant to a designation by that person is to commence. The
Custodian shall accept all such forms only in the Commonwealth of
Massachusetts, and they shall be considered part of this Agreement for
purposes of Article IX, para. 13(c).
(3) Any annuity which Custodian is to purchase and distribute under
this Agreement may be fixed or variable, but Custodian shall not be
required to distribute in that manner unless the premium for that
annuity is at least $1,000.
(4) Depositor's Beneficiary shall not have the right or power to
anticipate any part of the custodial account or to sell, assign,
transfer, pledge or hypothecate any part thereof. The custodial
account shall not be liable for the debts of Depositor's Beneficiary
or subject to any seizure, attachment, execution or other legal
process in respect thereto.
(d) If during a taxable year under Article 1 a total amount is
contributed which exceeds the amount deductible for that year, either because
such amount exceeds the tax-deductible limits specified in the Internal Revenue
Code, or because of attainment of age 70 1/2 in that year, or for some other
reason, then upon receiving written notice specifying the year in question, the
amount of the excess, the reason it is an excess, and the amount of net income
in the custodial account attributable to such excess -- Custodian shall
distribute cash to Depositor in an amount equal to the sum of such excess and
earnings. If the excess contribution did not arise because of attainment of age
70 1/2. then (in Custodian's discretion unless otherwise instructed by
Depositor) in lieu of being distributed, said sum shall be treated by Depositor
as a contribution in the then current or a succeeding taxable year, in
accordance with applicable law.
8. Additional Provisions Regarding the Custodian
(a) When and after distributions of the custodial account to
Depositor's Beneficiary commence, all rights and obligations assigned to
Depositor by provisions of this Agreement shall inure to, and be enjoyed and
exercised by, Depositor's Beneficiary instead of Depositor. Until such
distributions commence to such a person, the Custodian shall not be responsible
for treating such person's predecessor to such rights and obligations as still
possessing the same.
(b) Custodian shall keep adequate records of transactions it is
required to perform hereunder. Not later than sixty (60) days after the close
of each calendar year or after the Custodian's resignation or removal pursuant
to Article IX, para. 10(a), Custodian shall render to Depositor a written report
or reports reflecting the transactions effected by it during such period and the
assets of the custodial account at the close of the period. Sixty (60) days
after rendering such report(s), Custodian shall be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the recipient of such report(s) shall have filed
written objections with the Custodian within the latter such sixty-day period.
(c) Custodian shall be an agent for Depositor to receive and invest
contributions as authorized by Depositor, hold and distribute such investments,
and keep adequate records and report thereon, all in accordance with this
Agreement. The parties do not intend to confer any fiduciary duties on
Custodian, and none shall be implied. Custodian may perform any of its
administrative duties through other persons designated by Custodian from time to
time, except that Mutual Fund shares or other investments must be registered as
stated in para. 6(e) of this Article IX; and Custodian intends initially to
delegate all such duties to Boston Financial Data Services, Inc., which is
partially owned by Custodian's parent company; but no such delegation or future
change therein shall be considered as an amendment to this Agreement. Custodian
shall not be liable (and assumes no responsibility) for the collection of
contributions, the
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<PAGE>
deductibility of any contribution or its propriety under this Agreement, or the
purpose or propriety of any distribution ordered in accordance with Article IX,
para. 7, or made in accordance with Article IX, para. 12, which matters are the
sole responsibility of Depositor and Depositor's Beneficiary.
(d) Depositor shall always fully indemnify Custodian and save it
harmless from any and all liability whatsoever which may arise either (1) in
connection with this Agreement and matters which it contemplates, except that
which arises due to Custodian's negligence or willful misconduct, or (2) with
respect to making or failing to make any distribution, other than for failure to
make distribution in accordance with an order therefor which is in full
compliance with both Article IV and para. 7(a) and (b) of Article IX. Custodian
shall not be obligated or expected to commence or defend any legal action or
proceeding in connection with this Agreement or such matters unless agreed upon
by Custodian and Depositor, and unless fully indemnified for so doing to
Custodian's satisfaction.
(e) Custodian may conclusively rely upon and shall be protected in
acting upon any written order from or authorized by Depositor or Depositor's
Beneficiary or any other notice, request, consent, certificate or other
instrument, paper, or other communication believed by it to be genuine and to
have been issued in proper form and with proper authority, and, so long as it
acts in good faith, in taking or omitting to take any other action in reliance
thereon.
9. Amendment
(This paragraph 9 supplements Article VIII on Scudder IRA Form 12-84
of the Agreement and must be read in conjunction with it.)
(a) Depositor retains the right to amend this Agreement in any
respect at any time, effective on a stated date which shall be at least sixty
(60) days after giving written notice of the amendment (including its exact
terms) to Custodian by registered or certified mail unless Custodian waives such
notice as to that amendment. If Custodian does not wish to continue serving in
that capacity under this Agreement as so amended, it may resign in accordance
with Article IX, para. 10. Depositor also delegates, to the distributor
(principal underwriter) of a plurality of the Mutual Funds described in Article
IX, para. 6(b), Depositor's right so to amend including retroactively, as
necessary or appropriate in the opinion of counsel satisfactory to the
distributor, in order to conform with pertinent provisions of the Code and other
laws or successor provisions of law or to obtain a governmental ruling that such
requirements are met, to adopt a prototype or master plan (when one becomes
available) for investment in shares of such Mutual Funds or other investments,
or as otherwise may be advisable in the opinion of such counsel, provided the
distributor amends in the same manner all agreements comparable to this one,
having the same Custodian, permitting investment in shares of such Mutual Funds
or other investments, and under which such power has been delegated to it. Such
an amendment by the distributor shall be communicated in writing to Depositor
and Custodian, and Depositor shall be deemed to have consented thereto unless,
within thirty (30) days after such communication to Depositor is mailed,
Depositor either (1) gives Custodian a proper written order for a lump-sum
distribution of the custodial account, or (2) removes Custodian and
simultaneously appoints a Successor Custodian under Article IX, para. 10.
(b) This paragraph 9 shall not be construed to restrict Custodian's
freedom to agree with distributors of Mutual Fund shares, or others, upon the
terms by which shares of additional Mutual Funds or other investments may be
chosen for investment as contemplated in Article IX, para. 6(b), or Custodian's
freedom to change fee schedules in the manner proved by Article IX, para. 5(b),
and no such agreement or change shall be deemed to be an amendment of this
Agreement.
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10. Resignation or Removal of Custodian.
(a) Custodian may resign at any time upon at least thirty (30) days
prior notice in writing to Depositor, and may be removed by Depositor at any
time upon at least thirty (30) days prior notice in writing to Custodian. Upon
such resignation or removal, Depositor shall appoint a Successor Custodian to
serve under this Agreement. Upon receipt by Custodian of written acceptance of
such appointment by the Successor Custodian, Custodian shall transfer to such
Successor the assets of the custodial account and all necessary records (or
copies thereof) pertaining thereto, provided that (if so requested by Custodian)
any Successor Custodian agrees not to dispose of any such records without
Custodian's consent. Custodian is authorized, however, to reserve such a
portion of such assets as it may deem advisable for payment of all its fees,
compensation, costs, and expenses, or for payment of any other liabilities
constituting a charge on or against the assets of the custodial account or on or
against Custodian, with any balance of such reserve remaining after the payment
of all such items to be paid over to the Successor Custodian.
(b) If within thirty (30) days after Custodian's resignation or
removal or such longer time as Custodian may agree to, Depositor has not
appointed a Successor Custodian which has accepted such appointment, Custodian
shall terminate the custodial account pursuant to Article IX, para. 11, unless
within that time the distributor referred to in Article IX, para. 9(a), appoints
such Successor and gives written notice thereof to Depositor and Custodian.
(c) Custodian shall not be liable for the acts or omissions of such
Successor.
(d) The Custodian, and every Successor Custodian appointed to serve
under this Agreement, must be a bank as defined in Code section 408(n) or such
other person who qualifies to serve in the manner prescribed by Code section
408(a)(2) and satisfies the Depositor, distributor, or Custodian, upon request,
as to such qualification.
(e) After Custodian has transferred the custodial account assets
(including any reserve balance as contemplated above) to the Successor
Custodian, Custodian shall be relieved of all further liability with respect to
this Agreement, the custodial account, and the assets thereof.
11. Termination of Account
(a) Custodian shall terminate the custodial account if, within the
time specified in Article IX, para. 10(b), after Custodian's resignation or
removal, neither Depositor nor the distributor has appointed a Successor
Custodian which has accepted such appointment. Termination of the custodial
account shall be effected by distributing all assets thereof in a lump sum in
cash or in kind to Depositor subject to Custodian's right to reserve funds as
provided in Article IX, para. 10(a).
(b) Upon termination of the custodial account, this Agreement shall
terminate and have no further force and effect, and Custodian shall be relieved
from all further liability with respect to this Agreement, the custodial
account, and all assets thereof so distributed.
12. Liquidation of Account
(a) Notwithstanding anything contained in this Agreement to the
contrary, Scudder Fund Distributors, Inc. shall have the right to direct
Custodian, by written order to Custodian, to liquidate the custodial account if
the value of the account at the time of such written order is less than a
minimum value established on a non-discriminatory basis from time to time by
Scudder Fund Distributors, Inc., and upon receipt of such written order (which
Scudder Fund Distributors, Inc. shall have no duty to make and which, if made,
may be made with respect to any specified accounts as to which it may be made
applicable singly or to all accounts as to which it may be made applicable as a
group), Custodian shall forthwith proceed to liquidate the custodial account by
distributing all assets thereof in a lump sum in cash or in kind to Depositor,
subject to Custodian's right to reserve such a portion of such assets as it may
deem advis-
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<PAGE>
able for payment of all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or against the assets
of the custodial account or on or against Custodian, with any balance of such
reserve remaining after the payment of all such items to be paid over to
Depositor.
(b) Neither Scudder Fund Distributors, Inc. nor Custodian shall be
liable for, or in any way responsible with respect to, any penalty or any other
loss incurred by any person with respect to a distribution made hereunder and
upon liquidation of the custodial account as aforesaid, this Agreement shall
terminate and have no further force and effect, and Custodian and Scudder Fund
Distributors, Inc. shall be relieved from all further liability with respect to
this Agreement, the custodial account, and all assets thereof so distributed.
13. Miscellaneous
(a) References herein to the "Internal Revenue Code" or "Code" and
sections thereof shall mean the same as amended from time to time hereafter,
including successors to such sections.
(b) Except where otherwise specifically required in this Agreement,
any notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on Custodian's records.
(c) This agreement is accepted by Custodian in, and shall be
construed and administered in accordance with the laws of the Commonwealth of
Massachusetts. This Agreement is intended to qualify under section 408 of the
Code as an Individual Retirement Account and for the Retirement Savings
deduction under section 219 of the Code, and if any provision hereof is subject
to more than one interpretation or any term used herein is subject to more than
one construction, such ambiguity shall be resolved in favor of that
interpretation or construction which is consistent with that intent. However,
neither the Custodian, nor any Mutual Fund (or company associated therewith)
shall be responsible for whether or not such intentions are achieved through use
of this Agreement, and Depositor is referred to Depositor's attorney for any
such assurances.
CUSTODIAN
DISCLOSURE STATEMENT
The following information is being provided to you by the State Street Bank
and Trust Company, the Custodian of the Scudder Individual Retirement Accounts,
in accordance with the requirements of the Internal Revenue Service. Please
read it together with the Individual Retirement Plan and the prospectus for the
shares of each Mutual Fund selected by you for the investment of your
contributions to that Plan, copies of which you should have already received
from the distributor of those shares. The provisions of the Plan and prospectus
must prevail over this statement in any instance where the statement is
incomplete or appears to conflict.
The Employee Retirement Income Security Act of 1974 has provided an
entirely new program that may enable you to plan for your retirement by creating
a "retirement plan" with federally tax-deductible dollars. This federal income
tax deduction is available even if you do not otherwise itemize your deductions.
In addition, any earnings on the assets held in your individual retirement
account will not be subject to federal income tax until you actually begin to
receive a distribution from your account. The state income tax treatment of
your account may differ, and details should be available from your state taxing
authority or your own tax adviser.
As with most other laws that provide special tax treatment, there are
certain restrictions and limitations involved with respect to your individual
retirement account:
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1. Only a limited amount of savings can qualify for the preferential tax
treatment -- 100% of your compensation or earnings from self-
employment up to an annual maximum of $2,000. Under certain
conditions, an individual and his or her non-employed spouse may each
open an IRA. Annual deductions for contributions are allowable if a
joint income tax return is filed and the deductions are limited to the
lesser of 100% of the employed spouse's compensation or $2,250, and
the amount contributed to either individual retirement account may not
exceed $2,000.
In the case of an individual retirement account which meets the
requirements of a so-called Simplified Employee Pension Plan, an
employer may contribute a deductible amount equal to 15% of the
employee's compensation up to an annual maximum of $30,000, the amount
of such contribution is includible in the employee's income as wages
(for federal income tax purposes) but is deductible by him or her.
The employee is also allowed an annual deduction for his or her own
individual retirement account contributions limited to the lesser of
100% of the employee's compensation or $2,000.
There is a 6% penalty tax on any so-called "excess contribution" if
you make one, that is, on the portion of a contribution made to your
IRA in excess of the amount which can be currently deducted. Some
examples of when this can occur are when you make a contribution to
your IRA in excess of the allowable deduction limitations, or your
contribute during or after the calendar year in which you reach 70
1/2, or in the case of a spousal IRA, if the non-employed spouse
receives any compensation during the calendar year. The 6% penalty
tax on any "excess contribution" also attaches for each following year
until the excess is withdrawn or used up. If an excess contribution
plus earnings on it is withdrawn before the time for filing the
individual's tax return for the year of the contribution (including
extensions), there will be no 6% penalty tax. The amount withdrawn
will not be considered a premature distribution nor taxed as ordinary
income, except the earnings withdrawn will be included in the income
of the taxpayer. In addition, in certain cases an excess contribution
may be withdrawn after the time for filing the individual's tax return
without resulting in taxable income to the individual. Also, excess
contributions for one year may be carried forward and deducted in the
next year.
2. Contributions must be made to a Trust or Custodial Account in which
the Trustee/Custodian is either a bank or such other person who has
been approved by the Secretary of the Treasury. No part of your
contribution may be invested in life insurance or be commingled with
other property except in a common trust fund or common investment
fund.
3. No deduction is allowed for (a) contribution other than in cash; (b)
contributions (other than those by an employee to a Simplified
Employee Pension Plan) made during your calendar year in which you
attain age 70 1/2 or thereafter; or (c) for any amount you contribute
which was a distribution from another retirement plan ("rollover"
contribution). However, the limitations in paragraph 1 do not apply
to such rollovers.
4. Individuals receiving compensation may establish their own individual
retirement accounts even if they are already covered under tax-
qualified plans (including Keogh plans for self-employed individuals),
government plans, or certain annuities.
5. Your interest in the account must be nonforfeitable at all times.
6. An individual is allowed to transfer, as a so-called "rollover"
contribution, such individual's investment in one type of individual
retirement plan to another without any tax liability. Also,
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<PAGE>
under certain conditions, an individual may so roll over (tax-free) a
distribution received from a qualified plan or a tax-sheltered
annuity. However, strict limitations apply to such rollovers, and you
should seek competent tax advice in order to comply with all the rules
governing rollovers.
7. Since the purpose of the IRA savings plan is to accumulate funds for
retirement, your receipt or use of any portion of this account (for
example, as collateral for a loan) before you attain age 59 1/2 would
be considered as an early distribution unless the distribution is a
result of death or disability. The amount of early distribution would
be includable in your gross income and would also subject you to a
penalty tax equal to 10% of the distribution unless you transfer it to
another IRA under circumstances whereby it qualifies as a rollover.
8. If you or your beneficiary were to engage in any prohibited
transaction (such as any sale, exchange or leasing of any property
between you and the account, or any interference with the independent
status of the account) then the account would lose its exemption from
tax and be treated as having been distributed to you. The value of
the entire account would be includable in your gross income, and if
your then under age 59 1/2 you would also be subject to the 10%
penalty tax on early distributions.
9. If you attain age 70 1/2 before the end of 1984, your entire interest
in your account must be distributed to you, or begin to be distributed
to you, before the close of the year in which you attain age 70 1/2.
The distribution may be made at once in a lump sum, or it may be made
in installments. However, installment payments cannot be scheduled to
be made over a period which extends beyond your life expectancy, or
the combined life expectancy of you and your spouse. If the amount
distributed during a calendar year is less than the minimum amount
required to be distributed, the recipient would be subject to a
penalty tax equal to 50% of the difference between the amount required
to be distributed and the amount actually distributed. If you die
before the entire interest is distributed to you, similar rules
require prompt, level payments to your beneficiary.
10. If you do not attain age 70 1/2 until January 1, 1985 or later, your
entire interest in your account must be distributed, or begin to be
distributed, to you no later than the first April 1st of the year
following the later of the year in which you attain age 70 1/2 or
retire. Distribution may be made at once in a lump sum, or it may be
made in installments. However, installment payments cannot be
schedule to be made over a period which extends beyond your life
expectancy (as determined annually), or the joint life and last
survivor expectancy of you and the beneficiary your designate (as
redetermined annually, if that beneficiary is your spouse). If the
amount distributed during a calendar year is less than the minimum
amount required to be distributed, the recipient would be subject to a
penalty tax equal to 50% of the difference between the amount required
to be distributed and the amount actually distributed. If you die
before the entire interest is distributed to you, but after you have
begun to receive distributions, your entire account must be
distributed to your beneficiary over a period no longer than the last
determined life expectancy or life and last survivor expectancy over
which your account was being distributed prior to your death. If you
die before the entire interest has begun to be distributed to you and
your spouse is your beneficiary, distributions to your spouse must
either (a) be completed within 5 years of your death or (b) commence
before the later of one year after your death or the
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<PAGE>
date on which you would have attained age 70 1/2, and continue over
his or her life or a period not exceeding his or her life expectancy.
If you die before the entire interest has begun to be distributed to
you and your spouse is not your beneficiary, distributions to your
beneficiary must either (a) be completed within five years of your
death of (b) commence within one year after your death and continue
over your beneficiary's life or a period not exceeding his or her life
expectancy.
11. Amounts distributed to you are includable in your gross income when
you receive them and are taxable as ordinary income without any
special lump-sum distribution privileges. However, normal four-year
income averaging may be available.
12. If you die before the end of 1984, the first $100,00 worth of
distributions paid to your beneficiary (other than your estate) are
not subject to federal estate and gift tax when they are paid in a
series of substantially equal period statements over the life of the
beneficiary or over a period of at least 36 months after your death.
After December 31, 1984, this special federal estate and gift tax
exclusion will no longer be available.
13. You must file Treasury Form 5329 with the Internal Revenue Service for
each calendar year during which there is an excess contribution,
premature distribution, or during which there is an insufficient
distribution as referred to in paragraphs 9 and 10 above.
14. The Individual Retirement Account Plan has been approved as to form by
the Internal Revenue Service. This approval is a determination only
as to the form of the account and does not represent a determination
of the merits of such account.
15. Information about the shares of each mutual fund available for
investment by your individual retirement account must be furnished to
you in the form of a prospectus governed by rules of the Securities
and Exchange Commission. Please refer to the prospectus for detailed
information concerning your mutual fund. Growth in the value of your
account cannot be guaranteed or projected. However, the income and
operating expenses of a mutual fund will affect the value of its
shares, and hence the value of your account, as does any increase or
decrease in the value of the assets of the mutual fund. The fund's
prospectus contains information regarding current income and expenses
of your mutual fund.
Fees and other expenses of maintaining your account may be charged to
you or your account. The Custodian's fee schedule is referred to in
Article IX of the Plan document and is distributed to you with it.
If you have not received this Disclosure Statement at least seven calendar
days before the establishment of your Individual Retirement Account, you have
the right to revoke your Individual Retirement Account during the seven calendar
day period following the establishment of it. In order to so revoke your
Individual Retirement Account, you must do so in writing and you must mail or
deliver your revocation to Scudder Fund Distributors, Inc., c/o State Street
Bank and Trust Company, P.O. Box 1912, Boston, Massachusetts 02105. If your
revocation is mailed, the date of the postmark (or the date of certification or
registration if sent by certified or registered mail) will be considered your
revocation date. If you so revoke your individual retirement account during the
seven-day period, the entire amount of your account, without any adjustments
(for items such as administrative expenses, fees, or fluctuation in market
value) will be returned to you.
You may obtain further information from any district office of the Internal
Revenue Service.
(C)1984 Scudder Fund Distributors, Inc.
All rights reserved
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SCUDDER
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12/34-3-15
SCUDDER
403(b)
PLANS
Plan Agreement
SCUDDER
SERVING INVESTORS SINCE 1919
<PAGE>
Scudder 403(b) Agreement
This Scudder 403(b) Agreement ("the Agreement") is entered into by and
among (i) each employer who executes a Scudder 403(b) Application ("the
Employer") and thereby certifies that the Employer is duly qualified as an
organization described in section 403(b)(1)(A) of the Internal Revenue Code of
1954, as amended ("the Code"), (ii) the Custodian which executes a Scudder
403(b) Application and thereby certifies that it is duly qualified as a bank
described in section 401(d)(1) of the Code, and (iii) each employee who executes
a Scudder 403(b) Application ("the Employee") and thereby certifies that the
Employee is an employee of the Employer, and this Agreement shall be effective
as of the date acknowledgment of the receipt by the Custodian of such Scudder
403(b) Application is mailed by the Custodian to the Employee.
ARTICLE 1. DEFINITIONS
A. Code means the Internal Revenue Code of 1954, as amended.
B. Contribution means the amount to be transmitted by the Employer to
the Custodian for addition to the Employee's Custodial Investment Account.
C. Custodial Investment Account or Account means the account or
accounts established and maintained by the Custodian for an Employee pursuant to
this Agreement and, when the contect so implies, may mean the assets, if any, at
the time held therein by the Custodian.
D. Scudder 403(b) Agreement or Agreement means this document,
incorporating by reference the Scudder 403(b) Application and Designation of
Beneficiary.
E. Custodian shall mean the bank, or any successor thereto, set forth
in the Scudder 403(b) Application.
F. Designation of Beneficiary or Designation means the document
executed by the Employee pursuant to Article II, Part C.
G. Employee means each person employed by the Employer who has properly
executed an Application.
H. Employer means the organization, state, political subdivision of a
state, or agency or instrumentality of such state or political subdivision named
in this Agreement.
I. Regulated Investment Company or Company means a domestic corporation
which is a regulated investment company within the meaning of Section 851(a) of
the Code and which issues only redeemable stock for which Scudder, Stevens and
Clark (or its successor) is acting as the investment adviser and which has been
designated by Scudder Fund Distributors, Inc. (or its successor) as appropriate
for investment hereunder.
J. Scudder 403(b) Application or Application means the document
executed by the Employer, the Employee and the Custodian pursuant to Article II,
Part A.
K. Normal Retirement Age means age 59 1/2.
ARTICLE II. ESTABLISHMENT OF CUSTODIAL INVESTMENT ACCOUNTS
A. Request for participation. Each Employee who properly executes an
Application thereby becomes a party to this Agreement with the right to enforce
its terms against any other party. Such executed Application is hereby
specifically incorporated herein by reference. An Application is properly
executed when signed by the Employer, the Employee and the Custodian. The
Custodian may rely on the validity of the signatures thereon, on the existence
of the employment relation thereby affirmed, and on the irrevocable subscription
to the provisions of this Agreement therein contained.
B. Opening of Account. Upon acceptance of an Application by the
Custodian, the Custodian shall open a separate Custodial Investment Account
("the Account") for the benefit of the Employee. The Account shall be maintained
pursuant to the terms of this Agreement, including the documents incorporated
herein by reference.
C. Employee's Designation of Beneficiary. Each Employee may submit to
the Custodian a properly executed Employee's Designation of Beneficiary form or
other written instrument acceptable to the Custodian for use in connection with
this Agreement (which are referred to hereinafter interchangeably as a
"Designation") which shall not become effective until it is filed with the
Custodian at the Custodian's home office during the lifetime of the Employee.
The last effective Designation accepted by the Custodian shall be controlling,
and whether or not fully dispositive of the Account, thereupon shall revoke all
other such Designations previously filed by the Employee. Each such executed
Designation is hereby specifically incorporated herein by reference and shall be
construed, enforced and administered according to the laws of the state in which
the home office of the Custodian is located.
ARTICLE III. CONTRIBUTIONS
A. Adjustment of compensation, transmittal of Contributions, and
exclusion allowance. Each agreement between the Employer and the Employee as to
the adjustment of the Employee's compensation, whether made pursuant to an
Application or pursuant to a separate written agreement between the Employer and
the Employee, shall be effective only as to amounts earned by the Employee after
such an agreement becomes effective. Each such agreement between the Employer
and the Employee as to the adjustment of the Employee's compensation, whether
made pursuant to an Application or pursuant to a separate written agreement
between the Employer and the Employee, shall be irrevocable as to both the
Employer and the Employee except that either of them may terminate such
agreement as of the end of any payroll period so that it will not apply to
compensation subsequently earned. Subject to the immediately preceding sentence,
the Employee may, in the manner provided for in subpart (a) of Part B of Article
VIII, change such agreement between the Employer and the Employee as to the
adjustment of the Employee's compensation, but such change may be made no more
than once in each taxable year of the Employee. All Contributions shall be
transmitted to the Custodian. The Employee shall be responsible for computing
the maximum amount that may be contributed on his behalf for each tax year in
accordance with the Employee's "exclusion allowance" as that term is defined in
section 403(b)(2) of the Code. The Employee shall determine the applicable
limitation(s) on contributions under section 415(c) of the Code, and the
Employee shall have the right to avail himself of and make any of the elections
provided under said section 415. Such computations and determinations shall be
made at least annually, and the Employee shall communicate the results to the
Employer no later than thirty (30) days before the last day on which the
Employee can execute a new Application or other written agreement with the
Employer for the taxable year without violating the pertinent rules and
regulations promulgated by the Treasury Department. Neither the Custodian,
Scudder Fund Distributors, Inc., any Regulated Investment Company, nor the
Employer shall have any obligation to verify the correctness of the Employee's
computation of the Employee's exclusion allowance or limitations on
contributions under section 415 of the Code or any responsibility with respect
to any election available to the Employee under said section 415 or any matters
relating to any tax consequences with respect to the Employee's contributions,
including the identification and correction of an "excess contribution" as that
term is defined in section 4973 of the Code, all of which foregoing matters
shall be solely the responsibility of the Employee.
B. Transfers and rollovers.
(a) Transfers from and to other Accounts. The Employer or the Employee
may cause the transfer of assets acceptable to the Custodian and
available from an existing custodial account qualified under section
403(b)(7) of the Code and/or from an existing annuity contract
qualified under section 403(b) of the Code to his Custodial Investment
Account. Once transferred into the Employee's Custodial Investment
Account, such assets shall be treated as a Contribution for purposes of
this Agreement and shall be invested, distributed and otherwise dealt
with as such. The Employer or Employee may cause the transfer of assets
agreed to by the Custodian from the Employee's Custodial Investment
Account to a custodial account established under section 403(b)(7) of
the Code and/or to an annuity qualified under section 403(b) of the
Code.
(b) Rollover contributions. The Custodian may accept contributions in
the form of assets acceptable to the Custodian received from an annuity
contract or a custodial account described in section 403(b) of the
Code, an individual retirement account described in section 408(a) of
the Code, an individual retirement annuity described in section 408(b)
of the Code, or a retirement bond described in section 409(a) of the
Code, provided that such contribution qualifies in all respects as a
rollover contribution in accordance with the requirements of section
403(b)(8), section 408(d)(3) or section 409(b)(3)(C) of the Code
(including the requirement that no part of the amount received from an
individual retirement account, individual retirement annuity or
retirement bond be attributable to any source other than a rollover
contribution from any annuity contract or custodial account described
in section 403(b) of the Code) or other applicable provisions of the
Code in effect from time to time. Such rollover contribution shall be
held by the Custodian in a separate Account for the benefit of the
Employee which consists only of such rollover contributions and the
earnings thereon. Once transferred into the Employee's Custodial
Account, such assets shall be treated as a Contribution for purposes of
this Agreement and shall be invested, distributed and otherwise dealt
with as such. The right is reserved to transfer the assets of the
Custodial Investment Account to another form of annuity contract or
custodial account described in section 403(b) of the Code or to an
individual retirement account, individual retirement annuity, or
retirement bond plan established pursuant to section 408 or 409 of the
Code.
If permitted by Scudder Fund Distributors, Inc., in accordance with
applicable law, rollover contributions with respect to qualified voluntary
employee contributions as defined in section 219(e)(2) of the Code may be
received under this Agreement with respect to taxable years
2
<PAGE>
beginning after December 31, 1981, and such contributions shall thereafter
be held and administered hereunder by the Custodian in accordance with all
applicable law with respect to accumulated deductible employee
contributions as defined in section 72(o)(5)(B) of the Code.
(c) Limitation of liabilities. Neither the Custodian nor Scudder Fund
Distributors, Inc. shall have any responsibility with respect to any
matters relating to the tax consequences with respect to any transfer or
rollover made under this Part B of Article III.
ARTICLE IV. INVESTMENT
A. Purchase. The Custodian shall receive and, as soon as practical,
shall invest all contributions in accordance with the Employee's investment
instructions which are then in effect for the Employee.
B. Registration and safekeeping. Any stock of a Regulated Investment
Company held under this Agreement shall be held by the Custodian. Such stock may
be registered in the name of the Custodian or its nominee, but the Custodian
need not require issuance of certificates for such stock.
C. Eligibility. The Custodian shall invest only in stock of a Regulated
Investment Company. Nothing in this Agreement shall prevent the Employer from
purchasing an annuity policy which qualifies under section 403(b) of the Code,
but such a policy, if selected by the Employee, shall be issued directly to such
Employee.
A Custodial Investment Account shall be limited to investment in stock
of one Regulated Investment Company, except that the Employee may choose that
the investment be divided between the stock of more than one Regulated
Investment Company if the value of the stock of each Company in which an
investment is being made is, upon completion of the investment, equal to a
minimum value established from time to time by a designation by Scudder Fund
Distributors, Inc. (including a designation that there shall be no such minimum
investment limitation).
If a Company in whose stock investments have been made is no longer
designated by Scudder Fund Distributors, Inc as appropriate for investment
hereunder, Scudder Fund Distributors, Inc. shall advise the Employee for whose
Account the investments were made and shall provide said Employee with a current
list of Companies available for investment. If, within 30 days of providing of
such current list, the Employee does not submit new investment instructions, the
Employee's investment in the deleted Company shall be changed to an investment
for the Employee's Account in stock of Scudder Cash Investment Trust or in stock
of another Regulated Investment Company or Companies designated by Scudder Fund
Distributors, Inc. and no additional investments shall be made in said deleted
Company.
D. Reports and voting of securities. The Custodian shall deliver to the
Employee all notices, reports, prospectuses, financial statements, proxies and
proxy-soliciting materials received by it as to investments made for the
Employee's Account. The Custodian shall vote all shares only in accordance with
the instructions of the Employee as expressed in the executed proxy. If the
Employee desires to attend a meeting at which securities held in this account
may be voted, the Custodian shall furnish a proxy at the Employee's request.
E. Dividends. All capital gain distributions and dividends received on
the stock of a Regulated Investment Company shall be reinvested in the stock of
that Regulated Investment Company. The Custodian shall elect to receive any such
distribution in the stock of the distributing Company whenever possible.
F. Change of investments. An Employee or his designated beneficiary or
beneficiaries who has (have) survived the Employee and to whom distributions are
being made (by unanimous agreement if there is more than one beneficiary) may
direct in writing (or by any other manner of direction designated by Scudder
Fund Distributors, Inc.) that the investment medium of the Accout be changed to
stock of another Regulated Investment Company or Companies. However, if Scudder
Fund Distributors, Inc. determines in its own judgment that there has been
trading within the Account, any Regulated Investment Company may refuse to sell
its shares to such Account. If the Employee's Account is invested in stock of
more than one Regulated Investment Company, a separate account shall be kept
with respect to the stock of each such Company, and he or they may designate the
portion of any new contribution, withdrawal, or change of investment which is to
be allocated to each such separate account.
ARTICLE V. CUSTODIAN
A. Duties. The Custodian shall:
(1) Receive contributions transmitted by the Employer;
(2) Provide safekeeping for the securities and other assets in the
Custodial Investment Account;
(3) Collect income;
(4) Execute orders for purchase, sale or exchange of securities and
make settlement in accordance with general practice;
(5) Maintain records of all transactions in the Account;
(6) Transmit to each Employee, not less frequently than annually,
appropriate statements of the amount of the Custodian's compensation,
if any, charged to the account.
(7) File with the Internal Revenue Service and/or any other government
agency such returns, reports, forms, and other information as may be
required of it as Custodian;
(8) Perform all other duties and services consistent with the purposes
and intentions of this Agreement. The Custodian may perform any of its
administrative duties through other persons designated by the Custodian
from time to time, except that all assets in the Account shall be held
by the Custodian; and if State Street Bank and Trust Company is the
Custodian, it intends initially to delegate all such duties to Boston
Financial Data Services, Inc., which is partially owned by the
Custodian's parent company; but no such delegation or future change
therein shall be considered as an amendment of this Agreement.
B. Cash requirements. If cash funds are required to pay taxes, fees, or
other expenses pursuant to Article VI or to make payments to the Employee or his
beneficiaries (other than withdrawals under Article VII, Part C), the Employee
shall instruct the Custodian in writing which Regulated Investment Company
shares shall be redeemed or sold if there is more than one account, unless the
item for which cash is required is clearly allocable to an investment in a
specific Regulated Investment Company. In the absence of such written
instructions, the Custodian shall exercise its own discretion. However, the
Custodian's fee, if any, for each account within a Custodial Investment Account
shall be charged to such account.
C. Limitation of liabilities and duties.
(1) The Custodian shall be fully protected in acting or omitting to
take any action in reliance upon any order or other direction believed
by the Custodian to be genuine and properly given.
(2) To the extent permitted by law, upon the expiration of a 30-day
period after providing to the Employee the statements required under
Article V, Part A(6), the Custodian shall be released and discharged
from all liability to the Employee or any third party as to the matters
contained in such statement unless the Employee files written
objections with the Custodian within such 30-day period.
(3) In no event shall the Custodian be under a fiduciary duty to the
Employee in regard to the selection of investments or be liable for any
loss so incurred.
(4) The Custodian shall have no responsibility to see to the initial or
continued qualification of the Custodial Investment Account under
section 403(b)(7) of the Code.
(5) The Custodian shall not be obligated to determine the amount of any
contribution due or collect such contribution from the Employer.
(6) The Custodian shall not be held responsible for determining the
amount, character, or timing of any distribution to the Employee except
as provided in Article IX.
(7) The Custodian shall have no responsibility with respect to the
computation of the Employee's "exclusion allowance" as defined in
Section 403(b)(2) of the Code, any applicable limitation(s) on
contributions under Section 415(c) of the Code, any election available
to the Employee under said section 415, or any matters relating to any
tax consequences with respect to the Employee's contributions,
including the identification and correction of an "excess contribution"
as that term is defined in section 4973 of the Code, all of which
foregoing matters shall be solely the responsibility of the Employee.
(8) The Custodian shall not be required to carry out any instructions
not given in accordance with this Agreement and the various documents
incorporated herein by reference. If such instructions are not received
as required or if received, are in the opinion of the Custodian
unclear, the Custodian shall not be liable for loss of income or
appreciation or depreciation and shall not be liable for interest,
pending receipt of written instructions or other clarification.
Furthermore, the Custodian assumes (and shall have) no responsibility
to make any distribution (or process a withdrawal) by order of the
Employer, the Employee or a Beneficiary unless and until the requisite
instructions specify the occasion for such action and the Custodian is
furnished with any and all applications, certificates, tax waivers,
signature guarantees and other documents (including proof of any legal
representative's authority) deemed necessary or advisable to the
Custodian. The Custodian shall not be responsible for complying with
any instructions or acting in accordance with any other documents which
appear on their face to be genuine, or for refusing to comply or so act
if not satisfied to that effect, and assumes no further duty of
inquiry. The Custodian shall have no liability to the Employee (or the
Employee's beneficiary) for any tax penalty or other damages resulting
from any inadvertent failure by the Custodian to make a distribution
under this Agreement.
(9) The Custodian shall not be liable (and assumes no responsibility)
for the collection of contributions or the deductibility of
3
<PAGE>
any contribution, or its propriety under this Agreement, or the purpose
or propriety of any distribution made pursuant to this Agreement, which
matters are the responsibility of the Employer and the Employee.
(10) The Custodian shall not be liable for interest on temporary cash
balances, if any, maintained in the Account.
(11) To the extent permitted by law, the Employee shall always fully
idemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement
and matters which it contemplates, except that which arises due to the
Custodian's negligence or willful misconduct, or (ii) with respect to
making or failing to make any distribution, other than for failure to
make distribution in accordance with an order therefor which is in full
compliance with Article IX or Article VII, Part C or this Part C of
Article V. Except as required by law, the Custodian shall not be
obligated or expected to commence or defend any legal action or
proceeding in connection with this Agreement or such matters unless
agreed upon by the Custodian and the Employee, and unless fully
indemnified for so doing to the Custodian's satisfaction.
(12) The Employer assumes neither any responsibility nor any liability
for any acts or omissions of the Custodian hereunder.
D. Compensation. In consideration for its services hereunder, the
Custodian shall be entitled to receive the fees specified in its then current
fee schedule for the services specified on the schedule. The Custodian may
substitute a revised fee schedule from time to time upon thirty (30) days'
written notice to the Employer or Employee. A Custodian shall be entitled to
such reasonable additional fees as it may from time to time determine for
additional services required of it, if such additional services are not clearly
identified on the fee schedule.
E. Resignation and removal. The Custodian may resign by giving at least
30 days' written notice to the Employer. The Employer or Scudder Fund
Distributors, Inc. may remove the Custodian hereunder by giving at least 30
days' written notice to the Custodian. In each case, the Employer or Scudder
Fund Distributors, Inc. shall designate a successor custodian qualified under
section 403(b)(7) of the Code, which successor custodian shall accept such
appointment by a writing to be submitted to the Employer and the Custodian.
If, within 30 days after the giving of notice of resignation or
removal, neither the Employer nor Scudder Fund Distributors, Inc. designates a
successor custodian which accepts the appointment, this Agreement shall
terminate, and all assets in the Account shall be distributed in kind to the
Employee, or in the event of his death, to his designated beneficiary or
beneficiaries subject to the Custodian's right to reserve funds as provided in
this Part E of Article V.
On the effective date of its resignation or removal, the Custodian
shall transfer to the designated successor the assets and records (or copies
thereof) of the Custodial Investment Accounts provided, however, that the
Custodian may retain whatever assets it deems necessary for payment of its fees,
costs and expenses, compensation, and any other liabilities which constitute a
charge on or against the assets of the Account or on or against the Custodian.
ARTICLE VI. FEES, TAXES, AND OTHER EXPENSES
A. Fees, taxes, and other expenses. Any income taxes of any kind
whatsoever that may be levied or assessed upon or in respect of a Custodial
Investment Account created hereunder (including any transfer taxes incurred in
connection with the investment and reinvestment of the assets), and all other
expenses, fees, and administrative costs incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the compensation to the Custodian as determined under Article V,
Part D of this Agreement shall constitute a charge upon the assets of the
Custodial Investment Account and be paid from the assets held in such Account,
or (at the Custodian's option) be paid by the Employee.
ARTICLE VII. PROTECTION OF EMPLOYEE BENEFITS
A. Non-forfeitable. At no time shall it be possible for any part of the
assets held by the Custodian in the Employee's Account to be used for or
diverted to purposes other than for the exclusive benefit of the Employee. The
Employee's rights to or derived from the Employer's contributions to the
Custodian for addition to the Employee's Account shall be non-forfeitable at all
times after such payments are made to the Custodian.
B. Non-alienable. Any right or benefit which shall be payable under the
terms of this Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt at such shall be void, and any such right or benefit shall not in any
way be subject to the debts, contracts, liabilities, engagements or torts of the
person who is entitled to such right or benefit, nor shall Such right or benefit
be subject to attachment or legal process for or against such person, except as
provided in Part C of this Article VII.
C. Employee withdrawals.
(a) At any time or times prior to the completion of distributions
pursuant to Article IX, an Employee who has attained age 59 1/2 may
withdraw amounts of cash from his Account, including the entire balance
thereof, if the Employee submits to the Custodian written proof
satisfactory to the Custodian of the attainment of such age and, also,
written instructions to the Custodian as to the amounts to be so
withdrawn. If the Employee makes any withdrawal at any time pursuant to
the provisions of this subpart (a) of this Part C of Article VII, no
additional contributions may be made to the Employee's Account for a
period of one (1) year after such withdrawal and the employee may not
participate in any other custodial account for regulated investment
company stock involving the Employer under section 403(b) of the Code
for a period of one (1) year after such withdrawal.
(b) In addition to the foregoing, at any time or times prior to the
completion of distributions pursuant to Article IX, an Employee may
withdraw amounts of cash from his Account, including the entire balance
thereof, if the Employee encounters financial hardship, as determined
under rules of uniform application and in accordance with applicable
law, governmental regulations or rulings, by a person designated by the
Employer in accordance with applicable legal authority, and if the
Employee submits to the Custodian written proof satisfactory to the
Custodian of such determination of hardship and, also, written
instructions to the Custodian as to the amounts to be so withdrawn.
(c) Any withdrawal made pursuant to the provisions of either subparts
(a) or (b) of this Part C may not be in kind but may only be in the
cash proceeds received by the Custodian from redemptions or sales of
shares of the Regulated Investment Companies held in the Employee's
Account. If there is more than one account, the Employee shall instruct
the Custodian in writing as to which Regulated Investment Company
shares shall be redeemed or sold before any distribution is made under
this Part C of Article VII.
ARTICLE VIII. AMENDMENT.
A. By Employer. This Agreement and/or the various documents
incorporated herein may be modified or amended by the Employer by delivering to
the Employee and to the Custodian a written copy of such modification or
amendment signed by the Employer.
B. By Employee. The Employee may amend this Agreement by making any of
the following changes:
(a) No more than one in each taxable year of the Employee, and subject
to other applicable provisions of Part A of Article III, the Employee
may change the agreement between the Employer and the Employee as to
the adjustment of the Employee's compensation either by submitting to
the Employer and the Custodian, in accordance with Article II, Part A,
a revised Application or in lieu thereof, by the execution of a
separate written agreement between the Employer and the Employee;
(b) The Employee may change investments pursuant to Article IV, Part F;
or
(c) The Employee may change his designated beneficiary or beneficiaries
by submitting to the Custodian at any time a revised Designation of
Beneficiary pursuant to Article II, Part C.
C. By Scudder Fund Distributors, Inc. The Employer hereby delegates
authority to Scudder Fund Distributors, Inc. to modify or amend this Agreement
and/or the various documents incorporated herein, including authority to adopt a
prototype or master plan (if one becomes available) for investment in shares of
Regulated Investment Companies, and the Employer shall be deemed to have
consented to any such modification or amendment. Scudder Fund Distributors, Inc.
shall provide copies of such modification or amendment to the Employer or the
Employee, and the Custodian. However, Scudder Fund Distributors, Inc. has no
affirmative obligation to amend any of the foregoing documents pursuant to this
portion of the Agreement.
D. Limitations. Notwithstanding the powers granted in Parts A, B, and C
above, no amendment shall be made which would:
(a) Cause or permit any part of the assets in the Account to be
diverted to purposes other than for the exclusive benefit of the
Employee and/or his beneficiaries, or cause or permit any portion of
such assets to revert to or become the property of the Employer.
(b) Place any greater burden on a Custodian without its written
consent, or
(c) Retroactively deprive any Employee of any benefit to which he was
entitled under this Agreement by reason of contributions made by the
Employer, unless such modification or amendment is necessary to conform
the Agreement to, or satisfy the conditions of any law, governmental
regulation or ruling, and to permit the Agreement and Account to meet
the requirements of Section 403(b) of the Code, or any similar statute
enacted in lieu thereof, and any such retroactive modification or
amendment must be pursuant to an opinion of counsel that it is
necessary or advisable to conform the Agreement to the requirements for
qualification under Section 403(b) of the Code and Regulations
prescribed thereunder.
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<PAGE>
ARTICLE IX. DISTRIBUTION
A. Time of distribution.
(a) Subject to the remaining provisions of this Article IX and to the
provisions of Part C of Article VII, distribution of assets held in the
Employee's Investment Account shall be made or shall commence at the
earliest time of the occurrence of one of the following events:
(1) The disability of the Employee within the meaning of Section
72(m)(7) of the Code. An Employee shall be considered to be so
disbabled if he is unable to engage in any substantial gainful
activity because of any medically determinable physical or mental
impairment which can be expected to result in death or to be of
long-continued and indefinite duration and an individual shall not
be considered to be disabled, and, therefore, the Custodian shall
not be required to make distribution on account of the Employee's
disability, unless and until the Custodian has received a
physician's certificate to that effect;
(2) The Employee's actual retirement or attainment of the Normal
Retirement Age, whichever is later; or
(3) The Employee's death.
(b) In addition to the foregoing, distribution shall be made or shall
commence upon the Employee's separation from the service of the
Employer, prior to the occurrence of any of the events listed in
subpart (a) of this Part A or Article IX, if the Employee, either at
any time prior to or upon the Employee's separation from the service of
the Employer, files with the Custodian a written, irrevocable election
to have distribution commence upon such separation from service.
(c) The Custodian shall not be responsible for making any distributions
until such time as it has been notified in writing by either the
Employer or the Employee of the occurrence of one of the events set
forth in subparts (a)(1),(a)(2), or (b) of this Part A, or by the
designated beneficiary or beneficiaries (or by the Employee's Executor
or other personal representative if no such beneficiary survives the
Employee) of the occurrence of the event set forth in subpart (a)(3) of
this Part A.
B. Mode of distribution to Employee. Distributions to the Employee of
amounts held by the Custodian in his Custodial Investment Account shall normally
be made in the form of annual, quarterly or monthly installments in cash or in
kind or in the form of a lump sum, provided that:
(a) Installment payments in cash or in kind shall be made in
approximately equal amounts or approximately equal fractions of the
Employee's Custodial Investment Account;
(b) If payments to the Employee are made in the form of installments,
there shall be credited to such Employee's Custodial Investment Account
all earnings thereon during the period of such installments; and
(c) Except in the case where the distribution is made in the form of an
annuity for a period measured by the life of the Employee and his
spouse (regardless of whether the Employee's beneficiary is someone
other than his spouse), the present value of the payments to be made to
the Employee must be more than 50 percent of the present value of total
payments to be made to the Employee and his beneficiaries.
Stock of a Regulated Investment Company shall not be distributed in
kind unless at the time distribution is made or, if it is to be made in
installments, at the time it commences, the value of such stock held in the
Custodial Investment Account is five hundred ($500) dollars or more.
Distribution may also be made by distributing an annuity contract which
qualifies under section 403(b)(1)(A) of the Code.
C. Election. The Employee may elect or alter his election of the method
of distribution to the Employee by filing with the Custodian a written election
of a method of distribution which is consistent with the provisions of Part B of
this Article IX at any time prior to seven (7) days before the time of
distribution determined under Part A of this Article IX. Such election may be
changed at any time prior to the beginning of said seven (7)-day period.
In the event that an Employee fails to properly elect a method of
distribution of his Account, unless the Custodian in its absolute discretion
chooses another method of distribution consistent with the provisions of Part B
of this Article IX, installment payments pursuant to said Part B will be made in
cash or in kind to the Employee on a monthly basis over a 10-year-period, if a
systematic withdrawal plan is available for the Regulated Investment Company
stock held in the Account and if the assets in such Account are determined to be
sufficient by Scudder Fund Distributors, Inc. If such a plan is unavailable or
if such assets are deemed to be insufficient by Scudder Fund Distributors, Inc.,
the shares of the Regulated Investment Company stock held in the Account will be
distributed in cash or in kind promptly to the Employee, unless the Custodian in
its absolute discretion chooses another method of distribution consistent with
the provisions of said Part B of this Article IX.
D. Method of distribution to beneficiaries. In the event of the death
of the Employee either before or after the occurrence of any of the times for
distribution listed in Part A of this Article IX, any amounts held by the
Custodian in the Employee's Account shall be distributed to the beneficiary or
beneficiaries named in the Employee's Designation by the method acceptable to
the Custodian and stipulated in such form, but only after such beneficiary or
beneficiaries have notified the Custodian in writing of the Employee's death and
provided the Custodian with adequate verification of such death, as provided in
subpart (8) of Part C of Article V. Until such distributions commence to such
beneficiary or beneficiaries, the Custodian shall not be responsible for
treating such person's predecessor to such rights and obligations as still
possessing the same.
In the event that the Employee fails to properly stipulate a method of
distribution of his Account to such beneficiary or beneficiaries, unless the
Custodian in its absolute discretion chooses another mode of distribution,
installment payments will be made in cash or in kind to such beneficiary or
beneficiaries on a monthly basis over a 10-year period from the date of the
Employee's death, if a systematic withdrawal plan is available for the Regulated
Investment Company stock held in the Account and if the assets in such Account
are determined to be sufficient by Scudder Fund Distributors, Inc. If such a
plan is unavailable or if such assets are deemed to be insufficient by Scudder
Fund Distributors, Inc., the shares of the Regulated Investment Company stock
held in the Account will be distributed in cash or in kind promptly to such
beneficiary or beneficiaries, unless the Custodian in its absolute discretion
chooses another method of distribution.
If the Employee so elects in the Designation of Beneficiary form in
effect at the time of his death, his designated beneficiary or beneficiaries who
has (have) survived him and to whom distributions are to be made, may direct the
Custodian in writing (by unanimous agreement if there is more than one
beneficiary) to change the method of distribution to such beneficiary or
beneficiaries (that is, the method either selected in the Employee's Designation
or provided for in this Part D of Article IX, as the case may be), but only
within sixty (60) days after the day on which such beneficiary or beneficiaries
first became entitled to any distribution from the Account and only if such
change is acceptable to the Custodian.
If a distribution is payable to a person known by the Custodian to be a
minor or a person under a legal disability, the Custodian may in its absolute
discretion make the whole or any part of the distribution to (i) a parent of
such person, (ii) the guardian, committee or other legal representative,
wherever appointed, of such person, including a custodian for such person under
a Uniform Gifts to Minors Act or similar act, (iii) any person having the
control and custody of such person, or (iv) to such person directly, the receipt
of the distributee to whom any such payment or distribution is so being made a
sufficient discharge therefor.
Insofar as the disposition of the Account of a deceased Employee is not
governed by a valid Designation which names at least one beneficiary who
survives the Employee, the Account shall be distributed to the estate of the
deceased Employee. Any portion of an Account of a deceased Employee remaining
undisposed of after the death of an Employee's designated beneficiary who has
survived the Employee, shall be distributed to the estate of such deceased
beneficiary.
ARTICLE X. TERMINATION.
A. Voluntary termination. With respect to amounts not yet earned by an
Employee, this Agreement may be terminated by either such Employee or the
Employer by giving written notice to the other.
Copies of such notice shall be sent forthwith to the Custodian. Unless
otherwise mutually agreed upon by the Employer and the Employee, any such
termination shall take effect as of the last day of the month next following the
month in which such written notice shall have been given, the Employee's
compensation level shall be increased by the amount by which it otherwise would
be reduced pursuant to the Application, or other written agreement between the
Employer and the Employee as to the adjustment of the Employee's compensation,
and the obligations under this Agreement of the Employer with respect to future
pay periods shall cease.
B. Termination on distribution. This Agreement shall terminate as to an
Employee when all the assets held in the Custodial Investment Account
established for him hereunder have been distributed.
C. Termination on disqualification. This Agreement shall terminate as
to an Employee, if after notification by the Internal Revenue Service that the
Employee's Account does not qualify under section 403(b)(7) of the Code, Scudder
Fund Distributors, Inc. fails or is unable to make the amendments necessary to
so qualify the Account. On such termination of this Agreement, all assets in an
Account shall be distributed in kind by the Custodian to the Employee or, in the
event of his death, to his designated beneficiaries, subject to the Custodian's
right to reserve funds as provided in Article V, Part E, except that where the
value of such assets is less than five hundred ($500) dollars, the distribution
shall be in cash.
ARTICLE XI. MISCELLANEOUS
A. Adjustment regarding other employee benefits. Unless provided
otherwise in a separate written agreement between the Employer and the Employee,
all employee benefits furnished (either wholly or in part) by the Employer for
the benefit of the Employee(other than those provided for under this Agreement)
which are based on the amount of compensation payable to an employee, and which
would ordinarily be subject to reduction in the event of any salary adjustment
other than that provided for
5
<PAGE>
under this Agreement, shall continue to be based on the Employee's compensation
level without regard to any adjustment in compensation provided for under this
Agreement, if such employee benefits arrangements themselves are consistent with
this Part A of Article XI.
B. Qualified Voluntary Employee Contributions. If permitted by Scudder
Fund Distributors, Inc., qualified voluntary employee contributions as defined
in section 219(e)(2) of the Code may be received under this Agreement with
respect to taxable years beginning after December 31, 1981, and such
contributions shall thereafter be held and administered hereunder by the
Custodian in accordance with all applicable law with respect to accumulated
deductible employee contributions as defined in section 72(o)(5)(B) of the Code.
C. Applicable law. This Agreement and all documents incorporated herein
by reference shall be construed and administered in accordance with the laws of
the state in which the home office of the Custodian is located.
D. Terminology. Any masculine terminology in this Agreement shall
include the feminine.
E. Headings. Headings herein are primarily for convenience of
reference, and if they conflict with the text, the text shall control.
F. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but such counterparts shall together constitute one and the same instrument.
G. Change of address. The Employer shall notify the Custodian in
writing of any change of address within 30 days of such change.
H. Notice. Any notice from the Custodian to the Employee pursuant to
this Agreement shall be effective if sent by first class mail to the business
address of the Employer until the Employer specifies a different address
acceptable to the Custodian. Any notice to the Custodian pursuant to this
Agreement shall be by first class mail addressed to its home office.
I. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the successors in interest of the parties hereto.
J. Not employment contract. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to discharge the Employee or
of the Employee to terminate his employment.
K. Construction. No provision of this Agreement, including the
documents incorporated herein by reference, shall be construed to conflict with
any provision of a Treasury Department or Internal Revenue Service regulation,
ruling, release or other order which affects the terms of this Agreement or its
qualification under section 403(b)(7) of the Code. It is intended that this
Agreement, including the documents incorporated herein by reference, qualify as
a custodial account under said section 403(b)(7) and this Agreement, including
said documents, shall be construed and limited and the powers and discretions
conferred hereunder and by applicable laws shall be exercised in a manner
consistent with that purpose. Subject to the foregoing provisions of this Part K
of Article XI, in the event of any conflict between this Agreement and the
documents incorporated herein by reference, the provisions of this Agreement
shall prevail.
L. Tax treatment. The tax treatment of any contributions to the Account
and of any earnings of the Account depends, among other things, upon the nature
of the Employer, and the amount and nature of contributions made in any year to
the Account (and to other plans, accounts or contracts with the benefit of
special tax treatment) for the benefit of the Employee. The Custodian and
Scudder Fund Distributors, Inc. assume no responsibility with respect to such
matters, nor shall any term or provision of this Agreement be construed so as to
place any such responsibility upon any one of them. Furthermore, the Employer
and the Employee shall file and shall have sole responsibility for filing with
the Internal Revenue Service and/or any other government agency such returns,
reports, forms, and other information as may be required of them.
M. Separability. If any provision of this Agreement shall be held
invalid or illegal for any reason, such determination shall not affect any
remaining provisions of this Agreement, but this Agreement shall be construed
and enforced as if such invalid or illegal provision had never been included in
this Agreement.
N. If the Employer does not sign the Application and is not required to
do so under the Code and the regulations thereunder, the Employee, to the extent
allowed by law, assumes all obligations and responsibilities of the Employer
under the Application and this Agreement.
O. Separate Employer Plan. If the Employer has established a written
separate 403(b) plan, intending to provide for the investment in Regulated
Investment Companies, the terms of such plan will supersede any provisions of
this Agreement which conflict with such terms. This provision shall not be
effective until the Employer has provided Scudder Fund Distributors, Inc. with a
copy of such written plan and the Custodian has agreed in writing to be bound by
terms thereof.
6
<PAGE>
Telephone
numbers and
addresses
- --------------------------------------------------------------------------------
National Toll Free
Telephone Numbers
and Addresses
------------------------------------------------------------
For general information,
CALL (toll-free) 1-800-225-2470
(within Massachusetts, call collect 617-426-8300)
or
WRITE to: Scudder Fund Distributors, Inc.
175 Federal Street
Boston, MA 02110
Shareholder representatives from Scudder Fund Distributors,
Inc., underwriter for the Scudder funds, will answer your
calls and letters.
------------------------------------------------------------
------------------------------------------------------------
For prospectuses, call 1-800-453-3305.
For questions about an existing account and to arrange
transactions,
CALL (toll-free) 1-800-225-5163
(in Boston, call 328-5000)
WRITE to: The Scudder Funds
c/o Boston Financial Data Services
P.O. Box 1912
Boston, MA 02105
Account representatives from the transfer agent for the
Scudder funds will answer your calls and letters.
------------------------------------------------------------
- --------------------------------------------------------------------------------
Local Telephone
Numbers and Addresses
of Scudder Fund
Distributors, Inc.
Boca Raton
150 East Palmetto Park Road
Boca Raton, Florida 33432
305-395-0040
Los Angeles
333 South Hope Street
Los Angeles, California 90071
213-628-1144
Boston
175 Federal Street
Boston, Massachusetts 02110
617-426-8300
New York
345 Park Avenue
New York, New York 10154
212-350-8370
Chicago
Suite 2200, 111 East Wacker Drive
Chicago, Illinois 60601
312-861-2700
Philadelphia
Three Mellon Bank Center
Philadelphia, Pennsylvania 19102
215-864-7200
Cincinnati
540 Carew Tower
Cincinnati, Ohio 45202
513-621-4200
Portland, Oregon
1211 S.W. Fifth Avenue
Portland, Oregon 97204
503-224-3999
Cleveland
Suite 700, 1801 East Ninth Street
Cleveland, Ohio 44114
216-241-7744
San Francisco
Suite 4100, 101 California Street
San Francisco, California 94111
415-981-8191
Houston
1530 Bank of the Southwest Building
Houston, Texas 77002
713-659-3838
7
<PAGE>
SCUDDER [LOGO]
- --------------
This booklet is not to be used in
connection with the offering of any of
the Scudder funds unless preceded or
accompanied by the appropriate current
prospectus. The prospectus will be sent
to you by the fund's underwriter,
Scudder Fund Distributor's, Inc.
14-6-84 (C) Scudder Fund Distributors, Inc.
THE
SCUDDER
FUNDS
Plan agreement, The Scudder
sample plan Employer-Select
documents 403(b) plan
SCUDDER
SCUDDER, STEVENS & CLARK INVESTMENT COUNSEL
<PAGE>
Contents
- --------------------------------------------------------------------------------
How employers establish
a Scudder Employer-
Select 403(b) program 3
- ------------------------------------
Explanation of employer
selections 4
- ------------------------------------
Worksheet for employer
to select plan options 7
- ------------------------------------
Sample employer
adoption agreement 10
- ------------------------------------
Sample employee
application 12
- ------------------------------------
Sample designation of
beneficiary form 13
- ------------------------------------
Sample salary reduction
agreement 14
- ------------------------------------
Plan agreement 15
- ------------------------------------
Telephone numbers and
addresses 23
- ------------------------------------
- ------------------------------------
The term "Scudder 403(b) Plan"
refers to the Scudder 403(b) Plan
and includes functions performed by:
o Scudder Fund Distributors,
Inc. which offers Scudder
403(b) Plans and acts as
principal underwriter for
each Scudder fund,
o State Street Bank and
Trust Company, as
custodian and transfer
agent of the Scudder funds
and as custodian of the
Scudder 403(b) Plans, and
o Boston Financial Data
Services, Inc. (an
affiliate of State Street
Bank), the service agent
responsible for
maintaining shareholder
account records for the
Scudder funds.
Scudder, Stevens & Clark acts
as investment adviser to the Scudder
funds.
- ------------------------------------
Introduction
- --------------------------------------------------------------------------------
The Scudder Funds booklet "Tax Deferred Annuity Plans (TDAs and TSAs) under
Section 403(b)(7)" describes the Scudder 403(b) program. This program consists
of eight Scudder no-load mutual funds, a processing and record keeping system
that segregates contributions by contribution type and by individual employee,
and either the Scudder Employee-Select or the Scudder Employer-Select 403(b)
plan.
The Employer-Select plan described in this booklet is a flexible plan that
allows employers to select among many options to tailor a plan in accordance
with their objectives and the needs of their employees. It is designed to
accept direct employer contributions as well as various types of employee
contributions and permits the employer to impose certain controls over the
investment and withdrawal of contributions.
This booklet explains how employers establish a Scudder Employer-Select
program. In addition to the plan itself, the booklet includes a worksheet
showing how employers select various plan options.
The booklet also contains samples of an employer adoption agreement, an
employee application form, a designation of beneficiary form, and an employee
salary reduction agreement.
2
<PAGE>
How employers establish
a Scudder Employer-
Select 403(b) program
- --------------------------------------------------------------------------------
Plan adoption The Scudder Employer-Select 403(b) plan
permits employers to select among various
options that determine many of the important
terms of their plan. The employer makes
these elections on a worksheet provided by a
Scudder Group Retirement Specialist, as
illustrated on pages 7-9. Scudder then
prepares an individually-designed adoption
agreement that reflects all selections made
and eliminates any reference to options not
selected. The plan becomes effective after
the employer and State Street Bank and Trust
Company, acting as custodian, sign the
adoption agreement.
- --------------------------------------------------------------------------------
Employee applications Based on the employer's selections,
Scudder prepares a package of individually
designed employee applications and
information. The employee applications
specify which Scudder fund or funds the
employees are permitted to select for
contributions and the allocation of
contributions among funds. Depending on how
the employer completes the worksheet,
employees may also be able to make other
selections such as normal retirement age. A
designation of beneficiary form can be
printed on the reverse side of the
application. Salary reduction agreements, if
desired by the employer, can also be
provided.
The Scudder information package also
includes prospectuses and information about
the investment characteristics of the funds
designated by the employer. This information
acquaints employees with the nature of mutual
funds and helps them select the fund or funds
most suited to their investment objectives.
Scudder can also provide copies of the plan
agreement and the completed adoption
agreement for distribution to participants if
the employer wishes.
- --------------------------------------------------------------------------------
Establishing the plan on the To establish a 403(b) plan on the
Scudder processing system Scudder processing system, the employer needs
only to provide certain background
information about the plan and payroll
processing details. Thereafter the employer
remits funds and information about how the
amount submitted should be allocated among
participants and how it is broken down by
contribution type, if more than one type of
contribution is involved. The booklet "The
Scudder Processing System" provides more
information.
- --------------------------------------------------------------------------------
Reporting and disclosure A 403(b) plan sponsored by an employer
is subject to the reporting and disclosure
requirements of ERISA. Scudder will provide
information to help comply with the reporting
requirements. In addition, Scudder will
prepare a sample summary plan description
tailored to the selections made by the
employer and suitable for distribution to
employees.
3
<PAGE>
Explanation of
employer selections
- --------------------------------------------------------------------------------
How to use the worksheet The plan agreement beginning on page 15
contains the provisions of the Scudder
Employer-Select 403(b) plan. Employers are
urged to review it to develop a full
understanding of the plan and of the various
selections available to them.
Employers first indicate the selections
which they wish to make on a worksheet
provided for the employer's convenience by a
Scudder Group Retirement Specialist. Later,
Scudder prepares an individually-designed
employer adoption agreement reflecting only
the selections made by the employer and
eliminating references to unselected options.
A copy of the worksheet begins on page 7.
The selections made by the employer include
the determination of which contribution types
in addition to direct employer contributions
the employer wishes to permit. Employer
selections also establish certain fundamental
procedures such as those involving changes of
investment, withdrawal of contributions by
employees, and distribution of benefits to
employees.
- --------------------------------------------------------------------------------
Normal retirement age The employer can determine whether
employees may select normal retirement age.
Section II This section gives employers the option
of selecting the normal retirement age for
all their employees. Alternatively,
employers may give individual employees the
right to select their own. The normal
retirement age is the age at which employees
usually begin to receive distributions from
their plans. It cannot be less than age
59 1/2.
- --------------------------------------------------------------------------------
Determination of Employers can elect to permit various
employer and employee types of contributions in a Scudder Employer-
contribution types Select 403(b) plan in addition to direct
employer contributions. (Direct employer
contributions are automatically permitted but
are not required). Optional contribution
types include employer contributions pursuant
to employee salary reduction agreements,
mandatory contributions, employer matching
thrift contributions, thrift contributions,
employee non-deductible voluntary
contributions, and employee deductible
voluntary contributions (often called
"QVECs"). Rollover and transfer
contributions are also permitted.
The Scudder processing system segregates
all contribution types in order to maintain
the identity of each and to permit different
investment selections, investment procedures,
and distribution and withdrawal provisions to
apply to some contribution types than apply
to others.
Section III This section determines whether
employees may make contributions to the plan
by means of a salary reduction agreement. If
the employer permits either mandatory
contributions or matching thrift
contributions, the employer must permit
salary reduction contributions.
4
<PAGE>
- --------------------------------------------------------------------------------
Section IV Employers have the option under this
section of requiring employees to make
"mandatory contributions", (defined as
employee contributions of up to 6% of
compensation) to be eligible to receive
employer contributions. The employer may
make contributions on behalf of those
employees who contribute the mandatory
contributions, although there is no
requirement for the employer to make such
contributions.
Section V This section permits employers to offer
matching thrift contributions in order to
encourage employees to make salary reduction
contributions. Employers must match any
employee contributions made under the terms
of the matching agreement. The amount of the
employer's matching contribution may vary
from employee to employee but must then be
based on a formula established and
implemented by the employer that applies to
all employees. Employees with 20 years of
service, for example, could be offered a
higher matching contribution than employees
with five years of service.
Section VI The Scudder Employer-Select 403(b) plan
allows employees to make non-deductible
voluntary contributions to their plan if
permitted by the employer. Although not
deductible, employee contributions accumulate
tax-free until withdrawn. Non-deductible
voluntary contributions (but not earnings
from these contributions) may be withdrawn
from the plan.
The plan also permits employees to make
deductible voluntary contributions ("QVECs")
to the plan which are normally in lieu of IRA
contributions. These contributions are fully
tax-deductible but subject to certain
limitations concerning maximum contribution
amounts and withdrawals.
- --------------------------------------------------------------------------------
Investment selection The Scudder Employer-Select plan permits
employers to limit the Scudder funds eligible
for new contributions and to limit the funds
available to employees who wish to change the
investment of already-contributed amounts.
The plan also permits the employer to set
different fund-selection limitations for
different contribution types.
Section VII This selection permits employers to
limit the number of Scudder funds available
for contributions. Some employers, for
example, might wish to limit the selection to
one money market fund, an income fund, and a
common stock fund investing in large
established companies.
- --------------------------------------------------------------------------------
Investment changes Under the plan, new contributions are
invested identically. If, for example, a
monthly plan contribution consists of a
direct employer contribution and a salary
reduction contribution, the contributions
would be invested in two contribution
accounts and the investment allocation within
each contribution account would be in the
same proportions. Changes in the allocation
among funds of new contributions in the
future apply to all contribution types until
instructions are issued to the contrary.
5
<PAGE>
Explanation of
employer selections, cont.
- --------------------------------------------------------------------------------
However, the plan permits investment
changes involving already-contributed amounts
to be made in different proportions among
contribution types if allowed by the
employer. The employer, for example, could
permit employees to arrange investment
changes in their salary reduction accounts
without restriction. These investment
changes could result in money being invested
in funds other than those permitted for new
contributions. Employers could also permit
employees to make investment changes in their
salary reduction accounts by telephone at any
time while requiring that investment changes
in their direct employer contribution
accounts be arranged in writing no more
frequently than quarterly.
Section VIII This section permits employers to
require investment changes to be made through
the plan administrator, and enables employers
to limit the frequency with which employees
make investment changes.
Under this section, if employees are
given the right to make investment changes
directly with the custodian, the employer
cannot limit the frequency of investment
changes.
- --------------------------------------------------------------------------------
Withdrawals and Employers may select various provisions
distributions affecting the timing and manner of
distributions.
Section IX This section permits employers to decide
whether employees who have not reached normal
retirement age will be allowed to make
withdrawals from the plan upon attainment of
age 59 1/2.
Section X This section permits employers to decide
whether employees will be able to receive
distributions from the plan for reasons of
financial hardship before distribution would
normally begin.
Section XI This section permits employers to decide
whether employees are automatically entitled
to distributions upon separation from
service, or whether distributions would be
subject to guidelines imposed by the
employer.
Section XII The employer may select whether the
employer or the employee is to determine the
method of distribution of benefits to
employees.
6
<PAGE>
Worksheet for Scudder 403(b) Plan,
Employer Adoption Agreement, and
Summary Plan Description
- --------------------------------------------------------------------------------
The undersigned Employer will be establishing a custodial account, under
Internal Revenue Code Section 403(b)(7), and will be adopting a Scudder 403(b)
Plan pursuant to the provisions of the Scudder 403(b) Agreement and the
provisions selected below by the Employer in this worksheet. This worksheet is
provided only for the convenience of the Employer and is not a part of any Plan
or any Scudder 403(b) Agreement, nor is any portion of this worksheet
incorporated by reference into any Scudder 403(b) Agreement.
This plan will be for the benefit of each employee of the employer who signs a
Scudder 403(b) Plan Employee Application which is accepted by the Custodian.
However, if the Employer specifies in a writing pertaining to eligibility that
only employees of a certain class or classes are eligible to participate in this
403(b) plan, then this plan will be for the benefit of only such employees who
sign a Scudder 403(b) Plan Employee Application which is accepted by the
Custodian.
I. NAME OF PLAN
The Name of the 403(b) Plan to be adopted shall be the
___________________________________ 403(b) Plan.
(insert name of Employer)
II. NORMAL RETIREMENT AGE
An Employee's Normal Retirement Age (which may not be less than
age 59 1/2) shall be:
Select One [] (1) age 65 unless another age is indicated by the Employer
and Complete here: _________________________________
if Applicable (may not be less than age 59 1/2)
and if
Desired [] (2) age 65 unless another age is indicated by the Employee
in the Scudder 403(b) Plan Employee Application.
III. EMPLOYER CONTRIBUTIONS BY SALARY REDUCTION AGREEMENT
[NOTE: If either Mandatory Contributions by Salary Reduction Agreement
under Section IV(2) or Employer Matching Thrift Contributions under Section
V(2) are selected, Section III(1) must be selected to permit Employer
Contributions by means of a Salary Reduction Agreement.]
Select One [] (1) Employer Contributions made in accordance with a Salary
Reduction Agreement, made between the Employer and
Employee, described in Article III, Part B of the Scudder
403(b) Agreement.
[] (2) Employer contributions by means of a Salary Reduction
Agreement made between the Employer and the Employee are
not permitted.
IV. MANDATORY CONTRIBUTIONS BY SALARY REDUCTION AGREEMENT
[NOTE: Section IV(2) should NOT be completed to require Mandatory
Contributions if Employer Matching Thrift Contributions have been selection
under Section V(2), or if Employer Contributions by means of a Salary
Reduction Agreement are not permitted under Section III(2).]
Select One and [] (1) Mandatory Contributions are not required.
Complete if
Necessary [] (2) In order to participate in any Employer Contributions
which the Employer may wish to (but need not) make, with
respect to a taxable year of the Employee, directly to
the Employee's Employer Contribution Account, the
Employee must agree with the Employer for Mandatory
Contributions to be made, in accordance with a Salary
Reduction Agreement between the Employer and the
Employee, to the Employee's Mandatory Contribution
Account, with the total of such Mandatory Contributions
for such taxable year of the Employee to be an amount
equal to __________% (insert not over 6%) of the
Employee's Compensation with respect to such taxable year
of the Employee.
7
<PAGE>
V. MATCHING THRIFT CONTRIBUTIONS
[NOTE: Section V(2) should NOT be completed to permit Employer Matching
Thrift Contributions if Mandatory Contributions have been selected under
Section IV(2), or if Employer Contributions by means of a Salary Reduction
Agreement are not permitted under Section III(2).]
Select Either [] (1) Matching Thrift Contributions are not permitted.
(1) or (2);
and, if (2) [] (2) For each taxable year of the Employee with respect to
is Selected, which the Employee has agreed with the Employer for Thrift
Complete it Contributions to be made, in accordance with a Salary
and, if Reduction Agreement between the Employer and the Employee,
Desired, to the Employee's Thrift Contribution Account in a total
Select (3) amount not exceeding __________% (insert not over 6%) of
the Employee's Compensation for such taxable year of the
Employee, the Employer will make Employee Matching Thrift
Contributions directly to the Employer Matching Thrift
Contribution Account in a total amount equal to _____% of
the total amount of the Employee's Thrift Contributions
for such taxable year of the Employee.
[] (3) The preceding sentence of this Section V to the
contrary notwithstanding, the total amount of the
Employer Matching Thrift Contributions for the Employee
for such taxable year of the Employee shall not exceed an
amount designated in writing by the Employer and
communicated to the Employee based on a written formula
established by the Employer and applied in a uniform and
nondiscriminatory manner with respect to all Employees, a
copy of which formula is to be attached to the Scudder
403(b) Plan Employer Adoption Agreement before it is
signed by the Employer and the Custodian.
VI. EMPLOYEE CONTRIBUTIONS
A. Employee Non-deductible Voluntary Contributions:
Select One [] (1) Employee Non-deductible Voluntary Contributions, subject
to the provisions of Article III, Part A(e) of the
Scudder 403(b) Agreement, are permitted.
[] (2) Employee Non-deductible Voluntary Contributions are not
permitted.
B. Employee Deductible Voluntary Contributions:
Select One [] (1) Employee Deductible Voluntary Contributions, subject to
the provisions of Article III, Part A(f) of the Scudder
403(b) Agreement, are permitted.
[] (2) Employee Deductible Voluntary Contributions are not
permitted.
VII. PERMITTED INVESTMENTS
Select as Scudder Fund
Many as [] Government Money Fund
are Desired [] Cash Investment Trust
[] Income Fund
[] Target Fund (multi Portfolios)
[] Capital Growth Fund
[] Common Stock Fund
[] Development Fund
[] International Fund
[] Such other Scudder Fund or Funds, if
any, as may be designated from time to
time by Scudder Fund Distributors,
Inc. (or its successor) as appropriate
for investment hereunder
8
<PAGE>
VIII. PROCEDURES FOR CHANGE OF INVESTMENTS BY EMPLOYEE OR BENEFICIARY
[NOTE: Section VIII(3), concerning telephone exchange instructions, may be
selected ONLY if Section VIII(2) has been selected to permit Account
investment changes by directions given directly to the Custodian.]
Select Either [] (1) An Employee or the Employee's designated beneficiary or
(1) or (2); beneficiaries may change the investment medium of an
and, if (2) Account by directions given to the Plan Administrator in
is Selected such fashion and at such times as provided in Article IV,
and, if Part F of the Scudder 403(b) Agreement.
Desired,
Select (3) [] (2) An Employee or the Employee's designated beneficiary or
beneficiaries may change the investment medium of an
Account by directions given to the Custodian in such
fashion and at such times as provided in Article IV, Part
F of the Scudder 403(b) Agreement.
[] (3) The preceding sentence of this Section VIII to the
contrary notwithstanding, an Employee or the Employee's
designated beneficiary or beneficiaries is permitted to
change the investment medium of an Account, by
exchanging, by telephone, telegram or TWX instructions
given directly to the Custodian, shares in one Scudder
fund for shares of another Scudder fund for which
telephone exchange is available, unless the Employee
elects otherwise in Item 3C of the Scudder 403(b) Plan
Employee Application.
IX. WITHDRAWALS BY AN EMPLOYEE WHO HAS ATTAINED AGE 59 1/2
Withdrawals from an Account by an Employee who has attained age
59 1/2, subject to the provisions of Article VII, Part C(a) of
the Scudder 403(b) Agreement:
Select One [] (1) are permitted, except that such withdrawals are permitted
and Complete only if the Employee has attained another age if another
if Applicable age is indicated here: _________________________________
and if Desired (may not be less than age 59 1/2)
[] (2) are not permitted.
X. WITHDRAWALS BY AN EMPLOYEE IN CASE OF FINANCIAL HARDSHIP
Withdrawals from an Account by an Employee who encountered
financial hardship, subject to the provisions of Article VII,
Part C(b) of the Scudder 403(b) Agreement:
Select One [] (1) are permitted.
[] (2) are not permitted.
XI. DISTRIBUTION TO AN EMPLOYEE UPON SEPARATION FROM SERVICE
Distribution from an Account to an Employee, subject to the
provisions of Article IX, Part A(b) of the Scudder 403(b)
Agreement:
Select One [] (1) shall be made or shall commence upon the Employee's
separation from the service of the Employer if so
determined by the Employer in a uniform and
nondiscriminatory manner with respect to all Employees.
[] (2) shall be made or shall commence upon the Employee's
separation from the service of the Employer, if the
Employee so elects.
XII. DETERMINATION OF METHOD OF DISTRIBUTION OF BENEFITS TO AN EMPLOYEE
The method of distribution of benefits to an Employee from an
Account, subject to the provisions of Article IX, Part C of the
Scudder 403(b) Agreement:
Select One [] (1) shall be determined by the Employer.
[] (2) shall be determined by the Employee.
- ------------------------------------- -------------------------------------
Signature of Employer Printed name of Employer
- ------------------------------------- -------------------------------------
Date Date
9
<PAGE>
Sample employer
adoption agreement
- --------------------------------------------------------------------------------
The adoption agreement appearing below reflects one possible combination of
worksheet selections which an employer might choose.
- --------------------------------------------------------------------------------
Employer Adoption Agreement
The undersigned Employer by completing this Employer Adoption Agreement and the
undersigned Custodian hereby establish a custodial account, under section
403(b)(7) of the Internal Revenue Code of 1954, as amended (the "Code"), as
follows. (For definition of terms, see Article 1 of the Scudder 403(b)
Agreement.)
I. NAME OF PLAN
The Name of the 403(b) Plan hereby adopted shall be The Sample Organization
403(b) Plan.
II. NORMAL RETIREMENT AGE
An Employee's Normal Retirement Age shall be 65.
III. EMPLOYER CONTRIBUTIONS BY SALARY REDUCTION AGREEMENT
Employer Contributions may be made in accordance with a Salary Reduction
Agreement, made between the Employer and Employee, described in Article
III, Part B of the Scudder 403(b) Agreement.
IV. MANDATORY CONTRIBUTIONS BY SALARY REDUCTION AGREEMENT
Mandatory Contributions are not required.
V. MATCHING THRIFT CONTRIBUTIONS
For each taxable year of the Employee with respect to which the Employee
has agreed with the Employer for Thrift Contributions to be made, in
accordance with a Salary Reduction Agreement between the Employer and the
Employee, to the Employee's Thrift Contribution Account in a total amount
not exceeding 6% of the Employee's Compensation for such taxable year of
the Employee, the Employer will make Employer Matching Thrift Contributions
directly to the Employee's Employer Matching Thrift Contribution Account in
a total amount to equal 50% of the total amount of the Employee's Thrift
Contributions for such taxable year of the Employee.
VI. EMPLOYEE CONTRIBUTIONS
A. Employee Non-deductible Voluntary Contributions:
Employee Non-deductible Voluntary Contributions, subject to the
provisions of Article III, Part A(e) of the Scudder 403(b) Agreement,
are permitted.
B. Employee Deductible Voluntary Contributions:
Employee Deductible Voluntary Contributions, subject to the provisions
of Article III, Part A(f) of the Scudder 403(b) Agreement, are
permitted.
VII. PERMITTED INVESTMENTS
Initial and subsequent contributions to an account, subject to the
provisions of Article IV of the Scudder 403(b) Agreement, are permitted in
stock of the following Regulated Investment Companies:
Scudder Fund
Government Money Fund
Income Fund
Capital Growth Fund
Common Stock Fund
VIII. PROCEDURES FOR CHANGE OF INVESTMENTS BY EMPLOYEE OR BENEFICIARY
An Employee or the Employee's designated beneficiary or beneficiaries may
change the investment medium of an Account by directions given to the Plan
Administrator in such fashion and at such times as provided in Article IV,
Part F of the Scudder 403(b) Agreement.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
IX. WITHDRAWALS BY AN EMPLOYEE WHO HAS ATTAINED AGE 59 1/2
Withdrawals from an Account by an Employee who has attained age 50 1/2,
subject to the provisions of Article VII, Part C(a) of the Scudder 403(b)
Agreement are not permitted.
X. WITHDRAWALS BY AN EMPLOYEE IN CASE OF FINANCIAL HARDSHIP
Withdrawals from an Account by an Employee who has encountered financial
hardship, subject to the provisions of Article VII, Part C(b) of the
Scudder 403(b) Agreement are permitted.
XI. DISTRIBUTION TO AN EMPLOYEE UPON SEPARATION FROM SERVICE
Distribution from an Account to an Employee, subject to the provisions of
Article IX, Part A(b) of the Scudder 403(b) Agreement shall be made or
shall commence upon the Employee's separation from the service of the
Employer if so determined by the Employer in a uniform and
nondiscriminatory manner with respect to all Employees.
XII. DETERMINATION OF METHOD OF DISTRIBUTION OF BENEFITS
The method of distribution of benefits to an Employee from an Account,
subject to the provisions of Article IX, Part C of the Scudder 403(b)
Agreement shall be determined by the Employer.
XIII. ADOPTION OF AGREEMENT BY EMPLOYER AND CUSTODIAN
By this Employer Adoption Agreement, the Employer, duly qualified as an
organization described in section 403(b)(1)(A) of the Code, hereby agrees
with the Custodian, duly qualified as a bank described in Section 401(d)(1)
of the Code, to open a separate Custodial Investment Account (the
"Account"), for the benefit of each Employee of the Employer who signs a
Scudder 403(b) Plan Employee Application which is accepted by the
Custodian, pursuant to the Scudder 403(b) Agreement (the "Agreement")
hereby adopted by the Employer and the Custodian, and the Employer and the
Custodian further agree to the provisions contained in this Employer
Adoption Agreement.
STATE STREET BANK AND TRUST COMPANY
- ------------------------------------- By -------------------------------------
Signature of Employer Custodian
Sample Organization
- ------------------------------------- By -------------------------------------
Employer Date
Anytown, USA IMPORTANT: The Scudder 403(b) Agreement,
- ------------------------------------- including this Employer Adoption
Address of Employer Agreement, becomes effective upon the
date this Employer Adoption Agreement is
signed by the Employer and the
Custodian.
- --------------------------------------------------------------------------------
11
<PAGE>
Sample
Employee Application
- --------------------------------------------------------------------------------
The employee application appearing below reflects the selections set forth
in the sample adoption agreement on pages 10-11.
- --------------------------------------------------------------------------------
Employee Application
Return this form to:
Employee Benefits Dept.
1. NAME AND ADDRESS OF EMPLOYEE
Name ______________________________________________________________________
Address ___________________________________________________________________
City ___________________ State _______ Zip _______ Date of Birth __________
Social Security Number __________ Employee Identification Number __________
2. NAME AND ADDRESS OF EMPLOYER
Name ______________________________________________________________________
Address ___________________________________________________________________
City ____________________________ State _______________ Zip _______________
Employer Group Number ______________ Tax Identification Number ____________
3. INVESTMENT INSTRUCTIONS BY EMPLOYEE
A.Initial contribution to come B.Fund selection for initial
from (check one): contribution listed in
[] Employer check for Item 3A and for subsequent
$____________________ contributions (make your
or Fund selection below,
[] transfer or rollover choosing only among the
check from existing Funds which are permitted
plan for investment under
for $________________ Section VII of the Scudder
403(b) Plan Employer
Adoption Agreement)
Amount
$ %
Scudder Fund ---------- ---------
[] Government Money Fund __________ or _________
[] Income Fund __________ or _________
[] Capital Growth Fund __________ or _________
[] Common Stock Fund __________ or _________
Total 100%
---------- ---------
(amount
from 3A)
4. DESIGNATION OF BENEFICIARY BY EMPLOYEE (see form on reverse side of this
page)
[] If this box is checked, I have completed the Designation of
Beneficiary form on the reverse side.
5. ADOPTION OF AGREEMENT BY EMPLOYEE
By this Employee Application, I hereby agree to the establishment of a
separate Custodial Investment Account (the "Account") for my benefit,
pursuant to the Scudder 403(b) Agreement (the "Agreement") adopted by my
Employer and by State Street Bank and Trust Company as Custodian and hereby
adopted by me, and I hereby agree to the terms and conditions of that
Agreement and the completed Employer Adoption Agreement therefor, and to
the provisions contained above in this Employee Application. I also
acknowledge receipt of the prospectus for each Fund selected by me.
---------------------------------- ----------------------------------
Date Signature of Employee
IMPORTANT: Once acknowledgment of the receipt of this Employee Application
has been mailed by the Custodian to the Employee, this Employee Application
shall be deemed accepted by the Custodian, and, therefore, effective, as of
the date this Employee Application was signed by the Employee.
- --------------------------------------------------------------------------------
12
<PAGE>
Sample designation
of beneficiary form
- --------------------------------------------------------------------------------
The designation of beneficiary form appearing below reflects the worksheet
selections made by a sample employer. Normally this form would be printed on
the reverse side of the employee application form.
- --------------------------------------------------------------------------------
Designation of Beneficiary Form
IMPORTANT INFORMATION
Before executing this Designation form you may wish to consult an attorney
or tax advisor to determine whether use of the form, or another written
instrument acceptable to the Custodian, will accomplish your goals. Please also
review the applicable provisions of the Agreement. This form may be used as a
Designation form. It is effective if filed with the Custodian, State Street
Bank and Trust Company, during your lifetime.
This Designation form is for your use, if desired, in naming the
Beneficiary or Beneficiaries who are to receive the amounts in your Account at
your death; also, if desired, in electing the method of distribution of such
amounts; and, also, if desired, in permitting your designated Beneficiary or
Beneficiaries to change the method of distribution to such Beneficiary or
Beneficiaries. The Agreement (in Article IX, Part D) contains provisions which
govern as to death benefits if no surviving Beneficiary is designated by you, or
if no method of distribution is elected by you, in a valid Designation form.
You should, if desired, complete, date and sign this Designation form and
forward it to State Street Bank and Trust Company, P.O. Box 1912, Boston, MA
02105. We suggest you retain a copy for your records and review it
periodically. Additional copies can be obtained from any office of Scudder Fund
Distributors, Inc.
- --------------------------------------------------------------------------------
Designation of Beneficiary and Election of Method of Distribution
(under Article II, Part C, and Article IX, Part D, of Agreement).
Print Name of Employee: ________________________________________________________
Print Name of Employer: ________________________________________________________
Upon my death, the following person or persons shall receive the undistributed
amount in my Account under Article IX, Part D, of the Agreement. If a
Beneficiary or Beneficiaries fail to survive me, their interests shall lapse and
the surviving Beneficiaries shall take such interest proportionately. If more
than one named Beneficiary shall survive me, such Beneficiaries shall receive
equal portions unless otherwise indicated by me below. All previous Designation
forms of any kind of mine are hereby revoked. I reserve the right to change
this Designation form by executing a new Designation form or other written
instrument acceptable to the Custodian and filing it with the Custodian during
my lifetime.
Beneficiary: __________________________ Social Security Number _________________
(%)
Beneficiary: __________________________ Social Security Number _________________
(%)
Address of each Beneficiary specifically named above:
________________________________________________________________________________
The undistributed amount in my Account under Article IX, Part D of the Agreement
shall be paid to the appropriate Beneficiary or Beneficiaries in one of the
following methods (if desired, check and, where applicable, complete one -- the
selected method of distribution must be acceptable to the Custodian):
[] 1. _____ monthly installments consisting of the dollar value of
the Account divided by the remaining number of monthly
installments.
[] 2. _____ annual installments consisting of the dollar value of
the Account divided by the remaining number of annual
installments.
[] 3. A single lump sum.
Any undistributed balance in the Account which becomes payable to an estate of a
deceased Beneficiary shall be paid, as soon as practical, in a lump sum to such
estate, unless a valid direction as to a method of distribution to such estate
is made in accordance with Article IX, Part D, and Article II, Part C, of the
Agreement.
Option Right Of Beneficiary To Change Method Of Distribution
[] Check if this option is desired.
I agree that my designated Beneficiary or Beneficiaries surviving me may direct
the Custodian in writing (by unanimous agreement if there is more than one
Beneficiary) to change the method of distribution to such Beneficiary or
Beneficiaries (that is, the method either selected in my Designation or provided
for in Article IX, Part D, of the Agreement, as the case may be), but only
within sixty (60) days after the day on which such Beneficiary or Beneficiaries
first became entitled to any distribution from the Account and only if such
change is acceptable to the Custodian.
Date: _______________________ Signature of Employee: _______________________
- --------------------------------------------------------------------------------
13
<PAGE>
Sample salary
reduction agreement
- --------------------------------------------------------------------------------
This sample salary reduction agreement may be used with the Scudder
Employer-Select 403(b) plan. It contains language suitable for each eligible
contribution type. An Employer may reproduce the agreement using the portions
relevant to the options selected on the worksheet or may substitute its own
salary reduction agreement which is consistent with the plan.
- --------------------------------------------------------------------------------
Salary Reduction Agreement Return this form to:
Employee Benefits Dept.
Check one:
() This is an original Salary Reduction Agreement
() This is a subsequent Salary Reduction Agreement.
By this Salary Reduction Agreement, made between
_____________________________ and ___________________________, the Employer
(insert name of Employer) (insert name of Employee)
and the Employee hereby make the following agreement as to the adjustment of the
Employee's Compensation.
1. As of the ______________________________________ payroll period ending
(weekly, monthly, semi-monthly, etc.)
on _________________________________________________ the Employee's Compensation
(date)
(the first day of this period must be after the effective date of this Salary
Reduction Agreement)
shall be reduced by the Employer for each such payroll period by the amount(s)
or by the percentage(s) selected below in subparagraphs (a) or (b) and (c), or
by the amount or by the percentage selected below in subparagraph (d), as the
case may be (if more than one selection is made, all selections must be made in
the same manner, that is, either by selecting an amount or by selecting a
percentage; if neither Mandatory nor Thrift Contributions are selected below in
subparagraph (a) or subparagraph (b), then only subparagraph (d) may be
completed):
(a) Mandatory Contributions (Complete only if (1) Mandatory Contributions
are provided for under Section IV of the Scudder 403(b) Plan Employer
Adoption Agreement ["the Adoption Agreement"], (2) Mandatory
Contributions are desired by the Employee, and (3) Thrift
Contributions are not selected below in subparagraph (b).)
The Employee's Compensation shall be reduced by the Employer for each
such payroll period by $____________ or by ____________%, and the
amount of each such reduction shall be treated, under the Scudder
403(b) Agreement adopted by the Employer, the Custodian, and the
Employee (the "Scudder 403(b) Agreement"), as a Mandatory Contribution
made to the Employee's Mandatory Contribution Account.
(b) Thrift Contributions (Complete only if (1) Thrift Contributions are
permitted under Section V of the Adoption Agreement, (2) Thrift
Contributions are desired by the Employee, and (3) Mandatory
Contributions are not selection above in subparagraph (a).)
The Employee's Compensation shall be reduced by the Employer for each
such payroll period by $____________ or by ____________%, and the
amount of each such reduction shall be treated under the Scudder
403(b) Agreement as a Thrift Contribution made to the Employee's
Thrift Contribution Account.
(c) Contributions in Addition to Mandatory or Thrift Contributions
(Complete only if (1) either Mandatory Contributions or Thrift
Contributions are selected above, in either subparagraph (a) or
subparagraph (b), and (2) additional Contributions are desired by the
Employee.)
In addition to the reduction of Compensation provided for above under
either subparagraph (a) or subparagraph (b), the Employee's
Compensation shall be reduced by the Employer for each such payroll
period by $____________ or by ____________%, and the amount of each
such reduction shall be treated under the Scudder 403(b) Agreement as
a Contribution made to the Employee's Employer Contribution Account.
(d) Other Contributions (Complete only if (1) neither Mandatory
Contributions nor Thrift Contributions are selected above in either
subparagraph (a) or subparagraph (b) and (2) Contributions by means of
a Salary Reduction Agreement are desired by the Employee.)
The Employee's Compensation shall be reduced by the Employer for each
such payroll period by $____________ or by ____________%, and the
amount of each such reduction shall be treated under the Scudder
403(b) Agreement as a Contribution made by means of a Salary Reduction
Agreement to the Employee's Employer Contribution Account.
2. The amount(s) of such reduction(s) shall be transmitted by the
Employer to State Street Bank and Trust Company as Custodian under the Scudder
403(b) Agreement to be held in a separate Custodial Investment Account for the
benefit of the Employee pursuant to the terms and conditions of the Scudder
403(b) Agreement.
3. This Salary Reduction Agreement shall be irrevocable as to both the
Employer and the Employee except that either of them may terminate this Salary
Reduction Agreement as of the end of any pay period so that it will not apply to
Compensation subsequently earned. Subject to the preceding sentence, the
Employee may change tis agreement as to the adjustment of the Employee's
Compensation by the execution of a subsequent written Salary Reduction Agreement
between the Employer and the Employee, but such change may be made no more than
once in each taxable year of the Employee.
4. If Section V of the Employer Adoption Agreement provides for a written
formula to be used with respect to Employer Matching Thrift Contributions, the
Employee acknowledges having received and read a copy of that formula.
5. The Employee is responsible for determining that the total amount of
the salary reduction or reductions in Paragraph I above does not exceed the
Employee's "exclusion allowance" as defined in section 403(b)(2) of the Internal
Revenue Code of 1954, as amended (the "Code"), and for determining the
applicable limitation(s) on Contributions under section 415 of the Code, all as
provided in Article III, Part C of the Scudder 403(b) Agreement.
___________________________________ ___________________________________
Signature of Employer Signature of Employee
___________________________________ IMPORTANT: This Salary Reduction
Date Agreement becomes effective upon the
date it is signed by the Employer and
the Employee. Such signature date must
be a date which is on or after the date
upon which the Employee signs the
Scudder 403(b) Plan Employee
Application.
- --------------------------------------------------------------------------------
14
<PAGE>
Scudder 403(b) Agreement
- --------------------------------------------------------------------------------
INTRODUCTION
This Scudder 403(b) Agreement (the "Agreement") is entered into by and
among (i) each employer who executes a Scudder 403(b) Plan Employer Adoption
Agreement (the "Employer") and thereby certifies that the Employer is duly
qualified as an organization described in section 403(b)(1)(A) of the Internal
Revenue Code of 1954, as amended (the "Code"), (ii) the Custodian which executes
a Scudder 403(b) Plan Employer Adoption Agreement and thereby certifies that it
is duly qualified as a bank described in section 401(d)(1) of the Code (the
"Custodian"), and (iii) each employee who is eligible to participate in this
Agreement and who executes a Scudder 403(b) Plan Employee Application which is
accepted by the Custodian (the "Employee") and thereby certifies that the
Employee is an employee of the Employer. Any person employed by the Employer is
eligible to participate in this Agreement unless the Employer specifies in a
writing pertaining to eligibility, a copy of which writing is attached to the
Scudder 403(b) Plan Employer Adoption Agreement prior to execution thereof by
the Employer and the Custodian, that only Employees of a certain class or
classes are eligible to participate in this Agreement, in which event only such
Employees shall be eligible to participate in this Agreement. This Agreement,
including the Scudder 403(b) Plan Employer Adoption Agreement, becomes effective
upon the date such Employer Adoption Agreement is properly executed by the
Employer and the Custodian. Once acknowledgment of the receipt of the Scudder
403(b) Plan Employee Application has been mailed by the Custodian to the
Employee, such Employee Application shall be deemed accepted by the Custodian,
and, therefore, effective, as of the date such Employee Application was executed
by the Employee.
ARTICLE I. DEFINITIONS
A. Act means the Employee Retirement Income Security Act of 1974, as
amended.
B. Administrator or Plan Administrator means the person or persons
appointed under Article X, Part A.
C. Agreement or Scudder 403(b) Agreements means this document,
incorporating by reference the Scudder 403(b) Plan Employer Adoption Agreement,
the Scudder 403(b) Plan Employee Application, the Designation of Beneficiary,
the Salary Reduction Agreement, if Section V of the Employer Adoption Agreement
provides for a written formula to be used with respect to Employer Matching
Thrift Contributions any such written formula which is attached to the Employer
Adoption Agreement as required by said Section V thereof, and, if a writing
pertaining to eligibility is attached to the Employer Adoption Agreement under
the provisions of Section XIII thereof, any such writing pertaining to
eligibility.
D. Code means the Internal Revenue Code of 1954, as amended. Reference
to a section of the Code shall include any comparable section or sections of
future legislation amending, supplementing, or superseding such section.
E. Compensation means, unless provided otherwise in a separate written
agreement between the Employer and the Employee, the total amount for services
received by the Employee from the Employer for the taxable year or portion
thereof involved which is includible in the gross income of the Employee,
including, without limitation, basic salary or wages, bonuses, commissions, and
overtime payments, without regard to any adjustment in compensation provided for
under the Agreement.
F. Contribution means the amount to be transmitted to the Custodian for
addition to the Employee's Custodial Investment Account.
G. Custodial Investment Account or Account means the cash and securities
held by the Custodian for the benefit of an Employee pursuant to this Agreement,
which shall be the sum of the Employee's Employer Contribution Account, Employer
Matching Thrift Contribution Account, Thrift Contribution Account, Mandatory
Contribution Account, Employee Non-deductible Voluntary Contribution Account,
Employee Deductible Voluntary Contribution Account, and Rollover Contribution
Account.
H. Custodian means the bank or any successor thereto, set forth in the
Scudder 403(b) Employer Adoption Agreement.
I. Designation of Beneficiary or Designation means the document executed
by the Employee pursuant to Article II, Part C.
J. Employee means each person employed by the Employer who is eligible to
participate in this Agreement and who has properly executed an Employee
Application.
K. Employee Application or Scudder 403(b) Plan Employee Application means
the document executed by the Employee pursuant to Article II, Part A.
L. Employee Non-deductible Voluntary Contributions means the
Contributions made to the Custodial Investment Account by the Employee in
accordance with Article III, Part A(e). These after-tax Contributions are
intended not to be "qualified voluntary employee contributions" within the
meaning of Code Section 219(e)(2).
M. Employee Non-deductible Voluntary Contribution Account means the
separate account maintained pursuant to Article II, Part B for Employee Non-
deductible Voluntary Contributions made by the Employee and the income,
expenses, gains, and losses attributable thereto.
N. Employee Deductible Voluntary Contributions means the Contributions
made to the Custodial Investment Account by the Employee in accordance with
Article III, Part A(f). Such Contributions are intended to be "qualified
voluntary employee contributions" within the meaning of Code Section 219(e)(2).
O. Employee Deductible Voluntary Contribution Account means the separate
Account maintained pursuant to Article II. Part B for Employee Deductible
Voluntary Contributions made by the Employee and the income, expenses, gains,
and losses attributable thereto.
P. Employer means the organization, state, political subdivision of a
state, or agency or instrumentality of such state or political subdivision named
in the Employer Adoption Agreement.
Q. Employer Adoption Agreement or Scudder 403(b) Plan Employer Adoption
Agreement means the agreement executed by the Employer and the Custodian
providing for the establishment of the Custodial Investment Account in
accordance with the terms and conditions of this Agreement.
R. Employer Contributions means the Contributions made to the Custodial
Investment Account in accordance with Article III, Part A(a).
S. Employer Contribution Account means the separate Account maintained
pursuant to Article II, Part B for Employer Contributions made and the income,
expenses, gains, and losses attributable thereto.
T. Employer Matching Thrift Contributions means the Contributions made to
the Custodial Investment Account by the Employer in accordance with Article III,
Part A(b).
U. Employer Matching Thrift Contribution Account means the separate
Account maintained pursuant to Article II, Part B for Employer Matching Thrift
Contributions made by the Employer and the income, expenses, gains, and losses
attributable thereto.
V. Mandatory Contributions means the Contributions made to the Custodial
Investment Account by the Employer in accordance with Article III, Part A(d).
W. Mandatory Contribution Account means the separate Account maintained
pursuant to Article II, Part B for Mandatory Contributions made and the income,
expenses, gains, and losses attributable thereto.
X. Normal Retirement Age means age 65 unless another age is properly
indicated by the Employer in Section II of the Employer Adoption Agreement, or,
if the Employee is permitted by the Employer by Section II of the Employer
Adoption Agreement to indicate another age, unless another age is properly
indicated by the Employee in the Employee Application. In any event, Normal
Retirement Age cannot be less than 59 1/2.
Y. Plan means the Agreement, the Employer Adoption Agreement, the
Employee Application, the Designation of Beneficiary, the Salary Reduction
Agreement, if Section V of the Employer Adoption Agreement provides for a
written formula to be used with respect to Employer Match Thrift Contributions,
any such written formula which is attached to the Employer Adoption Agreement as
required by said Section V thereof, and, if a writing pertaining to eligibility
is attached to the Employer Adoption Agreement under the provisions of Section
XIII thereof, any such writing pertaining to eligibility.
Z. Regulated Investment Company or Company means a domestic corporation
which is a regulated investment company within the meaning of Section 851(a) of
the Code and which issues only redeemable stock for which Scudder, Stevens &
Clark (or its successor) is acting as the investment adviser and which has been
designated by Scudder Fund Distributors, Inc. (or its successor) as appropriate
for investment hereunder.
AA. Rollover Contributions means the Contributions made to the Custodial
Investment Account by the Employee in accordance with Article III, Part D(b).
BB. Rollover Contribution Account means the separate Account maintained
pursuant to Article II, Part B for Rollover Contributions made by the Employee
and the income, expenses, gains, and losses attributable thereto.
CC. Salary Reduction Agreement or Scudder 403(b) Plan Salary Reduction
Agreement means the document executed by the Employer and the Employee and
referred to in Article III, Part B.
DD. Thrift Contributions means the Contributions made to the Custodial
Investment Account in accordance with Article III, Part A(c).
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EE. Thrift Contribution Account means the separate Account maintained
pursuant to Article II, Part B for Thrift Contributions made and the income,
expenses, gains, and losses attributable thereto.
ARTICLE II. ESTABLISHMENT OF CUSTODIAL INVESTMENT ACCOUNTS
A. Request for participation. Each Employee who is eligible to
participate in this Agreement and properly executes an Employee Application
which is accepted by the Custodian thereby becomes a party to this Agreement
with the right to enforce its terms against any other party. Such executed
Employee Application is hereby specifically incorporated herein by reference.
An Employee Application is properly executed when completed and signed by the
Employee. The Custodian may rely on the validity of the signature thereon, on
the existence of the employment relation thereby affirmed, and on the
irrevocable subscription to the provisions of this Agreement therein contained.
B. Opening and administration of Account. The Custodian shall open a
separate Custodial Investment Account (the "Account") for the benefit of each
Employee whose Employee Application has been accepted by the Custodian. The
Account shall be maintained pursuant to the terms of this Agreement, including
the documents incorporated herein by reference. For each Employee, the
Custodian shall maintain a separate Account for each of the following types of
Contributions and the income, expenses, gains, and losses attributable thereto:
(a) Employer Contributions, involving, without limitation, the
following: (1) those types of Employer Contributions made in accordance with a
separate Salary Reduction Agreement made between the Employer and the Employee,
including, without limitation, Contributions exceeding the amount of Mandatory
Contributions made, or exceeding the amount of Thrift Contributions made, and
which are neither Employee Non-deductible Voluntary Contributions nor Employee
Deductible Voluntary Contributions; and (2) those types of Employer
Contributions made by the Employer directly to the Employee's Account,
including, without limitation, Employer Contributions made for Employees who
have made Mandatory Contributions, Employer Contributions made in addition to
Employer Matching Thrift Contributions, and Employer Contributions made in
addition to any made in accordance with a Salary Reduction Agreement. The
various types of Employer Contributions may be accounted for in separate sub-
accounts by the Custodian;
(b) Employer Matching Thrift Contributions, if such Contributions are
required by Section V of the Employer Adoption Agreement;
(c) Thrift Contributions, if such Contributions are permitted by
Section V of the Employer Adoption Agreement;
(d) Mandatory Contributions, if such Contributions are provided for
by Section IV of the Employer Adoption Agreement;
(e) Employee Non-deductible Voluntary Contributions, if such
Contributions are permitted by Section VI-A of the Employer Adoption Agreement;
(f) Employee Deductible Voluntary Contributions, if such
Contributions are permitted by Section VI-B of the Employer Adoption Agreement;
and
(g) Rollover Contributions, if the Custodian accepts such
Contributions pursuant to Article III, Part D(b).
Each Contribution shall be accompanied or preceded by clear
instructions specifying the Account to which it is to be credited. If such
clear instructions are not received by the Custodian, the Custodian may hold
such Contributions in a separate suspense account until it receives the proper
clear instructions. Such suspense account may be invested or left uninvested by
the Custodian as it deems fit.
C. Employee's Designation of Beneficiary. Each Employee may submit to
the Custodian a properly executed Employee's Designation of Beneficiary form or
other written instrument acceptable to the Custodian for use in connection with
this Agreement (which is referred to hereinafter interchangeably as a
"Designation") which shall not become effective until it is filed with the
Custodian during the lifetime of the Employee. The last effective Designation
accepted by the Custodian shall be controlling, and whether or not fully
dispositive of the Account, thereupon shall revoke all other such Designations
previously filed by the Employee. Each such executed Designation is hereby
specifically incorporated herein by reference and shall be construed, enforced
and administered according to the laws of the state in which the home office of
the Custodian is located.
ARTICLE III. CONTRIBUTIONS
A. Types of Contributions
(a) Employer Contributions. The Employer may make Employer
Contributions in cash to be held by the Custodian in a separate Employer
Contribution Account for the benefit of the Employee.
Such Employer Contributions may be made by the Employer to the
Employer Contribution Account in accordance with a separate Salary Reduction
Agreement made between the Employer and the Employee, if Employer Contributions
by means of a Salary Reduction Agreement are permitted by Section III of the
Employer Adoption Agreement. Such Employer Contributions made by means of a
Salary Reduction Agreement may include, without limitation, contributions which
exceed the amount of Mandatory Contributions made (if Mandatory Contributions
are provided for by Section IV of the Employer Adoption Agreement), or which
exceed the amount of the Thrift Contributions made (if Thrift Contributions are
permitted by Section V of the Employer Adoption Agreement) and which are neither
Employee Non-deductible Voluntary Contributions nor Employee Deductible
Voluntary Contributions.
Such Employer Contributions may also be made by the Employer directly
to the Employer Contribution Account and they may include, without limitation,
the following: Employer Contributions made for Employees who have made Mandatory
Contributions (if Mandatory Contributions are provided for by Section IV of the
Employer Adoption Agreement); Employer Contributions made in addition to
Employer Matching Thrift Contributions (if Employer Matching Thrift
Contributions are permitted by Section V of the Employer Adoption Agreement);
and Employer Contributions made in addition to any Contributions made in
accordance with a Salary Reduction Agreement made between the Employer and the
Employee.
(b) Employer Matching Thrift Contributions. If Employer Matching
Thrift Contributions are required by Section V of the Employer Adoption
Agreement, the Employer shall make to the Employee's Account the Employer
Matching Thrift Contributions required by that Section, including, without
limitation, if Section V of the Employer Adoption Agreement provides for a
written formula to be used with respect to Employer matching Thrift
Contributions, such Matching Thrift Contributions made in accordance with such
written formula. All Employer Matching Thrift Contributions shall be maintained
in the Employee's Employer Matching Thrift Contribution Account pursuant to
Article II, Part B.
(c) Thrift Contributions. If Thrift Contributions are permitted by
Section V of the Employer Adoption Agreement, they may be made to the Employee's
Account. All Thrift Contributions shall be maintained in the Employee's Thrift
Contribution Account pursuant to Article II, Part B.
(d) Mandatory Contributions. If Mandatory Contributions are provided
for by Section IV of the Employer Adoption Agreement, they may be made to the
Employee's Account. All Mandatory Contributions shall be maintained in the
Employee's Mandatory Contribution Account pursuant to Article II, Part B.
(e) Employee Non-deductible Voluntary Contributions. If Employee Non-
deductible Voluntary Contributions are permitted by Section VI-A of the Employer
Adoption Agreement, an Employee may make Employee Non-deductible Voluntary
Contributions to the Employee's Account; provided, however, that the aggregate
amount of such Employee Non-deductible Voluntary Contributions, plus any Non-
deductible Voluntary Contributions made by the Employee under any other plan
maintained by the Employer and intended to meet the requirements of Code section
401, shall not exceed ten percent (10%) of the Employee's total Compensation for
the period in which the Employee has been a party to this Agreement and,
therefore, a covered participant in this Plan. An Employee's Employee Non-
deductible Voluntary Contributions shall be maintained in the Employee's
Employee Non-deductible Voluntary Contribution Account pursuant to Article II,
Part B. An Employee may withdraw all or a portion of the Employee's Employee
Non-deductible Voluntary Contribution Account (but not including any earnings
thereon) upon at least thirty (30) days' written notice to the Custodian.
(f) Employee Deductible Voluntary Contributions. If Employee
Deductible Voluntary Contributions are permitted by Section VI-B of the Employer
Adoption Agreement, an Employee may make Employee Deductible Voluntary
Contributions to the Employee's Account; provided, however that with respect to
each taxable year of the Employee, the aggregate amount of such Employee
Deductible Voluntary Contributions, plus any other "qualified retirement
contributions" as that term is defined in Code section 219(e)(1) made by the
Employee, shall not exceed the lesser of $2,000 or 100% of the Employee's total
Compensation includible in the Employee's gross income for such taxable year (or
such higher limitation as permitted under Code section 219). An Employee's
Employee Deductible Voluntary Contributions shall be maintained in the
Employee's Employee Deductible Voluntary Contribution Account pursuant to
Article II, Part B. An Employee may withdraw all or a portion of his Employee
Deductible Voluntary Contribution Account (including the earnings thereon) upon
at least thirty (30) days' written notice to the Custodian. All such Employee
Deductible Voluntary Contributions received by the Custodian under this
Agreement shall be held and administered by it in accordance with all applicable
law with respect to "qualified voluntary employee contributions" as that
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term is defined in Code Section 219(e)(2) including, without limitation, any law
with respect to the redesignation thereof as non-deductible contributions in
connection with any withdrawal thereof by the Employee from the Employee's
Employee Deductible Voluntary Contribution Account.
B. Salary Reduction Agreements. If Employer Contributions by means of a
Salary Reduction Agreement are permitted by Section III of the Employer Adoption
Agreement, Employer Contributions may be made in accordance with a separate
written Salary Reduction Agreement made between the Employer and the Employee
providing for an adjustment of the Employee's Compensation and for transmittal
of the resultant Employer Contribution to the Custodian, which such Salary
Reduction Agreement shall become effective upon the date it is signed by the
Employer and the Employee. Such Salary Reduction Agreement may provide for an
adjustment of the Employee's Compensation with respect to either Mandatory
Contributions (if Mandatory Contributions are provided for by Section IV of the
Employer Adoption Agreement) or Thrift Contributions (if Thrift Contributions
are permitted by Section V of the Employer Adoption Agreement) and/or other
Contributions which the Employee may wish to have made by means of the Salary
Reduction Agreement.
Each such Salary Reduction Agreement between the Employer and the Employee
as to the adjustment of the Employee's Compensation shall be effective only as
to amounts earned by the Employee after such Salary Reduction Agreement becomes
effective. Each such Salary Reduction Agreement between the Employer and the
Employee as to the adjustment of the Employee's Compensation shall be
irrevocable as to both the Employer and the Employee except that either of them
may terminate such Salary Reduction Agreement as of the end of any payroll
period so that it will not apply to Compensation subsequently earned. Subject
to the immediately preceding sentence, the Employee may, in the manner provided
for in subpart (a) of Part B of Article VIII, change such Salary Reduction
Agreement between the Employer and the Employee as to the adjustment of the
Employee's Compensation, but such change may be made no more than once in each
taxable year of the Employee.
C. Transmittal of Contributions and Employee's responsibility regarding
Contributions. All Contributions shall be transmitted to the Custodian. The
Employee shall be responsible for the computation and the proper making of
Employee Contributions provided for under the terms of the Plan including, if
desired, Mandatory Contributions, Thrift Contributions, Employee Non-deductible
Contributions, and Employee Deductible Voluntary Contributions. The Employee
shall be responsible for computing the maximum amount that may be contributed on
the Employee's behalf for each tax year in accordance with the Employee's
"exclusion allowance" as that term is defined in section 403(b)(2) of the Code.
The Employee shall determine the applicable limitation(s) on Contributions under
section 415 of the Code, and the Employee shall have the right to make any of
the elections provided under said section 415. Such computations and
determinations shall be made at least annually, and the Employee shall
communicate the results to the Employer no later than thirty (30) days before
the last day on which the Employee can execute a new Salary Reduction Agreement
with the Employer for the taxable year without violating the pertinent rules and
regulations promulgated by the Treasury Department. Neither the Custodian,
Scudder Fund Distributors, Inc., any Regulated Investment Company, nor the
Employer shall have any obligation to verify the correctness of the Employee's
computations with respect to Contributions or the correctness of the Employee's
computation of the Employee's exclusion allowance or limitations on
Contributions under section 415 of the Code or any responsibility with respect
to any election available to the Employee under said section 415 or any matters
relating to any tax consequences with respect to any Contributions made to the
Custodial Account for the benefit of the Employee, including, without
limitation, the identification and correction of an "excess contribution" as
that term is defined in section 4973 of the Code, all of which foregoing matters
shall be solely the responsibility of the Employee.
D. Transfers and rollovers.
(a) Transfers from and to other Accounts. The Employer or the
Employee may cause the transfer of assets acceptable to the Custodian and
available from an existing custodial account qualified under section 403(b)(7)
of the Code and/or from an existing annuity contract qualified under section
403(b) of the Code to the Employee's Custodial Investment Account. Once
transferred into the Employee's Custodial Investment Account, such assets shall
be treated as a Contribution for purposes of this Agreement and shall be
invested, distributed and otherwise dealt with as such. The Employer or the
Employee may cause the transfer of assets agreed to by the Custodian from the
Employee's Custodial Investment Account to a custodial account established under
section 403(b)(7) of the Code and/or to an annuity qualified under section
403(b) of the Code.
(b) Rollover Contributions. The Custodian may in its discretion
accept contributions in the form of assets acceptable to the Custodian received
from an annuity contract or a custodial account described in section 401(b) of
the Code, an individual retirement account described in section 408(a) of the
Code, and individual retirement annuity described in section 408(b) of the Code,
or a retirement bond described in section 409(a) of the Code, provided that such
Contribution qualifies in all respects as a Rollover Contribution in accordance
with the requirements of section 403(b)(8), section 408(d)(3) or section
409(b)(3)(C) of the Code (including the requirement that no part of the amount
received from an individual retirement account, individual retirement annuity or
retirement bond be attributable to any source other than a rollover contribution
from any annuity contract or custodial account described in section 403(b) of
the Code) or other applicable provisions of the Code in effect from time to
time. Such rollover contribution shall be held by the Custodian in a separate
Rollover Account for the benefit of the Employee which consists only of such
rollover contributions and the earnings thereon. Once transferred into the
Employee's Custodial Account, such assets shall be treated as a Contribution for
purposes of this Agreement and shall be invested, distributed and otherwise
dealt with as such. The right is reserved to transfer the assets of the
Custodial Investment Account to another form of annuity contract or custodial
account described in section 403(b) of the Code or to an individual retirement
account, individual retirement annuity, or retirement bond plan established
pursuant to section 408 or 409 of the Code.
If permitted by Scudder Fund Distributors, Inc. in accordance with
applicable law, rollover contributions with respect to "qualified voluntary
employee contributions" as that term is defined in section 219(e)(2) of the Code
may be received under this Agreement with respect to taxable years beginning
after December 31, 1981, and such contributions shall thereafter be held and
administered hereunder by the Custodian in accordance with all applicable law
with respect to "accumulated deductible employee contributions" as that term is
defined in section 72(o)(5)(B) of the Code.
(c) Limitation of liabilities. Neither the Custodian nor Scudder
Fund Distributors, Inc. shall have any responsibility with respect to any
matters relating to the tax consequences with respect to any transfer or
rollover made under this part D of Article III.
ARTICLE IV. INVESTMENT
A. Purchase. The Custodian shall receive and, as soon as practical,
shall invest all Contributions in accordance with the investment instructions
which are then in effect for the Employee.
B. Registration and safekeeping. Any stock of a Regulated Investment
Company held under this Agreement shall be held by the Custodian. Such stock
may be registered in the name of the Custodian or its nominee, but the Custodian
need not require issuance of certificates for such stock.
C. Eligibility. The Custodian shall invest only in stock of a Regulated
Investment Company.
A Custodial Investment Account shall be limited to investment in stock of
one Regulated Investment Company, except that the investment may be divided
between the stock of more than one Regulated Investment Company if the value of
the stock of each Company in which an investment is being made is, upon
completion of the investment, equal to a minimum value established from time to
time by a designation by Scudder Fund Distributors, Inc. (including a
designation that there shall be no such minimum investment limitation).
If a Company in whose stock investments have been made is no longer
designated by Scudder Fund Distributors, Inc. as appropriate for investment
hereunder, Scudder Fund Distributors, Inc. shall advise the Employee for whose
Account the investments were made and shall give a current list of Companies
available for investment to the Employee or, if the Employer pursuant to Article
IV, Part G wishes to make the investment determination, to the Employer. If,
within 30 days of providing of such current list, the Employee, or the Employer
as the case may be, does not submit new investment instructions, the Employee's
investment in the deleted Company shall be changed to an investment for the
Employee's Account in stock of Scudder Cash Investment Trust or in stock of
another Regulated Investment Company or Companies designated by Scudder Fund
Distributors, Inc. and no additional investments shall be made in said deleted
Company.
D. Reports and voting of securities. The Custodian shall deliver to the
Employee or to the Employee's designated beneficiary all notices, reports,
prospectuses, financial statements, proxies and proxy-soliciting materials
received by it as to investments made for the Employee's Account. The Custodian
shall vote all shares only in accordance with the written instructions of the
Employee or the Employee's designated beneficiary. If the Employee desires to
attend a meeting at which securities held in his Account may be voted, the
Custodian shall furnish a proxy at the Employee's request.
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E. Dividends. All capital gain distributions and dividends received on
the stock of a Regulated Investment Company shall be reinvested in the stock of
that Regulated Investment Company. The Custodian shall elect to receive any
such distribution in the stock of the distributing Company whenever possible.
F. Change of investments. An Employee or his designated beneficiary or
beneficiaries who has (have) survived the Employee and to whom distributions are
being made (by unanimous agreement if there is more than one beneficiary) may
direct that the investment medium of the Account or any portion thereof be
changed to stock of another Regulated Investment Company or Companies which have
been selected by the Employer as permitted investments under Section VII of the
Employer Adoption Agreement. If the Employer determines in Section VIII of the
Employer Adoption Agreement that such changes in the investment medium of the
Account are to be made by such directions given to the Plan Administrator, such
directions shall be given in writing by the Employee or by the Employee's said
designated beneficiary or beneficiaries to the Administrator who shall instruct
the Custodian in writing as to any such directed changes, and any such
investment changes may be made at such times as are determined from time to time
by the Employer in a uniform and nondiscriminatory manner with respect to all
Employees. If the Employer determines in Section VIII of the Employer Adoption
Agreement that such changes in the investment medium of the Account are to be
made by such directions to be given directly to the Custodian, such directions
shall be given by the Employee or by the Employee's said designated beneficiary
or beneficiaries directly to the Custodian, either in writing or by any other
manner of direction designated from time to time by the Employer in a uniform
and nondiscriminatory manner with respect to all Employees, and such investment
changes may be made at any time or times. However, if Scudder Fund
Distributors, Inc. determines in its own judgment that there has been trading
within the Account, any Regulated Investment Company may refuse to sell its
shares to such Account. If the Employee's Account invested in stock of more
than one Regulated Investment Company, a separate account shall be kept with
respect to the stock of each such Company, and he or they may designate the
portion of any new Contribution, withdrawal, or change of investment which is to
be allocated to each such separate account. The provisions of this Part F of
Article IV are subject to the provisions of Part G of this Article IV.
G. Employer determinations as to investments. Anything in this Agreement
to the contrary notwithstanding, the Employer may, if permitted by Scudder Fund
Distributors, Inc., decide from time to time to make any or all determinations
with respect to the investment of an Employee's Account or any portion thereof
in stock of a Regulated Investment Company or Companies, including without
limitation determinations as to initial investments, subsequent investments, and
changes in the investment medium of an Account or portion thereof, as to the
frequency and manner of direction of any changes in the investment medium of an
Account or portion thereof, and as to whether the Employer or the Employee shall
make any determinations with respect to the investment of an Employee's Account
or any portion thereof. Any such determination by the Employer shall be
communicated by the Employer to the Employee, shall be made in a uniform and
nondiscriminatory manner with respect to all Employees, and shall be subject to
the further requirement that if Scudder Fund Distributors, Inc. determines in
its own judgment that there has been trading within an Account, any Regulated
Investment Company may refuse to sell its shares to such Account.
ARTICLE V. CUSTODIAN.
A. Duties. The Custodian shall:
(1) Receive Contributions transmitted by the Employer or the
Employee;
(2) Provide safekeeping for the securities and other assets in the
Custodial Investment Account;
(3) Collect income;
(4) Execute orders for purchase, sale or exchange of securities and
make settlement in accordance with general practice;
(5) Maintain records of all transactions in the Account;
(6) Transmit to each Employee, not less frequently than annually,
appropriate statements of the amount of the Custodian's compensation, if any,
charged to the Account;
(7) File with the Internal Revenue Service and/or any other
government agency such returns, reports, forms, and other information as may be
required of it as Custodian;
(8) Perform all other duties and services consistent with the
purposes and intentions of this Agreement. The Custodian may perform any of its
administrative duties through persons designated by the Custodian from time to
time, except that all assets in the Account shall be held by the Custodian; and
if State Street Bank and Trust Company is the Custodian, it intends initially to
delegate all such duties to Boston Financial Data Services, Inc., which is
partially owned by the Custodian's parent company; but no such delegation or
future change therein shall be considered as an amendment of this Agreement.
B. Cash requirements. If cash funds are required to pay taxes, fees, or
other expenses pursuant to Article VI or to make payments to the Employee or his
beneficiaries (other than withdrawals under Article VII, Part C), the Employee
shall instruct the Custodian in writing which Regulated Investment Company
shares shall be redeemed or sold if there is more than one account, unless the
item for which cash is required is clearly allocable to an investment in a
specific Regulated Investment Company. In the absence of such written
instructions, the Custodian shall exercise its own discretion. However, the
Custodian's fee, if any, for each Account within a Custodial Investment Account
shall be charged to such Account.
C. Limitation of liabilities and duties.
(1) The Custodian shall be fully protected in acting or omitting to
take any action in reliance upon any order or other direction believed by the
Custodian to be genuine and properly given.
(2) To the extent permitted by law, upon the expiration of a 30-day
period after providing to the Employee the statements required under Article V,
Part A(6), the Custodian shall be released and discharged from all liability to
the Employee or any third party as to the matters contained in such statement
unless the Employee files written objections with the Custodian within such 30-
day period.
(3) In no event shall the Custodian be under a fiduciary duty to the
Employee in regard to the selection of investments or be liable for any loss so
incurred.
(4) The Custodian shall have no responsibility to see to the initial
or continued qualification of the Custodial Investment Account under section
403(b)(7) of the Code.
(5) The Custodian shall not be obligated to determine the amount or
type of any contribution due or to collect any Contribution from the Employer.
(6) The Custodian shall not be held responsible for determining the
amount, character, or timing of any distribution to the Employee except as
provided in Article IX.
(7) The Custodian shall have no responsibility with respect to the
computation of the Employee's "exclusion allowance" as defined in section
403(b)(2) of the Code, any applicable limitation(s) on Contributions under
section 415 of the Code, any election available to the Employee under said
section 415, or any matters including the identification and correction of an
"excess contribution" as that term is defined in section 4973 of the Code, all
of which foregoing matters shall be solely the responsibility of the Employee.
(8) The Custodian shall not be required to carry out any instructions
not given in accordance with this Agreement and the various documents
incorporated herein by reference. If such instructions are not received as
required or if received, are in the opinion of the Custodian unclear, the
Custodian shall not be liable for loss of income or appreciation or depreciation
and shall not be liable for interest, pending receipt of written instructions or
other clarification. Furthermore, the Custodian assumes (and shall have) no
responsibility to make any distribution (or process a withdrawal) by order of
the Employer, the Employee or a Beneficiary unless and until the requisite
instructions specify the occasion for such action and the Custodian is furnished
with any and all applications, certificates, tax waivers, signature guarantees
and other documents (including proof of any legal representative's authority)
deemed necessary or advisable to the Custodian. The Custodian shall not be
responsible for complying with any instructions or acting in accordance with any
other documents which appear on their face to be genuine, or for refusing to
comply or so act if not satisfied to that effect, and assumes no further duty of
inquiry. The Custodian shall have no liability to the Employee (or the
Employee's beneficiary) for any tax penalty or other damages resulting from any
inadvertent failure by the Custodian to make a distribution under the Agreement.
(9) The Custodian shall not be liable (and assumes no responsibility)
for the collection of Contributions or the making or the deductibility of any
Contribution, or its purpose or propriety under this Agreement, or the purpose
or propriety of any distribution made pursuant to this Agreement, which matters
are the responsibility of the Employer and the Employee.
(10) The Custodian shall not be liable for interest on temporary cash
balances, if any, maintained in the Account.
(11) To the extent permitted by law, the Employee shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement and
matters which it contemplates, except that which arises due to the Custodian's
negligence or willful misconduct, or (ii) with respect to making or failing to
make any distribution, other
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than for failure to make distribution in accordance with an order therefor which
is in full compliance with Article IX or Article VII, Part C or this Part C of
Article V. Except as required by law, the Custodian shall not be obligated or
expected to commence or defend any legal action or proceeding in connection with
this Agreement or such matters unless agreed upon by the Custodian and the
Employee, and unless fully indemnified for so doing to the Custodian's
satisfaction.
(12) The Employer assumes neither any responsibility nor any liability
for any acts or omissions of the Custodian hereunder.
D. Compensation. In consideration for its services hereunder, the
Custodian may be entitled to receive the fees specified in its then current fee
schedule for the services specified on the schedule. The Custodian may
substitute a revised fee schedule from time to time upon thirty (30) days'
written notice to the Employer or Employee. A Custodian may be entitled to such
reasonable additional fees as it may from time to time determine for additional
services required of it, if such additional services are not clearly defined on
the fee schedule.
E. Resignation and removal. The Custodian may resign by giving at least
30 days' written notice to the Employer. The Employer or Scudder Fund
Distributors, Inc. may remove the Custodian hereunder by giving at least 30
days' written notice to the Custodian. In each case, the Employer or Scudder
Fund Distributors, Inc. shall designate a successor custodian qualified under
section 403(b)(7) of the Code, which successor custodian shall accept such
appointment by a writing to be submitted to the Employer and the Custodian.
If, within 30 days after the giving of notice of resignation or removal,
neither the Employer nor Scudder Fund Distributors, Inc. designates a successor
custodian which accepts the appointment, this Agreement shall terminate, and all
assets in the Account shall be distributed in kind to the Employee, or in the
event of his death, to his designated beneficiary or beneficiaries subject to
the Custodian's right to reserve funds as provided in this Part E of Article V.
On the effective date of its resignation or removal, the Custodian shall
transfer to the designated successor the assets and records (or copies thereof)
of the Custodial Investment Accounts provided, however, that the Custodian may
retain whatever assets it deems necessary for payment of its fees, costs and
expenses, compensation, and any other liabilities which constitute a charge on
or against the assets of the Accounts or on or against the Custodian.
ARTICLE VI. FEES, TAXES, AND OTHER EXPENSES
A. Fees, taxes, and other expenses. Any income taxes or other taxes of
any kind whatsoever that may be levied or assessed upon or in respect of a
Custodial Investment Account created hereunder (including any transfer taxes
incurred in connection with the investment and reinvestment of the assets), and
all expenses, fees and administrative costs incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the compensation to the Custodian as determined under Article V,
Part D of this Agreement shall constitute a charge upon the assets of the
Custodial Investment Account and be paid from the assets held in such Account,
or (at the Custodian's option) be paid by the Employee.
ARTICLE VII. PROTECTION OF EMPLOYEE BENEFITS AND WITHDRAWALS BY EMPLOYEES
A. Non-forfeitable. At no time shall it be possible for any part of the
assets held by the Custodian in the Employee's Account be used for or diverted
to purposes other than for the exclusive benefit of the Employee. The
Employee's rights to or derived from all Contributions to the Custodian for
addition to the Employee's Account shall be non-forfeitable at all times after
such payments are made to the Custodian.
B. Non-alienable. Any right or benefit which shall be payable under the
terms of this Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt at such shall be void, and any such right or benefit shall not in any
way be subject to the debts, contracts, liabilities, engagements or torts of the
person who is entitled to such right or benefit, nor shall such right or benefit
be subject to attachment or legal process for or against such person, except as
provided in Part C of this Article VII and in subparts (e) and (f) of Part A of
Article III.
C. Employee withdrawals.
(a) If withdrawals from an Account by an Employee, pursuant to this
subpart (a) of this Part C of Article VII, are permitted by Section IX of the
Employer Adoption Agreement, then at any time or times prior to the completion
of distributions pursuant to Article IX, an Employee who has attained age 59
1/2, or who has attained the age indicated by the Employer in Section IX of the
Employer Adoption Agreement if an age other than 59 1/2 is so indicated by the
Employer, may withdraw amounts of cash from his Account, including the entire
balance thereof, if the Employee submits to the Custodian written proof
satisfactory to the Custodian of the attainment of such age and, also, written
instructions to the Custodian as to the amounts to be so withdrawn. If the
Employee makes any withdrawal at any time pursuant to the provisions of this
subpart (a) of this Part C of Article VII, no additional contributions may be
made to the Employee's Account for a period of one (1) year after such
withdrawal and the Employee may not participate in any other custodial account
for regulated investment company stock involving the Employer under section
403(b) of the Code for a period of one (1) year after such withdrawal.
(b) In addition to the foregoing, if withdrawals from an Account by
an Employee who has encountered financial hardship, pursuant to this subpart (b)
of this Part C of Article VII, are permitted by Section X of the Employer
Adoption Agreement, at any time or times prior to the completion of
distributions pursuant to Article IX, an Employee may withdraw amounts of cash
from the Employee's Account, including the entire balance thereof, if the
Employee encounters financial hardship, as determined in a uniform and
nondiscriminatory manner with respect to all Employees and in accordance with
applicable law, governmental regulations or rulings, by a person designated by
the Employer in accordance with applicable legal authority, and if the Employee
submits to the Custodian written proof satisfactory to the Custodian of such
determination of hardship and, also, written instructions to the Custodian as
the amounts to be so withdrawn.
(c) Any withdrawal made pursuant to the provisions of either subparts
(a) or (b) of this Part C may not be in kind but may only be in the cash
proceeds received by the Custodian from redemptions or sales of shares of the
Regulated Investment Companies held in the Employee's Account. If there is more
than one account, the Employee shall instruct the Custodian in writing as to
which Regulated Investment Company shares shall be redeemed or sold before any
distribution is made under either subparts (a) or (b) of this Part C of Article
VII.
ARTICLE VIII. AMENDMENT OR MODIFICATION
A. By Employer. This Agreement and/or the various documents incorporated
herein may be modified or amended by the Employer by delivering to the Employee
and to the Custodian a written copy of such modification or amendment signed by
the Employer.
B. By Employee. The Employee may modify this Agreement by making any of
the following changes:
(a) If Employer Contributions by means of a Salary Reduction
Agreement are permitted by Section III of the Employer Adoption Agreement, and
subject to other applicable provisions of Part B of Article III, then no more
than once in each taxable year of the Employee, the Employee may change the
Salary Reduction Agreement between the Employer and the Employee as to the
adjustment of the Employee's Compensation by the execution of a subsequent
written Salary Reduction Agreement between the Employer and the Employee;
(b) The Employee may change investments pursuant to Article IV, Part
F; or
(c) The Employee may change the Employee's designated beneficiary or
beneficiaries by submitting to the Custodian at any time a revised Designation
of Beneficiary pursuant to Article II, Part C.
C. By Scudder Fund Distributors, Inc. The Employer hereby delegates
authority to Scudder Fund Distributors, Inc. to modify or amend this Agreement
and/or various documents incorporated herein, including authority to adopt a
prototype or master plan (if one becomes available) for investment in shares of
Regulated Investment Companies, and the Employer shall be deemed to have
consented to any such modification or amendment. Scudder Fund Distributors,
Inc. shall provide copies of such modification or amendment to the Employer or
the Employee, and the Custodian. However, Scudder Fund Distributors, Inc. has
no affirmative obligation to amend any of the foregoing documents pursuant to
this portion of the Agreement.
D. Limitations. Notwithstanding the powers granted in Parts A, B, and C
above, no amendment shall be made which would:
(a) Cause or permit any part of the assets in the Account to be
diverted to purposes other than for the exclusive benefit of the Employee and/or
the Employee's beneficiaries, or cause to permit any portion of such assets to
revert to or become the property of the Employer,
(b) Place any greater burden on a Custodian without its written
consent, or
(c) Retroactively deprive any Employee of any benefit to which the
Employee was entitled under the Agreement by reason of Contributions made by the
Employer or the Employee, unless such modification or amendment is necessary to
conform the Agreement to, or satisfy the conditions of any law, governmental
regulation or ruling, and to permit the Agreement and Account to meet the
requirements
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of Section 403(b) of the Code, or any similar statute enacted in lieu thereof,
and any such retroactive modification or amendment must be pursuant to an
opinion of counsel that it is necessary or advisable to conform the Agreement to
the requirements for qualification under Section 403(b) of the Code and
Regulations prescribed thereunder.
ARTICLE IX. DISTRIBUTIONS
A. Time of distribution.
(a) Subject to the remaining provisions of this Article IX, and to
the provisions of Part C of Article VII and to the provisions of subparts (e)
and (f) of Part A of Article III, distribution of assets held in the Employee's
Investment account shall be made or shall commence at the earliest time of the
occurrence of one of the following events:
(1) The disability of the Employee within the meaning of Section
72(m)(7) of the Code. An Employee shall be considered to be so disabled if the
Employee is unable to engage in any substantial gainful activity because of any
medically determinable physical or mental impairment which can be expected to
result in death or to be of long-continued and indefinite duration and an
individual shall not be considered to be disabled, and, therefore, the Custodian
shall not be required to make distribution on account of the Employee's
disability, unless and until the Custodian has received a physician's
certificate to that effect;
(2) The Employee's actual retirement or attainment of the Normal
Retirement Age, whichever is later; or
(3) The Employee's death.
(b) In addition to the foregoing, distribution shall be made or shall
commence upon the Employee's separation from the service of the Employer, prior
to the occurrence of any of the events listed in subpart (a) of this Part A of
Article IX, subject to whichever one of the following two provisions of this
subpart (b) of this Part A of Article IX is applicable:
(1) If Section XI of the Employer Adoption Agreement provides
for a determination by the Employer with respect to such distribution upon the
Employee's separation from the service of the Employer, such distribution upon
the Employee's separation from the service of the Employer shall be made or
shall commence if so determined by the Employer in a uniform and
nondiscriminatory manner with respect to all Employees; or
(2) If Section XI of the Employer Adoption Agreement provides
for an election by the Employee with respect to such distribution upon the
Employee's separation from the service of the Employer, such distribution upon
the Employee's separation from the service of the Employer shall be made or
shall commence only if the Employee, either at any time prior to or upon the
Employee's separation from the service of the Employer, files with the Custodian
a written irrevocable election to have distribution commence upon such
separation from service.
(c) The Custodian shall not be responsible for making any
distributions until such time as it has been notified in writing by either the
Employer or the Employee of the occurrence of one of the events set forth in
subparts (a)(1), (a)(2), or (b) of this Part A, or by the designated beneficiary
or beneficiaries (or by the Employee's Executor or other personal representative
if no such beneficiary survives the Employee) of the occurrence of the event set
forth in subpart (a)(3) of this Part A.
B. Method of distribution to Employee. Distributions to the Employee of
amounts held by the Custodian in the Employee's Custodial Investment Account
shall normally be made in the form of annual, quarterly or monthly installments
in cash or in kind or in the form of a lump sum, provided that:
(a) Installment payments in cash or in kind shall be made in
approximately equal amounts or approximately equal fractions of the Employee's
Custodial Investment Account;
(b) If payments to the Employee are made in the form of installments,
there shall be credited to such Employee's Custodial Investment Account all
earnings thereon during the period of such installments; and
(c) Except in the case where the distribution is made for a period
measured by the life of the Employee and the Employee's spouse (regardless of
whether the Employee's beneficiary is someone other than the Employee's spouse),
the present value of the payments to be made to the Employee must be more than
50 percent of the present value of total payments to be made to the Employee and
the Employee's beneficiaries.
Stock of a Regulated Investment Company shall not be distributed in kind
unless at the time distribution is made or, if it is to be made in installments,
at the time it commences, the value of such stock held in the Custodial
Investment Account is five hundred ($500) dollars or more.
C. Election. The method of distribution of the Employee's Account to the
Employee shall be determined as follows:
(a) In the event that Section XII of the Employer Adoption Agreement
provides that the method of distribution of the Employee's Account to the
Employee shall be determined by the Employer, the Employer may, in such event,
at any time prior to thirty (30) days after the time of distribution determined
under Part A of this Article IX, file with the Custodian a written election of a
method of distribution to the Employee which is consistent with the provisions
of Part B of this Article IX, which election may be changed at any time prior to
the end of said thirty (30)-day period; or
(b) In the event that Section XII of the Employer Adoption Agreement
provides that the method of distribution of the Employee's Account to the
Employee shall be determined by the Employee, the Employee may, in such event,
elect or alter the Employee's election of the method of distribution to the
Employee by filing with the Custodian a written election of a method of
distribution to the Employee which is consistent with the provisions of Part B
of this Article IX at any time prior to seven (7) days before the time of
distribution determined under Part A of this Article IX, which election may be
changed at any time prior to the beginning of said seven (7)-day period.
In the event that the Employer or the Employee, as the case may be, fails
to properly elect a method of distribution of the Employee's Account, unless the
Custodian in its absolute discretion chooses another method of distribution
consistent with the provisions of Part B of this Article IX, installment
payments pursuant to said Part B will be made in cash or in kind to the Employee
on a monthly basis over a 10-year period, if a systematic withdrawal plan is
available for the Regulated Investment Company stock held in the Account and if
the assets in such Account are determined to be sufficient by Scudder Fund
Distributors, Inc. If such a plan is unavailable or if such assets are deemed
to be insufficient by Scudder Fund Distributors, Inc., the shares of the
Regulated Investment Company stock held in the Account will be distributed in
cash or in kind promptly to the Employee, unless the Custodian in its absolute
discretion chooses another method of distribution consistent with the provisions
of said Part B of this Article IX.
D. Method of distribution to beneficiaries. In the event of the death of
the Employee either before or after the occurrence of any of the times for
distribution listed in Part A of this Article IX, any amounts held by the
Custodian in the Employee's Account shall be distributed to the beneficiary or
beneficiaries named in the Employee's Designation by the method acceptable to
the Custodian and stipulated in such form, but only after such beneficiary or
beneficiaries have notified the Custodian in writing of the Employee's death and
provided the Custodian with adequate verification of such Death, as provided in
subpart (8) of Part C of Article V. Until such distributions commence to such
beneficiary or beneficiaries, the Custodian shall not be responsible for
treating such person's predecessor to such rights and obligations as still
possessing the same.
In the event that the Employee fails to properly elect a method of
distribution of the Employee's Account to such beneficiary or beneficiaries,
unless the Custodian in its absolute discretion chooses another method of
distribution, installment payments will be made in cash or in kind to such
beneficiary or beneficiaries on a monthly basis over a 10-year period from the
date of the Employee's death, if a systematic withdrawal plan is available for
the Regulated Investment Company stock held in the Account and if the assets in
such Account are determined to be sufficient by Scudder Fund Distributors, Inc.
If such a plan is unavailable or if such assets are deemed to be insufficient by
Scudder Fund Distributors, Inc., the shares of the Regulated Investment Company
stock held in the Account will be distributed in cash or in kind promptly to
such beneficiary or beneficiaries, unless the Custodian in its absolute
discretion chooses another method of distribution.
In the event the Employee so elects in the Designation of Beneficiary form
in effect at the time of his death, his designated beneficiary or beneficiaries
who has (have) survived him an to whom distributions are to be made, may direct
the Custodian in writing (by unanimous agreement if there is more than one
beneficiary) to change the method of distribution to such beneficiary or
beneficiaries (that is, the method either selected in the Employee's Designation
or provided for in this Part D of Article IX, as the case may be), but only
within sixty (60) days after the day on which such beneficiary or beneficiaries
first became entitled to any distribution from the Account and only if such
change is acceptable to the Custodian.
If a distribution is payable to a person known by the Custodian to be a
minor or a person under a legal disability, the Custodian may in its absolute
discretion made the whole or any part of the distribution to (i) a parent of
such person, (ii) the guardian, committee or other legal representative,
wherever appointed, of such person, including a custodian for such person under
a Uniform Gifts to Minors Act or similar act, (iii) any person having the
control and custody of such person, or (iv) to such person directly, the receipt
of the distributee to whom any such payment or distribution is so made being a
sufficient discharge therefor.
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Insofar as the disposition of the Account of a deceased Employee is not
governed by a valid Designation which names at least one beneficiary who
survives the Employee, the Account shall be distributed to the estate of the
deceased Employee. Any portion of an Account of a deceased Employee remaining
undisposed of after the death of an Employee's designated beneficiary who has
survived the Employee, shall be distributed to the estate of such deceased
beneficiary.
ARTICLE X. ADMINISTRATION
A. Appointment of Administrator. The Employer may from time to time in
writing appoint one or more individuals as Administrator (hereinafter referred
to in the singular) who shall have all power and authority necessary to carry
out the terms of the Plan. The Administrator may resign upon fifteen (15) days
advance written notice to the Employer, and the Employer may at any time revoke
the appointment of the Administrator with or without cause. The Employer shall
exercise the power and fulfill the duties of the Administrator if at any time
the position is vacant.
B. Named Fiduciary. The "Named Fiduciary" within the meaning of the Act
shall be the Administrator.
C. Allocations of responsibilities. Responsibilities under the Plan
shall be allocated among the Custodian, the Administrator, and the Employer as
follows:
(a) Custodian: The Custodian shall have exclusive responsibility to
hold, manage, and invest, pursuant to instructions communicated to it under
parts A and F of Article IV by the Administrator or by the Employee as the case
may be, the funds received by it subject to the terms of the Agreement under
which it serves, and the Custodian shall also have all functions otherwise
assigned to it under the terms of the Plan.
(b) Administrator: The Administrator shall have the responsibility
and authority to control the operation and administration of the Plan in
accordance with its terms including, without limiting the generality of the
foregoing: (1) the transmission to the Custodian of any Employee or beneficiary
investment decision under Part F of Article IV; (2) interpretation of the Plan
and conclusive determination of all questions of eligibility and status under
the Plan; (3) hiring of persons to provide necessary services to the Plan not
provided by Employees; (4) preparation and filing of all statements, returns and
reports required to be filed by the Plan with any agency of Government; (5)
compliance with all disclosure requirements of all state or federal law; (6)
maintenance and retention of all Plan records as required by law, except those
required to be maintained by the Custodian; and (7) all functions otherwise
assigned to it under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of the
Plan, as adopted or amended, the selection of the Custodian and the designation
of the Administrator as provided in the Plan, the delivery to the Administrator
and the Custodian of Employee information necessary for operation of the Plan,
the computation and the proper making of Employer Contributions and Employer
Matching Thrift Contributions, if any, provided for under the terms of the Plan
(including without limitation, if Section V of the Employer Adoption Agreement
provides for a written formula to be used with respect to Employer Matching
Thrift Contributions, the establishment and application of such written formula
in accordance with applicable law), the selection in a writing pertaining to
eligibility under Section XIII of the Employer Adoption Agreement of Employees
eligible to participate in this Agreement if such selection is made by the
Employer, any determinations as to investments made by the Employer under the
provisions of Part G of Article IV, and the exercise of all functions provided
in or necessary to the Plan except those assigned in the Plan to others.
(d) This part C of Article X is intended to allocate individual
responsibility for the prudent execution of the functions assigned to each of
the Custodian, the Administrator, and the Employer and none of such
responsibilities or any other responsibility shall be shared among them unless
specifically provided in the Plan. Whenever one such person is required by the
Plan to follow the directions of another, the two shall not be deemed to share
responsibility, but the person who gives the direction shall be responsible for
giving it and the responsibility of the person receiving the direction shall be
to follow it insofar is it is on its face proper under applicable law.
D. More than one Administrator. If more than one individual is appointed
as Administrator under Part A of this Article X, such individuals shall either
exercise the duties of the Administrator in concert, acting by a majority vote
or allocate such duties among themselves by written agreement delivered to the
Employer and the Custodian. In such case, the Custodian may rely upon the
instruction of any one of the individuals appointed as Administrator regardless
of the allocation of duties among them.
E. No compensation. The Administrator shall not be entitled to receive
any compensation from the funds held under the Plan for its services in that
capacity unless so determined by the Employer or required by law.
F. Record of acts. The Administrator shall keep a record of all
proceedings, acts and all such records and instruments pertaining to the Plan
administration and shall be subject to inspection by the Employer at any time.
The Employer shall supply, and the Administrator may rely on the accuracy of,
all Employee data and other information needed to administer the Plan.
G. Bond. The Administrator shall be required to give bond for the
faithful performance of his duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
H. Agent for service of process. The Administrator shall be agent for
service of legal process on the Plan.
I. Rules. The Administrator may adopt or amend and shall publish to the
Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
J. Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of his responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Custodian may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of such delegate.
K. Claims procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Employees and Employees' beneficiaries.
(a) Manner of making claim. A Claim for benefits by an Employee or
beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or by
course of conduct waives such requirements.
(b) Notice of reason for denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Employee or beneficiary
with written notice of the denial within sixty (60) days after the original
claim was filed. This notice of denial shall set forth in a manner calculated
to be understood by the claimant (1) the reason or reasons for denial, (2)
specific reference to pertinent plan provisions on which the denial is based,
(3) a description of any additional information needed to perfect the claim and
an explanation of why such information is necessary, and (4) an explanation of
the Plan's claim procedure.
(c) Application for review. The Employee or beneficiary shall have
sixty (60) days from receipt of the denial notice in which to make written
application for review by the Administrator. The Employee or beneficiary may
request that the review be in the nature of a hearing. The Employee or
beneficiary shall have the rights (1) to have representation, (2) to review
pertinent documents, and (3) to submit comments in writing.
(d) Decision on review. The Administrator shall issue a decision on
such review within sixty (60) days after receipt of an application for review,
except that such period may be extended for a period of time not to exceed an
additional sixty (60) days if the Administrator determines that special
circumstances (such as the need to hold a hearing) requires such extension. The
decision on review shall be in writing and shall include specific reasons for
the decision, written in a manner calculated to be understood by the claimant,
and specific references to the pertinent Plan provisions on which the decision
is based.
L. Fees and expenses of Administrator. All reasonable expenses, fees,
and administrative costs incurred by the Administrator in the performance of its
duties hereunder, including fees for legal services rendered to the
Administrator, shall be paid by the Employer; and to the extent not so paid by
the Employer, said fees and expenses shall be deemed to be an expense of the
Custodial Investment Account and the Custodian is authorized to charge the same
to the Accounts of the Employees, and unless allocable to the Accounts of
specific Employees, they shall be charged against the respective Accounts of all
or a reasonable group of Employees in such reasonable manner as the Custodian
shall determine.
ARTICLE XI. TERMINATION
A. Voluntary termination. With respect to amounts not yet earned by an
Employee, this Agreement may be terminated by either such Employee or the
Employer by giving written notice to the other. Copies of such notice shall be
sent forthwith tot he Custodian. Unless otherwise mutually agreed upon by the
Employer and the Employee, any such termination shall take effect as of the last
day of the
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month next following the month in which such written notice shall have been
given, the Employee's compensation level shall be increased by the amount by
which it otherwise would be reduced pursuant to any applicable Salary Reduction
Agreement, and the obligations under this Agreement of the Employer with respect
to future pay periods shall cease.
B. Termination on distribution. This Agreement shall terminate as to an
Employee when the assets held in the Custodial Investment Account established
for the Employee hereunder have been distributed.
C. Termination on disqualification. This Agreement shall terminate as to
an Employee if, after notification by the Internal Revenue Service that the
Employee's Account does not qualify under section 403(b)(7) of the Code, Scudder
Fund Distributors, Inc. fails to or is unable to make the amendments necessary
to so qualify the Account. On such termination of this Agreement, all assets in
an Account shall be distributed in kind by the Custodian to the Employee or, in
the event of his death, to his designated beneficiaries, subject to the
Custodian's right to reserve funds as provided in Article V, Part E, except that
where the value of such assets is less than five hundred ($500) dollars, the
distribution shall be in cash.
ARTICLE XII. MISCELLANEOUS
A. Adjustment regarding other employee benefits. Unless provided
otherwise in a separate written agreement between the Employer and the Employee,
all employee benefits furnished (either wholly or in part) by the Employer for
the benefit of the Employee (other than those provided for under this Agreement)
which are based on the amount payable to an employee, and which would ordinarily
be subject to reduction in the event of any salary adjustment other than that
provided for under this Agreement, shall continue to be based on the Employee's
compensation level without regard to any adjustment in Compensation provided for
under this Agreement, if such employee benefits arrangements themselves are
consistent with this Part A of Article XII.
B. No release from liability. Nothing in this Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the Act.
Subject thereto neither the Custodian, the Administrator nor any other person
shall have any liability under the Plan, except as a result of his negligence or
willful misconduct, and in any event the Employer shall fully indemnify and save
harmless all person from any such liability except that resulting from their
negligence or willful misconduct.
C. Applicable law. This Agreement and all documents incorporated herein
by reference shall be construed and administered in accordance with the laws of
the state in which the home office of the Custodian is located.
D. Terminology. Any masculine terminology in this Agreement shall
include the feminine.
E. Headings. Headings herein are primarily for convenience of reference,
and if they conflict with the text, the text shall control.
F. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but such counterparts shall together constitute one and the same instrument.
G. Change of address. The Employer shall notify the Custodian in writing
of any change of address within 30 days of such change.
H. Notice. Notice from the Custodian to the Employee pursuant to this
Agreement shall be effective if sent by first class mail to the business address
of the Employer until the Employer specifies a different address acceptable to
the Custodian. Any notice to the Custodian pursuant to this Agreement shall be
by first class mail addressed to its home office.
I. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the successors in interest of the parties hereto.
J. Not employment contract. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to discharge the Employee or
of the Employee to terminate his employment.
K. Discretionary actions. Any discretionary action to be taken by the
Employer or the Administrator under this Plan shall be nondiscriminatory in
nature and all Employees similarly situated shall be treated in a uniform
manner.
L. Department of Labor requirements. If the Custodial Investment Account
and this Agreement constitutes a plan subject to Title I of the Act, then the
Employer, Administrator, Employee, and Custodian shall comply with the
applicable requirements of Title I and shall furnish to each other such
information as may be required in that respect.
M. Construction. No provision of this Agreement, including the documents
incorporated herein by reference, shall be construed to conflict with any
provision of a Labor Department, Treasury Department or Internal Revenue Service
regulation, ruling, release or other order which affects the terms of this
Agreement or its qualification under section 403(b)(7) of the Code. It is
intended that this Agreement, including the documents incorporated herein by
reference, qualify as a custodial account under said section 403(b)(7) and this
Agreement, including said documents, shall be construed and limited and the
powers and discretions conferred hereunder and by applicable laws shall be
exercised in a manner consistent with that purpose. Subject to the foregoing
provisions of this Part M of Article XII, the following constructional
principles shall govern: (1) in the event of any conflict between the Employer
Adoption Agreement and the Employee Application, the provisions of the Employer
Adoption Agreement shall prevail; and (2) in the event of any conflict between
this Agreement and the documents incorporated herein by reference, the
provisions of this Agreement shall prevail.
N. Tax treatment. The tax treatment of any contributions to the Account
and of any earnings of the Account depends, among other things, upon the nature
of the Employer, and the amount and nature of contributions made in any year to
the Account (and to other plans, accounts or contracts with the benefit of
special tax treatment) for the benefit of the Employee. The Custodian and
Scudder Fund Distributors, Inc. assume no responsibility with respect to such
matters, nor shall any term or provision of this Agreement be construed so as to
place any such responsibility upon any one of them. Furthermore, the Employer,
the Employee, and the Administrator shall file and shall have sole
responsibility for filing with the Internal Revenue Service and/or any other
governmental agency such returns, reports, forms, and other information as may
be required of them.
O. Separability. If any provision of this Agreement shall beheld invalid
or illegal for any reason, such determination shall not affect any remaining
provisions of this Agreement, but this Agreement shall be construed and enforced
as if such invalid or illegal provision had never been included in this
Agreement.
22
<PAGE>
Telephone
numbers and
addresses
- --------------------------------------------------------------------------------
National toll free
telephone numbers
and addresses
For information about the Scudder Employer-Select 403(b) program,
CALL (toll-free) 1-800-225-2471
(within Massachusetts, call collect 617-482-3990)
or
WRITE to: Scudder Funds Group Retirement Plans
175 Federal Street
Boston, MA 02110
A Group Retirement Specialist from Scudder Fund Distributors, Inc.,
underwriter for the Scudder funds, will answer your calls and letters.
- --------------------------------------------------------------------------------
Local addresses Boca Raton
of Scudder Fund 150 East Palmetto Park Road
Distributors, Inc. Boca Raton, Florida 33432
305-395-0040
Boston
175 Federal Street
Boston, Massachusetts 02110
617-426-8300
Chicago
Suite 2200, 111 East Wacker Drive
Chicago, Illinois 60601
312-861-2700
Cincinnati
540 Carew Tower
Cincinnati, Ohio 45202
513-621-2733
Cleveland
Suite 700, 1801 East Ninth Street
Cleveland, Ohio 44114
216-241-7744
Dallas
Suite 2124, Plaza of the Americas
700 North Pearl
Dallas, Texas 75201
214-742-1465
Houston
1530 Bank of the Southwest Building
Houston, Texas 77002
713-659-3838
Los Angeles
333 South Hope Street
Los Angeles, California 90071
213-628-1144
New York
345 Park Avenue
New York, New York 10154
212-350-8200
Philadelphia
Three Girard Plaza
Philadelphia, Pennsylvania 19102
215-864-7200
Portland, Oregon
Benjamin Franklin Plaza
1 S.W. Columbia St.
Portland, Oregon 97258
503-224-3999
San Francisco
Suite 4100, 101 California Street
San Francisco, California 94111
415-981-8191
23
<PAGE>
Scudder
- ---------------------------------------------
This booklet is not to be used in connection
with the offering of any of the Scudder funds
unless preceded or accompanied by the
appropriate current prospectuses. Scudder
Fund Distributors, Inc. is the underwriter
of the Scudder no-load mutual funds.
BES-23 (C)Scudder Fund Distributors, Inc.
THE
SCUDDER
FUNDS
Employer Adoption Agreement, Cash or Deferred
Prototype Plan, and Profit Sharing Plan
Trust Agreement under Section 401(k)
SCUDDER
SCUDDER, STEVENS & CLARK INVESTMENT COUNSEL
<PAGE>
Contents
- --------------------------------------------------------------------------------
Advantages of a 401(k) plan 3
- ----------------------------------------------
Features of the Scudder
prototype 401(k) plan 4
- ----------------------------------------------
How to establish a Scudder
401(k)plan 6
- ----------------------------------------------
Instructions for completing
the Adoption Agreement 7
- ----------------------------------------------
Adoption Agreement 9
- ----------------------------------------------
Prototype Plan 13
- ----------------------------------------------
Trust Agreement 21
- ----------------------------------------------
Introduction
- --------------------------------------------------------------------------------
The Scudder Funds booklet "Cash or Deferred Arrangements under Section 401(k)"
describes Scudder's 401(k) program. This program consists of eight Scudder
no-load mutual funds, a specially-designed administrative system, and a flexible
prototype plan that can be tailored to fit the needs of corporations not
requiring an individually designed plan.
The Scudder prototype 401(k) plan has not received a determination with
respect to its qualified status from the National Office of the IRS. The IRS
will not consider prototype 401(k) plans at the present time. Scudder believes
its prototype qualifies under Section 401(k) and the proposed IRS regulations
and will apply for a determination letter as soon as the IRS National Office
will accept it. Scudder will revise the prototype plan as necessary to meet IRS
requirements.
This booklet contains the Scudder prototype 401(k) plan, the Adoption
Agreement to be completed by the employer, and the Trust Agreement which sets
forth the responsibilities of the trustee of the plan.
2
<PAGE>
Advantages of a 401(k) profit sharing plan
- --------------------------------------------------------------------------------
Advantages over traditional
profit sharing plans
Section 401(k) profit sharing plans offer many advantages over traditional
profit sharing plans, as described in more detail in our general information
booklet. Four of the most important advantages for employers and participants
are listed below.
- --------------------------------------------------------------------------------
Tax savings for participants
and employers
Contributions to a 401(k) plan are made before taxes, so participants pay
no federal income taxes on contributions. Earnings accumulate tax-free until
withdrawal. Lump-sum distributions from a 401(k) plan are eligible for 10-year
averaging, which substantially reduces the taxes paid upon distribution. If
contributions are made through salary reduction, employers also save Social
Security taxes, unemployment insurance, and workmen's compensation payments.
- --------------------------------------------------------------------------------
High ceiling on contributions
401(k) contributions are subject to the same limitations imposed on any
profit sharing plan. There is no $2,000 annual maximum, as with Individual
Retirement Account contributions.
Participants in a 401(k) plan may also make a tax-deductible contribution
of up to $2,000 per year to an Individual Retirement Account.
- --------------------------------------------------------------------------------
Employee contributions to
thrift plans with pre-tax
dollars
Employers may make matching contributions to a 401(k) plan. This feature
allows employers to use a 401(k) plan in place of a traditional thrift plan, so
that employees contribute pre-tax dollars to the plan.
- --------------------------------------------------------------------------------
No penalty for distributions
Distributions from a 401(k) plan can be made without penalty upon
retirement, separation from service, death, disability, or attainment of age
59 1/2. In addition, distributions may be made in cases of hardship, subject to
restrictions required by law.
3
<PAGE>
The Scudder prototype 401(k) plan -
summary of features
- --------------------------------------------------------------------------------
The Scudder family of no-load
mutual funds
The Scudder prototype 401(k) plan is used with eight Scudder no-load
(commission-free) mutual funds. These funds offer a wide range of investment
choice, and include money market, growth, income, and international funds.
Transfers among the funds may easily be made, so, if the employer permits,
participants can tailor their 401(k) portfolios to meet changes in investment
requirements and the economic environment.
- --------------------------------------------------------------------------------
Flexible administrative
system
Scudder offers a flexible administrative system for use with the prototype
plan. Some companies may choose to use the Scudder processing system, which was
specially designed to facilitate the administrative work involved in operating a
401(k) plan. It maintains separate files for each participant and segregates
contributions by type, allowing each type of contribution to be invested
separately. Other companies may require more detailed benefit plan
administrative services which may be arranged through Scudder. These services
include consolidated statements to participants, information for government
reports and discrimination testing.
- --------------------------------------------------------------------------------
Eligibility
The employer may choose to have all employees eligible to participate in
the plan, or participation may be limited by age, years of service, or class of
service (e.g., salaried or piece-rate employees).
- --------------------------------------------------------------------------------
Contribution options
Salary reduction
An employer may make contributions to the plan on behalf of an
employee instead of paying salary, based on a salary reduction agreement
between the employer and the employee.
Cash deferred
profit sharing
An employer may make a profit sharing contribution to the plan and
permit an employee to elect to receive some or all of that contribution in
cash. The employer may use this option to meet the IRS "fail-safe" test.
Social Security
integration
The plan may be integrated with Social Security.
Non-deductible voluntary
contributions
If the employer chooses, the employee may make non-deductible
voluntary contributions of up to 10% of total compensation. These
contributions may be withdrawn by the employee for any reason upon 30 days'
notice.
4
<PAGE>
- --------------------------------------------------------------------------------
Deductible voluntary
contributions (QVECs)
Employees may also make deductible voluntary contributions (QVECs) to
the plan of up to $2,000. These contributions may also be withdrawn upon 30
days' notice, subject to the same penalties for premature distribution as
apply to IRAs.
Matching contributions
Employers may choose to make matching contributions in proportion to
any or all of these contributions (except QVECs).
Rollover contributions
Under certain circumstances, distributions from other qualified plans
may be rolled over into this plan.
Vesting
All contributions including Employer Matching Contributions, are 100%
vested immediately.
- --------------------------------------------------------------------------------
Investment decisions
Employers may choose to give the plan administrator control over how
contributions and subsequent earnings on these contributions are to be invested,
or they may allow participants to make their own investment decisions.
- --------------------------------------------------------------------------------
Loans and hardship distributions
If selected as an option by the employer, loans may be made to participants
from the plan.
The employer may also choose to make distributions to participants in cases
of hardship. These distributions are made without penalty upon determination of
hardship by the administrator of the plan.
- --------------------------------------------------------------------------------
Appointment of trustee
The employer may designate one or more individuals, a bank, or trust
company as trustee. The Trust Agreement (p.21) is the document under which the
trustee accepts appointment, and it details the responsibilities of the trustee.
- --------------------------------------------------------------------------------
No separate charges
Employers pay no charges for using the Scudder processing system.
Participants are not charged any fees for opening or maintaining 401(k)
plan investments in the Scudder funds. These and other fund expenses are paid
out of the gross investment income of each fund, as detailed in each fund
prospectus.
5
<PAGE>
How to establish a Scudder 401(k) plan
- --------------------------------------------------------------------------------
Scudder Group Representative
A Scudder Group Representative, a retirement plan specialist familiar with
the issues involved in adopting a plan under Section 401(k), will help you
complete the Adoption Agreement (p.9) and determine the appropriate
administrative and information processing procedures. These representatives are
located in most of the twelve Scudder offices throughout the country.
- --------------------------------------------------------------------------------
Adopting the plan
The first step in adopting the plan is to complete the Adoption Agreement
(instructions are found on pages 7-8), sign it, and send it to Scudder Fund
Distributors, Inc. Scudder will execute the Adoption Agreement to acknowledge
its acceptance and return it to you.
Scudder will also provide various forms which may be required once the plan
is in effect, including Designation of Beneficiary, a Summary Plan Description,
and sample agreements whereby participants may elect to defer portions of their
salaries or profit sharing bonuses.
- --------------------------------------------------------------------------------
IRS determination letter
The Scudder prototype 401(k) plan has not yet received a determination with
respect to its qualified status from the National Office of the IRS. If you wish
to apply for a determination with respect to your plan before the Scudder
prototype 401(k) plan becomes qualified, you should submit your plan to the
appropriate Key District Director of the IRS as if it were an
individually-designed plan rather than a prototype plan. Your Scudder Group
Representative will provide you with the necessary forms and instructions.
- --------------------------------------------------------------------------------
Advice of attorney
It is important that an employer adopting this plan first consult with its
attorney for advice in connection with the adoption and operation of the plan
and in selecting the options available.
- --------------------------------------------------------------------------------
Establishing administrative processing procedures
A 401(k) plan requires that separate accounts be maintained for each
participant. The Scudder processing system, which maintains participant
subaccounts, is available for this purpose. Other administrative options include
an employer's in-house processing system and a benefit plan administrative
service, which may be arranged through Scudder.
The appropriate administrative and processing procedures for your plan
depend on a number of factors, such as the number of participants, the number of
different types of contributions your plan permits, and your company's
processing capabilities. Your Scudder Group Representative will discuss the
options with you and help you determine which is best suited to your needs.
6
<PAGE>
Instructions for completing the Adoption Agreement
- --------------------------------------------------------------------------------
Before completing the Adoption Agreement, please carefully read it and the
following comments about the various options you may select.
I. Eligibility
This option determines who will be covered by the plan. You may select a
waiting period of up to 3 years and a minimum age requirement up to 25 years.
You may also elect to exclude certain classes of employees, such as hourly paid
employees, so long as such exclusion does not discriminate in favor of officers,
shareholders or highly compensated employees.
II. Normal retirement date
Indicate the normal retirement date under the plan by completing this
section.
III. Definition of compensation
This option limits the definition of "compensation" under the plan. Under
part A, you determine whether compensation includes amounts paid during the
entire year in which the employee first becomes eligible to participate in the
plan, or only amounts paid after the employee becomes eligible to participate.
Under part B, you may exclude certain amounts paid, such as commissions, from
the definition of compensation so long as such exclusion does not result in
discrimination in favor of officers, shareholders or highly-paid employees.
IV. Employer salary deferral and profit sharing deferral contributions
This option determines the type of employer contribution that will be made
to the plan. You may select either "Employer Salary Deferral Contributions" or
"Employer Profit Sharing Deferral Contributions," or both.
Employer Salary Deferral Contributions. If you select this option,
participants will be able to elect to reduce their compensation and have a
portion of it contributed to the plan. You must specify under Part 1 the maximum
percentage by which participants may reduce their compensation by selecting and
completing option (a) or (b):
Option (a) permits a participant to elect a percentage reduction of
his entire compensation.
Option (b) only permits a participant to elect a percentage reduction
of that portion of his compensation in excess of the social security
taxable wage base.
In completing Part 1, keep in mind the limitations under Code Section 415
(as described in Section 5 of the plan) which generally limit contributions on
behalf of any participant to 25% of compensation, as well as the limitations
under Code Section 404(a)(3) which limit an employer's deduction for employer
contributions to 15% of the aggregate compensation paid or accrued during its
taxable year to all participants as shown on the W-2 forms. Compensation for
these purposes is calculated after salary reductions under the plan. For this
reason, although you may elect a percentage limitation greater than 15% (because
it is unlikely that all participants will elect the maximum reduction),
employers may want to select a limit less than 15% to be safe. Furthermore, if
an employer maintains another qualified plan, consideration must be given to the
effect of that plan on the contribution and allocation limitations of Code
Section 415 and the deductibility limitations of code Section 404.
Employer Profit Sharing Deferral Contributions. If you select this option,
a profit sharing contribution will be made to the plan except to the extent that
you permit participants to elect to receive a portion of their profit sharing
allocation in cash. You must specify under Part 2 how profit sharing allocations
will be determined each year:
Option (a) specifies that the profit sharing allocation will be a
fixed percentage of compensation.
Option (b) specifies that the profit sharing allocation will be a
percentage of compensation determined each year by your Board of Directors.
Furthermore, you must specify under Part 2 the extent to which participants
may elect to receive cash instead of having their profit sharing
contributions deferred and contributed to the plan:
Option (c) does not permit participants to receive any cash.
Option (d) permits participants to receive in cash only that portion
of their profit sharing allocation which exceeds the percentage of
compensation you specify (thus requiring participants to defer part of
their profit sharing allocations).
Option (e) permits participants to receive in cash up to the
percentage of their profit sharing allocations that you specify.
The comments above about the limitations under Code Section 404 and 415 as
discussed above for Employer Salary Deferral contributions also apply to
Employer Profit Sharing Contributions.
Anti-Discrimination Rules. In completing Part IV, you should also keep in
mind that the anti-discrimination requirements of Code Section 401(k) may limit
the percentage of compensation highly-paid participants may elect to defer
through Employer Salary Deferral Contributions or Employer Profit Sharing
Deferral Contributions. These anti-discrimination rules are described in Section
6 of the prototype plan and you should review them carefully before completing
Section IV of the Adoption Agreement. The following are examples of some of the
ways to meet these anti-discrimination requirements:
Fail-Safe. You can meet the so-called "fail-safe" rule of the proposed
regulations by completing Part 2 so that the profit sharing allocation is a
fixed percentage of compensation which the participant cannot receive in
cash. If you then complete Part 1 so that the maximum salary reduction a
participant can elect will be a percentage of compensation not greater,
when compared to the percentage of compensation represented by the profit
sharing allocation under Part 2, than permitted under the special
anti-discrimination requirements of Code Section 401(k), the fail-safe rule
will be satisfied. For example, you could complete Part 2 so that the
Employer Profit Sharing Deferral Contributions will be 5% and Part 1 so
that the maximum salary reduction can be no more than 3% of compensation.
Social Security Integration. Some employers will be able to meet the
general anti-discrimination rules of Code Section 401(k) by selecting
option (b) of Part 1 so that the maximum salary reduction a participant can
elect will be limited to not more than 7% in excess of the taxable wage
base.
Other Alternatives. You may want to limit the percentage of
compensation which participants may defer through Employer Salary Deferral
contributions to a modest amount, such as 5%. So long as the actual
deferral percentage for the lower 2/3 is 2% or more, your plan will meet
the anti-discrimination rule under code Section 401(k). Alternatively, you
may decide to hold Employer Salary Deferral contributions or Employer
Profit Sharing Deferral contributions for the highest paid one-third (top
1/3) of your employees in suspense outside the plan before contributing
them to the plan to first verify that the anti-discrimination rules not be
violated. The IRS does not permit a refund of such contributions after they
have been contributed to the plan in order to meet the anti-discrimination
rules. Or you may decide to permit only the lower paid two-thirds (lower
2/3) of your employees to have Employer Salary Deferral contributions made
for them through payroll deduction during the year and limit the Employer
Salary Deferral contributions for the top 1/3 to a one-time only
contribution at the end of the year after the maximum permissible
contributions have been determined. Another alternative might be to permit
the top 1/3 to withdraw a portion of their Participant Non-Deductible
Voluntary Contributions and then use those amounts to have Employer Salary
Deferral Contributions made on their behalf once the maximum contributions
for the top 1/3 have been determined at the end of the year on the basis of
the percentage actually contributed for the lower 2/3 of your employees.
The flexibility of the Scudder prototype plan and processing system permits
these as well as other possible solutions to the anti-discrimination rules.
7
<PAGE>
V. Employer thrift contributions
This option permits you to make Employer Thrift Contributions that will
match the percentage you select of either Employer Salary Deferral
contributions, Employer Profit Sharing Deferral contributions or Participant
Non-Deductible Voluntary contributions, or any combination of these types of
contributions. For example, you might elect to make an Employer Thrift
contribution equal to 50% of each participant's Employer Salary Deferral
Contribution and Employer Profit Sharing Deferral Contribution.
VI. Participant non-deductible and deductible voluntary contributions
Under this option, you may permit participants to make either Participant
Non-Deductible Voluntary contributions or Participant Deductible Voluntary
contributions. If you select Participant Non-Deductible Voluntary contributions,
participants will be permitted to make voluntary contributions each year in an
amount not greater than 10% of their total compensation. These contributions
will be nondeductible. If you select Participant Deductible Voluntary
Contributions, participants will be permitted to make voluntary contributions
each year up to $2,000. These contributions will be deductible but are subject
to the special rules under the Code relating to "qualified voluntary employee
contributions" (QVECs) which are generally similar to the rules applicable to
individual retirement accounts (IRAs).
VII. Determination of investment
Indicate in this section whether investment decisions will be made by the
Administrator (whom you appoint) or by participants themselves.
VIII. Tax-option corporations (Subchapter S)
This option pertains to Subchapter S corporations. Indicate in part A
whether or not the employer is a Subchapter S corporation. If so, also complete
part B to indicate how the limitations of Code Section 1379(b) on Subchapter S
corporations are to apply.
IX. Loans to participants
By this Option you may permit participants to borrow out of their accounts,
subject to the limitations of Section 12 of the prototype plan.
X. Hardship distributions
By this option you may permit participants to receive early distribution of
their account in case of hardship, subject to the limitations of Section 9 of
the prototype plan (which describes special rules attributable to such
distributions under Code Section 401(k)).
XI. Effective date of plan
Insert the effective date of the plan in this section.
XII. Plan year
Indicate in this section either that the plan year is the same as the
fiscal year of the employer or insert another date if you prefer.
XIII. Amendment
Indicate in this section whether this is a new plan or an amendment of an
existing plan.
XIV. Appointment of trustee
Insert the name or names of the Trustee(s) in this Section. One or more
individuals, a bank, or a trust company may be designated.
XV. Statement of Employer
Please read this section of the Adoption Agreement carefully.
XVI. Limitation on allocations
If this plan is the only retirement plan which you maintain, do not
complete this section of the Adoption Agreement; it applies only in certain
cases where employees participate in more than one plan maintained by the same
employer. Complete this section only it you maintain another plan which is a
qualified defined contribution plan other than a model, master or prototype
plan; and you may prefer not to complete it, which is permitted, in which case
the provisions of Section 5.2 of the prototype plan will automatically apply to
this plan.
THE ADOPTION AGREEMENT SHOULD BE SIGNED BY THE EMPLOYER AND THE TRUSTEE(S).
Under the Employer's signature, insert the Federal Employer Identification
Number, the Plan Serial Number (001 if you maintain no other plan), the
employer's fiscal year and the employer's telephone number.
8
<PAGE>
SCUDDER CASH OR DEFERRED PROFIT-SHARING PLAN
ADOPTION AGREEMENT
The undersigned (the "Employer") hereby establishes, or amends the
______________________ [insert name of Employer] CASH OR DEFERRED PROFIT-SHARING
PLAN, by completing this Adoption Agreement adopting or amending the
profit-sharing plan and trust agreement in the form of the Prototype Plan and
the Trust Agreement attached. (For definition of terms, see Section 2 of the
Prototype Plan.)
I. ELIGIBILITY
A. To become a Participant an Employee:
Select One
(_) (1) Need not complete any waiting period.
(_) (2) Must complete [insert no more than 3] Years of Service.
B. To become a Participant an Employee:
Select One
(_) (1) Need not attain any minimum age.
(_) (2) Must be at least ________[insert 25 or less] years of age.
C. Employees in all classes are entitled to be Participants except:
[NOTE: If Employees are excluded from the Plan under one or more of
the classifications below (not including the last two
classifications), the exclusion must NOT result in discrimination in
favor of officers, shareholders or highly-paid Employees.]
One or More May be Selected
(_) (1) Salaried Employees
(_) (2) Hourly-paid Employees
(_) (3) Piece-rate Employees
(_) (4) Employees paid by commission
(_) (5) Employees covered by another retirement plan to which the Employer
is required to contribute
(_) (6) Employees in the following classification [must be
nondiscriminatory] ______________________________________________
_________________________________________________________________
(_) (7) Non-resident aliens who receive no earned income from United
States sources (as permitted under Code Section 410(b)(3)(c).)
(_) (8) Employees covered by a collective bargaining contract between the
Employer and a recognized bargaining agent, if contract
negotiations considered retirement benefits in good faith, unless
such contract specifically provides for participation in the
Plan.
This must be Completed
D. A Year of Service shall mean a 12-month period beginning on an
Employee's initial date of Employment or an anniversary thereof during
which the Employee has __ [insert 1,000 or less] Hours of Service.
E. The Participants eligible for Profit Sharing Allocations under Section
IV below or Employer Thrift Contributions under Section V below for
any Plan Year shall be:
Select One
(_) (1) All Participants
(_) (2) All Participants except those who have not completed the
number of Hours of Service required under D above during
such Plan Year.
II. NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date shall be:
Select and Complete One
(_) (1) The first day of the month preceding his ___th [insert not
less than 55 nor more than 65] birthday.
(2) The first day of the month preceding his ___th [insert not
less than 55 nor more than 65] birthday or the ___th
[insert 10 or less] anniversary of the date he became a
Participant, whichever is later.
III. COMPENSATION
A. "Compensation" shall include amounts paid as described in B
below:
Select One
(_) (1) For the entire Plan Year in which the Employee became a
Participant whether or not he was a Participant for the
entire Plan Year.
(_) (2) For the portion of the Plan Year after the Employee became a
Participant.
B. "Compensation" shall mean the amount paid by the Employer to the
Employee for his services as reportable to the Federal Government
for the purposes of withholding Federal income taxes, or which
would be reportable if it were not deferred by the Employee's
election hereunder to have it contributed to the Plan as an
Employer Salary Deferral Contribution described in Section IV
below, but excluding any portion of the Profit Sharing Allocation
described in Section IV below which the Participant has elected
to receive in cash and also excluding the following:
Select One or More Desired
(_) (1) Bonuses
(_) (2) Commissions
(_) (3) Overtime Payments
(_) (4) Other(specify) ________________________________
[NOTE: If one or more of the above are chosen the exclusion must
NOT result in discrimination in favor of officers, shareholders
or highly-paid Employees.]
9
<PAGE>
IV. EMPLOYER CONTRIBUTIONS
For each Year the Employer will make the following contribution to the
Trust established pursuant to the Plan on behalf of each Participant:
Select and Complete
if Desired
(_) (1) Subject to Section 4.1 of the Prototype Plan, an Employer
Salary Deferral Contribution equal to the portion of the
Compensation otherwise payable by the Employer for the Plan
Year that the Participant has elected to be deferred and
contributed to the Trust. Such election shall specify the
amount of the Compensation to be deferred, which amount
shall be:
Select and Complete
One if Salary Deferral
Contribution has been
Selected
(_)(a) not less than ___% nor more than __% of the
Participant's Compensation.
(_)(b) not more than ____ % [insert 7% or less] of that
portion of the Participant's Compensation which
exceeds the Taxable Wage Base.
Select and
Complete if
Desired
(_) (2) Subject to Section 4.2 of the Prototype Plan, an Employer
Profit Sharing Deferral Contribution equal to that portion
of the Profit Sharing Allocation for the Plan Year which the
Participant has not elected to receive in cash, if permitted
below, instead of having it deferred and contributed to the
Trust. The Profit Sharing Allocation for this purpose shall
be an amount equal to:
Select and Complete
One if Profit Sharing
Deferral Contribution
has been Selected
(_) (a) __ % of the Participant's Compensation, or
(_) (b) the percentage of the Participant's Compensation as
is determined by a vote of the Board of Directors
of the Employer for each Year (which percentage
shall be the same for each Participant), but in no
event more than _____%.
Select and Complete
One if Profit Sharing
Deferral Contribution
has been Selected
A Participant:
(_) (c) may not elect to receive any portion of his Profit
Sharing Allocation in cash instead of having it
deferred and contributed to the Trust.
(_) (d) may elect to receive that portion of his Profit
Sharing Allocation which exceeds ________ % of his
Compensation in cash instead of having it deferred
and contributed to the Trust.
(_) (e) may elect to receive not more than __% of his
Profit Sharing Allocation in cash instead of having
it deferred and contributed to the Trust.
[NOTE: Code Section 404(a)(3) generally limits the
Employer's deduction for Employer Contributions to 15% of
the aggregate compensation otherwise paid or accrued during
its taxable year to all Participants as shown on the W-2
forms. Employers should not complete Section IV in such a
way that this limitation will likely be exceeded.]
V. EMPLOYER THRIFT CONTRIBUTION
Select and
Complete if
Desired
(_) In addition to the Employer Salary Deferral or Profit Sharing Deferral
Contributions in Section IV above, the Employer shall make an Employer
Thrift Contribution pursuant to Section 4.5 of the Prototype Plan on
behalf of each Participant equal to __% of the aggregate:
Select One or more if
Thrift Contribution
has been Selected
(_) (1) Employer Salary Deferral Contribution
(_) (2) Employer Profit Sharing Deferral Contribution
(_) (3) Participant Non-Deductible Voluntary Contribution allocated to
such Participant's Account for the Plan Year, but only to the extent
that the aggregate amount of the Contributions designated in (1), (2)
or (3) above which are allocated to the Participant's Account for such
Plan Year does not exceed __% [insert 6% or less] of the Participant's
Compensation.
[NOTE: Code Section 404(a)(3) generally limits the Employer's
deduction for Employer Contributions to 15% of the aggregate
compensation otherwise paid or accrued during its taxable year to all
Participants as shown on the W-2 forms. Employers should not complete
Section V in such a way that this limitation will likely be exceeded.]
VI. PARTICIPANT CONTRIBUTIONS
A. Participant Non-Deductible Voluntary Contributions:
Select One
(_)(1) Participant Non-Deductible Voluntary contributions pursuant to
Section 4.3 of the Prototype Plan are permitted.
(_)(2) Participant Non-Deductible Voluntary contributions are not
permitted.
B. Participant Deductible Voluntary Contributions:
Select One
(_) (1) Participant Deductible Voluntary Contributions pursuant to Section
4.4 of the Prototype Plan are permitted.
(_) (2) Participant Deductible Voluntary Contributions are not permitted.
[NOTE: Participant Non-Deductible Contributions made hereunder
shall not be allowed to the extent they would otherwise exceed
the limitations of Section 5 of the Prototype Plan.]
10
<PAGE>
VII. INVESTMENT
Pursuant to Section 11 of the Prototype Plan, all contributions
under this Plan and any earnings thereon shall be invested as
determined by:
Select One
(_) (1) the Administrator.
(_) (2) the Participant.
VIII. TAX-OPTION CORPORATIONS (Subchapter S)
A. The Employer:
Select One
(_) (1) is an electing small business corporation under Code Section 1371.
(_) (2) is not an electing small business corporation under Code Section
1371.
Complete ONLY if the Employer is an Electing Small Business Corporation
B. With respect to any Year in which the Employer is an electing small
business corporation, the Employer Contributions for each
shareholder-employee (as defined in Code Section 1379(d)) otherwise
payable under the Plan for such Year shall be limited as follows:
Select One
(_) (1) No limitation on the amount to be allocated to a
shareholder-employee.
(_) (2) No allocations to any shareholder-employee.
(_) (3) The statutory limit permitted under Code Section 1379(b) which may
be deducted by the Employer without inclusion in the gross income
of the shareholder-employee.
IX. LOANS
Loans to a Participant pursuant to Section 12 of the Prototype Plan:
Select One
(_) (1) are permitted.
(_) (2) are not permitted.
X. EARLY DISTRIBUTION IN CASES OF HARDSHIP
Early distributions to Participants in cases of hardship pursuant to
Section 9 of the Prototype Plan:
Select One
(_) (1) are permitted.
(_) (2) are not permitted.
XI. EFFECTIVE DATE
Complete
The Effective Date of this Plan or amendment shall be ___.
XII. PLAN YEAR
The Plan year shall:
Select One and, if Applicable, Complete
(_) (1) be the same as the fiscal year of the Employer.
(_) (2) end on the last day of the month of _________.
XIII. AMENDMENT
Execution of this Adoption Agreement:
Select One
(_) (1) is an amendment to an existing plan.
(_) (2) is not an amendment to an existing plan.
XIV. APPOINTMENT OF TRUSTEES
The Employer hereby designates the following person or persons as
Trustee(s) under the Trust:
Complete:_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
XV. STATEMENT OF EMPLOYER
The Employer (i) covenants and agrees that whenever a Participant makes a
contribution the Employer shall ascertain that the Participant has received a
copy of the current prospectus relating to the shares of any Designated
Investment Company in which such contribution is to be invested plus, where
required by any state or federal law, the current prospectus relating to any
other investment in which contributions are to be invested, and (ii) by
remitting such a contribution to the Trustee the Employer shall be deemed to
represent that the Participant has received such a prospectus, and (iii) by
remitting any other contribution to the Trustee the Employer shall be deemed
to represent that the Employer has received a current prospectus of any
Designated Investment Company in which it is to be invested, plus, where
required by any state or federal law, the current prospectus relating to any
other investment in which contributions are to be invested.
11
<PAGE>
XVI. LIMITATION ON ALLOCATIONS
[NOTE: Complete this Section only if the Employer maintains either (i)
another plan which is a qualified defined contribution plan other than a Model,
Master or Prototype plan, or (ii) a qualified defined benefit Plan. If the
Employer maintains such a plan, failure to complete this Section may adversely
affect the qualification of the plans the Employer maintains. If the Employer
does not complete this Section, the provisions of Section 5.2 of the Prototype
Plan will automatically apply to this Plan.]
The amount of Annual Additions allocated to any Participant's Account under
this Plan shall be limited as follows: [Use a Rider to provide appropriate
provisions to comply with the Code.]
IN WITNESS WHEREOF, the Employer has hereunto executed this Adoption
Agreement as of the __ day of ______, 19__.
____________________________________
Name of Employer
By____________________________________
Authorized Signature
Address ____________________________________
____________________________________
Employer Identification ____________________________
Plan Serial Number ____________________________
Employer Fiscal Year ____________________________
Employer Telephone Number ____________________________
TRUSTEE ACCEPTANCE
The undersigned accept(s) appointment as Trustee(s) under the Trust
Agreement.
____________________________________
____________________________________
____________________________________
DESIGNATED INVESTMENT COMPANY ACKNOWLEDGEMENT
Scudder Fund Distributors, Inc. acknowledges receipt of a copy of the
executed Adoption Agreement and agrees to accept, on behalf of the Designated
Investment Company or Companies, contributions under the Plan for investment in
accordance with Section VII of the Adoption Agreement.
____________________________________
Scudder Fund Distributors, Inc.
Return this form to:
Scudder Fund Distributors, Inc.
Group Representatives
175 Federal Street
Boston, Massachusetts 02110
12
<PAGE>
SCUDDER CASH OR DEFERRED PROFIT-SHARING PLAN
SECTION 1. INTRODUCTION
The Employer has established this Plan (the "Plan"), consisting of the
Adoption Agreement, the following provisions (the "Prototype Plan") and the
Trust Agreement for the exclusive benefit of its Employees and their
Beneficiaries.
SECTION 2. DEFINITIONS
Where the following words and phrases appear in the Plan, they shall have
the respective meanings set forth below, unless their context clearly indicates
a contrary meaning. The singular herein shall include the plural, and vice
versa, and the masculine gender shall include the feminine gender, and vice
versa, where the context requires.
2.1 "Account" shall mean the cash and securities held by the Trustee for
the benefit of a Participant, which shall be the sum of his Employer Salary
Deferral Account, Employer Profit Sharing Deferral Account, Employer Thrift
Account, Participant Non-Deductible Voluntary Account, Participant Deductible
Voluntary Account, and Rollover Account.
2.2 "Act" shall mean the Employer Retirement Income Security Act of 1974,
as amended.
2.3 "Administrator" shall mean the person or persons appointed under
Section 13.1.
2.4 "Adoption Agreement" shall mean the agreement by which the Employer has
most recently adopted or amended the Plan.
2.5 "Beneficiary" shall mean any person or legal representative entitled to
receive benefits on or after the death of a Participant.
2.6 "Code" shall mean the Internal Revenue Code of 1954, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.7 "Compensation" shall mean the amount paid by the Employer to the
Employee for his services as reportable to the Federal Government for the
purpose of withholding Federal income taxes, or which would be reportable if it
were not deferred by the Employee's election to have it contributed to the Plan
as an Employer Salary Deferral Contribution, but excluding any portion of the
Profit Sharing Allocation which a Participant elects to receive in cash and (i)
amounts attributable to services rendered by an Employee when he was not a
Participant, except to the extent specified in Section III-A of the Adoption
Agreement, (ii) the amounts attributable to any category specified by the
Employer to be excluded in Section III-B of the Adoption Agreement, and (iii),
in the case of an Employer who has one or more shareholder-employees within the
meaning of Section 1379(b) of the Code as Participants, amounts paid to any
Employee in excess of $200,000.
2.8 "Current or Accumulated Earnings and Profits" of the Employer, shall
mean the Employer's current or accumulated earnings and profits, as determined
on the basis of the Employer's books of account in accordance with generally
accepted accounting practices, without any deductions for Employer Contributions
under the Plan for the current Year or for Federal income taxes for the current
Year and without regard to the Employer's election to be taxed as a small
business corporation, if it has so elected.
2.9 "Designated Investment Company" shall mean a regulated investment
company for which Scudder, Stevens & Clark, or its successor or any of its
affiliates, acts as investment adviser and which is designated by Scudder Fund
Distributors, Inc., or its successors, as eligible for investment under the
Plan.
2.10 "Designation of Beneficiary" or "Designation" shall mean the document
executed by a Participant under Section 16.
2.11 "Distributee" shall mean the Beneficiary or other person entitled to
receive the undistributed portion of the Participant's Account because of death
under Section 8 or because of his incompetency or the inability to ascertain or
locate him under Section 15.
2.12 "Distributor" shall mean Scudder Fund Distributors, Inc. or its
successor.
2.13 "Effective Date" shall mean the date selected by the Employer in
Section XI of the Adoption Agreement.
2.14 "Employee" shall mean an individual who performs services in the
business of the Employer in any capacity except as a self-employed individual.
2.15 "Employer" shall mean the organization named as such in the Adoption
Agreement and any successor organization which adopts the Plan. Any two or more
members of a controlled group of corporations as defined in Code Section 414(b)
may adopt and maintain the plan as a single Plan.
2.16 "Employer Contributions" shall mean the sum of the Employer Profit
Sharing Deferral Contributions, Employer Salary Deferral Contributions and
Employer Thrift Contributions.
2.17 "Employer Profit Sharing Deferral Account", shall mean the separate
account maintained pursuant to Section 7.3 hereof for the Employer Profit
Sharing Deferral Contributions (as described in Section IV of the Adoption
Agreement) allocated to a Participant and the income, expenses, gains and losses
attributable thereto.
2.18 "Employer Profit Sharing Deferral Contributions" shall mean
contributions made to the Trust by the Employer in accordance with Section 4.2
as that part of the Profit Sharing Allocations which Participants have not
elected to receive in cash.
2.19 "Employer Salary Deferral Account" shall mean the separate account
maintained pursuant to Section 7.3 hereof for the Employer Salary Deferral
Contributions allocated to a Participant and the income, expenses, gains and
losses attributable thereto.
2.20 "Employer Salary Deferral Contributions" shall mean contributions made
to the Trust by the Employer in accordance with Section 4.1 hereof as a result
of the election by Participants to defer part of their Compensation.
2.21 "Employer Thrift Account" shall mean the separate account maintained
pursuant to Section 7.3 hereof for the Employer Thrift Contributions allocated
to a Participant and the income, expenses, gains and losses attributable
thereto.
2.22 "Employer Thrift Contributions" shall mean contributions made to the
Trust by the Employer in accordance with Section 4.5 hereof as matching
contributions.
2.23 "Hour of Service" shall mean:
(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the
duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No
more than 501 Hours of Service shall be credited under this paragraph
for any single continuous period (whether or not such period occurs in
a single computation period). Hours under this paragraph shall be
calculated and credited pursuant to section 2530.200b-2 of the
Department of Labor Regulations which are incorporated herein by this
reference; and
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (a) or paragraph
(b), as the case may be, and under this paragraph (c). These hours
shall be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made.
(d) Where the Employer maintains the plan of a predecessor employer,
service for such predecessor employer shall be treated as service of
the Employer. Where the Employer does not maintain the plan of a
predecessor employer, employment by a predecessor employer, upon the
written election of the Employer made in a uniform and
non-discriminatory manner, shall be treated as service for the
Employer.
2.24 "Normal Retirement Date" or "Normal Retirement Age" shall mean the
date selected by the Employer in Section II of the Adoption Agreement.
2.25 "Participant" shall mean an Employee who is eligible to participate in
the Plan under Section 3 and who has not, since becoming a Participant, died,
become disabled, retired or otherwise terminated employment with the Employer.
2.26 "Participant Contributions" shall mean the sum of the Participant
Non-Deductible Voluntary Contributions and the Participant Deductible Voluntary
Contributions.
2.27 "Participant Deductible Voluntary Account" shall mean the separate
account maintained pursuant to Section 7.3 hereof for the Participant Deductible
Voluntary Contributions (as described in Section VI-B of the Adoption Agreement)
made by the Participant and the income, expenses, gains and losses attributable
thereto.
2.28 "Participant Deductible Voluntary Contributions" shall mean
contributions made to the Trust by Participants in accordance with Section 4.4
hereof. Such contributions are intended to be "qualified voluntary employee
contributions" within the meaning of Code Section 219(e)(2).
2.29 "Participant Non-Deductible Voluntary Account" shall mean the separate
account maintained pursuant to Section 7.3 hereof for the Participant
Non-Deductible Voluntary Contributions (as described in Section VI-A of the
Adoption Agreement) made by the Participant and the income, expenses, gains and
losses attributable thereto.
2.30 "Participant Non-Deductible Voluntary Contributions" shall mean
contributions made to the Trust by Participants in accordance with Section 4.3
hereof. Such contributions are intended not to be "qualified
13
<PAGE>
voluntary employee contributions" within the meaning of Code Section 219(e)(2).
2.31 "Plan" shall mean the Prototype Plan, the Adoption Agreement and the
Trust Agreement.
2.32 "Plan Year" shall mean the fiscal year of the Employer or a different
period as specified in Section XIV of the Adoption Agreement.
2.33 "Profit Sharing Allocation" shall mean the contribution payable by the
Employer to the Trust on behalf of a Participant out of the Employer's Current
or Accumulated Earnings in accordance with Section 4.2 hereof subject to the
Participant's right to elect, if permitted by Section IV of the Adoption
Agreement, to receive all or a portion of such contribution in cash in lieu of
having it deferred and contributed to the Trust on his behalf.
2.34 "Prototype Plan" shall mean these Sections 1-21.
2.35 "Rollover Account" shall mean the separate account maintained pursuant
to Section 7.3 hereof for any Rollover Contributions (as described in Section
4.6 hereof) made by the Participant and the income, expenses, gains and losses
attributable thereto.
2.36 "Rollover Contributions" shall mean contributions made to the Trust by
Participants in accordance with Section 4.6 hereof out of "qualifying rollover
distributions" within the meaning of Code Section 402(a)(5)(D)(i).
2.37 "Service" generally shall mean Employment by the Employer or, if the
Employer is maintaining the plan of a predecessor employer or has so elected,
employment by such predecessor employer. (See "Hour of Service").
2.38 "Taxable Wage Base" shall mean, for any Plan Year, the maximum amount
of earnings which may be considered wages for the calendar year ending within or
coincident with such Plan Year for purposes of determining F.I.C.A. tax
liability under Code Section 3121(a)(1).
2.39 "Trust" shall mean the trust established under the Trust Agreement
entered into pursuant to this Plan for investment as provided in Section VII of
the Adoption Agreement.
2.40 "Trust Agreement" shall mean the agreement under which the Trustee
accepts appointment to establish a Trust for the investment of contributions
under the Plan.
2.41 "Trustee" shall mean the person or persons, including any successor or
successors thereto, designated pursuant to Section XIV of the Adoption Agreement
to act as trustee of the Trust.
2.42 "Valuation Date" shall mean the last day of each Plan Year.
2.43 "Year" shall mean the fiscal year of the Employer.
2.44 "Year of Service" shall mean a twelve (12) month period, beginning on
an Employee's initial date of Employment or an anniversary thereof in which the
Employee had the number of Hours of Service specified in Section 1-D of the
Adoption Agreement. The date of initial employment is the first day on which the
Employee performs an Hour of Service.
SECTION 3. ELIGIBILITY
3.1 Entry. Each Employee of the Employer who on the Effective Date of this
Plan meets the conditions specified in Section I of the Adoption Agreement shall
become eligible to participate in the Plan commencing with that Effective Date,
Each other Employee of the Employer, including future Employees, shall become
eligible to participate in the Plan on the first business day of the month next
following the month in which he meets such conditions.
3.2 Reentry. A former Participant shall become a Participant immediately
upon his return to the employ of the Employer or his return to an eligible class
of employees, whichever is applicable.
3.3 Transfer to Eligible Class. In the event an Employee who is not a
member of an eligible class of Employees becomes a member of an eligible class
such Employee shall participate immediately if such Employee has satisfied the
minimum age and service requirements and would have previously become a
Participant had he been in the eligible class.
3.4 Determination by Administrator. Eligibility shall be determined by the
Administrator and the Administrator shall notify each Employee upon his
admission as a Participant in the Plan.
3.5 Related Businesses. If the Employer is a member of (a) a controlled
group of corporations (as defined under Code Section 414(h)), (b) a group of
trades or businesses (whether or not incorporated) which are under common
control (as defined under Code Section 414(c)), or (c) an affiliated service
group (as defined under Code Section 414(m)), all service of an Employee for any
member of such a group shall be treated as if it were service for the Employer
for purposes of the eligibility requirements of Section I of the Adoption
Agreement and this Section 3.
SECTION 4. CONTRIBUTIONS
4.1 Employer Salary Deferral Contributions. If selected by the Employer in
Section IV of the Adoption Agreement, the Employer will make an Employer Salary
Deferral Contribution to the Trust on behalf of each Participant who has elected
to defer a portion of the Compensation otherwise payable to him for the Plan
Year and have it contributed to the Trust. Such an election may only be made
pursuant to a written salary reduction agreement between the Participant and the
Employer. The agreement shall be in such form and subject to such rules as the
Administrator may prescribe, and the agreement shall specify the amount of
Compensation that the Participant desires to defer (but in no event may such
deferral exceed the percentage of Compensation specified in Section IV (1) of
the Adoption Agreement). A salary reduction agreement may be amended or
terminated prospectively during the Plan Year at such times and in such manner
as permitted by the rules of the Administrator. The Employer Salary Deferral
Contribution made for a Participant shall be in an amount equal to the amount
specified in the Participant's salary reduction agreement; provided, however,
that the Employer Salary Deferral Contribution otherwise to be made for a
Participant shall be reduced to the extent necessary, if any, to comply with the
limitations of Section 4.7, 5 and 6 hereof (and Section VIII of the Adoption
Agreement if applicable). Any amount which cannot be contributed to the Trust
because of those limitations shall be paid to the Participant in cash no later
than the last day that such amount could otherwise have been contributed to the
Trust for the Plan Year in respect to which it has been deferred, and such
payment shall be subject to federal income and other tax withholding by the
Employer. An Employer Salary Deferral Contribution made for a Participant shall
be allocated to his Employer Salary Deferral Account pursuant to Section 7.3
hereof.
4.2 Employer Profit Sharing Deferral Contributions. If selected by the
Employer in Section IV of the Adoption Agreement, the Employer will make an
Employer Profit Sharing Deferral Contribution to the Trust in an amount equal to
the Profit Sharing Allocation specified in Section IV (2) of the Adoption
Agreement as expressed as a percentage of the Participant's Compensation;
provided, however, that if and to the extent permitted by Section IV (2) of the
Adoption Agreement, each Participant may elect to receives portion of the Profit
Sharing Allocation in cash in lieu of having it deferred and contributed to the
Trust as an Employer Profit Sharing Deferral Contribution. Such an election may
only be made pursuant to a written agreement between the Participant and the
Employer. The agreement shall be in such form and subject to such rules as the
Administrator may prescribe, and the election shall specify the amount of the
Profit Sharing Allocation that the Participant desires to receive in cash. The
amount which a Participant has elected to receive in cash pursuant to such an
election shall be paid to the Participant by the Employer no later than the last
day on which the Employer Profit Sharing Deferral Contributions for the Plan
Year in question must be paid to the Trust under Section 7.2 hereof,
Notwithstanding the above, the Employer Profit Sharing Deferral Contribution
otherwise to be made for a Participant shall be reduced to the extent necessary,
if any, to comply with the limitations of Sections 4.7, 5 and 6 hereof (and
Section VIII of the Adoption Agreement, if applicable). Any amount which cannot
be contributed to the Trust because of those limitations shall be paid to the
Participant in cash no later than the last day that such amount could otherwise
have been contributed to the Trust for the Plan Year in the respect to which it
has been deferred, and such payment shall be subject to federal income and other
tax withholding by the Employer. An Employer Profit Sharing Deferral
Contribution made for a participant shall be allocated to his Employer Profit
Sharing Deferral Account pursuant to Section 7.3 hereof.
4.3 Participant Non-Deductible Voluntary Contributions. If selected by the
Employer in Section VI A of the Adoption Agreement, a Participant may make
Participant Non-Deductible Voluntary Contributions to his Account in any Plan
Year; provided, however, that the aggregate amount of such Participant
Non-Deductible Voluntary Contributions, plus any Participant Non-Deductible
Voluntary Contributions made by him under any other plan maintained by the
Employer and intended to meet the requirements of Code Section 401, shall not
exceed ten percent (10%) of his total compensation (disregarding any exclusions
from Compensation specified by the Employer in Section III-B of the Adoption
Agreement) for the period in which he has been a Participant in the Plan;
provided, further, that in no event shall a Participant be permitted to makes
Participant Non-Deductible Voluntary Contribution in an amount which would cause
the annual addition to his Account to exceed the limitations set forth in
Section 5 hereof. A Participant's Participant Non-Deductible Voluntary
Contributions shall be allocated to his Participant Non-Deductible Voluntary
Account pursuant to Section 7.3 hereof. A Participant may withdraw all or 5
portion of his Participant Non-Deductible Voluntary Account upon 30 days'
written notice to the Administrator.
4.4 Participant Deductible Voluntary Contributions. If selected by the
Employer in Section VI-B of the Adoption Agreement, a Participant may make
Participant Deductible Voluntary Contributions to his Account in any Year;
provided, however, that the aggregate amount of such Participant Deductible
Voluntary Contributions, plus any other "qualified retirement contributions" (as
that term is defined in Code Section 219(e)(1)) made by the Participant, shall
not, in any taxable year of the Participant, exceed the lesser of $2,000 or 100%
of the Participant's total compensation includible in his gross income for his
taxable year (or such higher limitation as is permitted under Code Section 219).
A Participant's Participant Deductible Voluntary Contributions shall at no time
be included in the computation of the maximum allocation to a Participant's
Account as set forth
14
<PAGE>
in Section 5 and 6 hereof. A Participant's Participant Deductible Voluntary
Contributions shall be allocated to his Participant Deductible Voluntary Account
pursuant to Section 7.3 hereof. A Participant may withdraw all or a portion of
his Participant Deductible Voluntary Account upon 30 days' written notice to the
Administrator, who may also permit, to the extent allowed by applicable law, the
Participant to redesignate his Participant Deductible Voluntary Account as his
Participant Non-Deductible Voluntary Account prior to the withdrawal thereof.
4.5 Employer Thrift Contributions. If selected by the Employer in Section V
of the Adoption Agreement, the Employer will make an Employer Thrift
Contribution to the Trust for each Participant for each Plan Year that one or
more of contribution categories selected by the Employer in Section V of the
Adoption Agreement for matching (i.e., Employer Profit Sharing Deferral
Contributions, Employer Salary Deferral Contributions or Participant
Non-Deductible Voluntary Contributions) is allocated to the Participant's
Account. The Employer Thrift Contribution made for a Participant shall be in an
amount equal to the percentage specified in Section V of the Adoption Agreement
of the aggregate of the contributions categories selected by the Employer in
Section V of the Adoption Agreement (i.e., Employer Profit Sharing Deferral
Contributions, Employer Salary Deferral Contributions or Participant
Non-Deductible Voluntary Contributions) allocated to the Participant's Account
for the Year, but only to the extent that such aggregate amount does not exceed
the percentage of the Participant's Compensation specified in Section V of the
Adoption Agreement (not in excess of 6%); provided, however, that the Thrift
Contribution otherwise to be made for a Participant shall be reduced to the
extent necessary to comply with the limitations of Sections 4.7, 5 and 6 hereof
(and Section VIII of the Adoption Agreement, if applicable). Any amount which
cannot be contributed to the Trust because of these limitations will be retained
by the Employer, and the Employer shall have no obligation to contribute such
amount . An Employer Thrift Contribution made for a Participant shall be
allocated to his Employer Thrift Account pursuant to Section 7.3 hereof.
4.6 Rollover Contributions. The Administrator may, in his discretion,
direct the Trustee to accept a Rollover Contribution upon the express request of
the Participant wishing to make such Rollover Contribution, the same to be held,
administered and distributed by the Trustee in accordance with the terms of this
Plan provided the Trustee consents if the contribution includes property other
than cash. A Rollover Contribution shall only be a contribution, comprised of
money and/or property, which is all or a portion of a lump sum with respect to
which such Participant certifies in writing that all of the following conditions
are met:
(a) Such lump sum is such Participant's entire interest (or such lesser
amount as permitted by applicable law) in all qualified plans of the
same type of a prior employer of such Participant (within the meaning
of Code Section 402(e)(4)(C) as modified by Code Section
402(A)(6)(E)), including qualified annuity plans under Code Section
403(a), reduced by the amount, if any, considered as contributed by
him to such other plan or plans (as determined under Code Section
402(e)(4)(D)(i)) and augmented, if such be the case, by any earnings
on the aforesaid net amount accrued during any period when such net
amount was held in an intervening individual retirement account or
annuity (as defined in Code Sections 408(a) and (b));
(b) Such lump sum was received by such Participant as a lump sum
distribution from such other qualified plan or plans within the
meaning of Code Section 402(e)(4)(A) or as a payment within one
taxable year of the Participant on account of a termination of such
plan(s) or, in the case of a profit-sharing or stock bonus plan, a
complete discontinuance of contributions under such plan(s) (within
the meaning of Code Section 402(a)(6));
(c) The transfer of all or a portion of such lump sum is being made within
60 days of its receipt by him from the plan or plans referred to in
paragraph (a) above or, if the net amount referred to in paragraph (a)
above had previously been deposited in an intervening individual
retirement account or annuity (as defined in Code Sections 408 (a) and
(b)) within 60 days of its prior receipt from such plan or plans, the
transfer of such lump sum is being made within 60 days of its receipt
by him from such intervening individual retirement account or annuity;
and
(d) No part of such lump sum represents an amount derived from a plan in
which such Participant was a self-employed employee (within the
meaning of Code Section 401(c)(1)) at any time contributions were made
on his behalf under that plan.
All Rollover Contributions made under this Section 4.6 must be accepted by
the Trustee within the 60 day period referred to in paragraph (c) above. If the
sum accepted as a Rollover Contribution contains property other than cash, the
Trustee shall promptly sell it, and reinvest the proceeds as set forth in the
paragraph immediately below. However, the Trustee may nevertheless, in his
discretion, retain part or all of such property in kind at the Participant's
express request, provided the Participant reimburses the Trustee for any
additional expenses arising out of such retention. A Participant's Rollover
Contribution shall at no time be included in the computation of the maximum
allocation to a Participant's Account as set forth in Sections 5 and 6 hereof.
Each Rollover Contribution made by a Participant shall be allocated to his
Rollover Account pursuant to Section 7.3 hereof. Such Rollover Account shall be
invested by the Trustee as part of the Trust Fund, pursuant to the provisions of
the Trust Agreement, and shall share in the gains and losses of such fund,
except as it may be held in kind as permitted above. A Participant may withdraw
all or a portion of his Rollover Account upon 30 days' written notice to the
Administrator.
4.7 Limited by Profits. Notwithstanding anything to the contrary herein,
the total Employer Contributions for a Year shall not exceed the Current or
Accumulated Earnings and Profits of the Employer for the Year, whichever is
greater.
SECTION 5. CODE SECTION 415 LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS
5.1 Employers Maintaining No Other Plan.
(a) If an Employer does not maintain any other qualified plan, the amount
of Annual Addition which may be allocated under this Plan on a
Participant's behalf for a Limitation Year shall not exceed the
Maximum Permissible Amount.
(b) Prior to the determination of the Participant's actual compensation
for a Limitation Year, the Maximum Permissible Amount may be
determined on the basis of the Participant's estimated annual
compensation for such Limitation Year. Such estimated annual
compensation shall be determined on a reasonable basis and shall be
uniformly determined for all Participants similarly situated.
(c) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such Limitation
Year shall be determined on the basis of the Participant's actual
compensation for such Limitation Year.
(d) If, pursuant to Section 5.1(c) and notwithstanding the provisions of
Section 4 hereof which require Employer Contributions on behalf of a
Participant to be reduced so as out to exceed the limitations of this
Section 5, there is an Excess Amount with respect to a Participant for
a Limitation Year, such Excess Amount shall be disposed of as follows:
(i) First, any Participant Contributions, to the extent that the
return would reduce the Excess Amount, shall be returned to the
Participant.
(ii) Second, such Excess Amount, to the extent attributable to
Employer Thrift Contributions, must out be distributed to the
Participant, but shall be applied to reduce Employer Thrift
Contributions for the Limitation Year. To the extent such Excess
Amount is attributable to Employer Profit Sharing Deferral
Contributions or Employer Salary Deferral Contributions, it shall
be distributed to the Participant in accordance with Sections 4.1
and 4.2.
5.2 Employers Maintaining Other Model, Master or Prototype Defined
Contribution Plans.
(a) If, in addition to this Plan, the Employer maintains any other
qualified defined contribution plan (all of which are qualified Model,
Master or Prototype Plans), the amount of Annual Additions which may be
allocated under this Plan on a Participant's behalf for a Limitation Year,
shall out exceed the Maximum Permissible Amount, reduced by the sum of any
Annual Additions allocated to the Participant's account for the same
Limitation Year under such other defined contribution plan.
(b) Prior to the determination of the Participant's actual compensation for
the Limitation Year, the amounts referred to in Section 5.2(a) above may be
determined on the basis of the Participant's estimated annual compensation
for such Limitation Year. Such estimated annual compensation shall be
determined on a reasonable basis and shall be uniformly determined for all
Participants similarly situated.
(c) As soon as is administratively feasible after the end of the Limitation
Year, the amounts referred to in Section 5.2(a) shall be determined on the
basis of the Participant's actual compensation for such Limitation Year.
(d) If a Participant's Annual Additions under this Plan and all such other
plans result in an Excess Amount, such Excess Amount shall be deemed to
consist of the Amounts last allocated.
(e) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another plan,
the Excess Amount attributed to this Plan will be the product of:
(i) the total Excess Amount allocated as of such date (including any
amount which would have been allocated but for the limitations of Code
Section 415), times
(ii) the ratio of (A) the amount allocated to the Participant as of such
date under this Plan, divided by (B) the total amount allocated as of
such date under all qualified defined contribution plans (determined
without regard to the limitations of Code Section 415).
(f) Any Excess Amounts attributed to this Plan shall be disposed of as
provided in Section 5.1(d).
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5.3 Employers Maintaining Other Defined Contribution Plans, If the Employer
also maintains another plan which is a qualified defined contribution plan other
than a Model, Master or Prototype Plan, Annual Additions allocated under this
Plan on behalf of any Participant shall be limited in accordance with the
provisions of Section 5.2 as though the other plan were a Model, Master or
Prototype Plan, unless the Employer provides other limitations in the Adoption
Agreement.
5.4 Definitions. For purposes of this Section 5, the following terms shall
be defined as follows:
(a) "Annual Additions" - The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year:
(i) all employer contributions,
(ii) all forfeitures, and
(iii) the lesser of (A) one-half of all employee contributions, and (B) the
amount of all employee contributions in excess of six percent (6%) of
such Participant's actual compensation.
For the purposes of this Section 5, amounts reapplied to reduce employer
contributions shall also be included as Annual Additions.
(b)"Employer" - The employer that adopts this Plan. In the case of a group
of employers which constitutes a (i) controlled group of corporations (as
defined in Code Section 414(b) as modified by Code Section 415(h)), (ii)
trades or businesses (whether or not incorporated) which are under common
control (as defined in Code Section 414(c) as modified by Code Section
415(h)), or (iii) an affiliated service group (as defined in Code Section
414 (ml), all such employers shall be considered a single employer for
purposes of applying the limitations of this Section 5.
(c)"Excess Amount" - The excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Amount, less loading and
other administrative charges allocable to such excess.
(d)"Limitation Year" - A calendar year (Or any other 12 consecutive month
period adopted for all plans of the Employer pursuant to a written
resolution adopted by the Employer).
(e)"Master or Prototype Plan" - A plan the form of which is the subject of
a favorable opinion letter from the Internal Revenue Service issued
pursuant to Rev. Proc. 80-29 or successor procedure.
(f) "Maximum Permissible Amount" - For a Limitation Year, with respect to
any Participant shall be the lesser of:
(1)(A) if the Plan was in existence on July 1, 1982, $25,000 for
Limitation Years beginning before January 1, 1983 and $30,000 for
Limitation Years beginning after December 31, 1982, or (B) if the Plan was
not in existence on July 1, 1982, $30,000; provided, however, that the
amounts described in (A) and (B) shall be increased to such larger amounts
as may be prescribed by regulation authorized by the Secretary of the
Treasury or his delegate; or
(2) 25% of the Participant's compensation for the Limitation Year.
(g)"Model Plan" - A plan the form of which has been published by the
Internal Revenue Service.
SECTION 6. CODE SECTION 401(1;) LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS
6.1 Limitation. In addition to any other limitations set forth in this
Plan, Code Section 401(k) requires that the Employer Contributions and the
allocation thereof must not result in discrimination in favor of the
shareholders, officers or highly compensated employees of the Employer. To meet
this requirement, one or more of the following tests must be met each Plan Year:
(a) If the Employer has not elected to make Employer Thrift Contributions
under Section V of the Adoption Agreement, the Employer Profit Sharing
Deferral Contributions and Employer Salary Deferral Contributions and the
allocation thereof must either:
(i) satisfy the General Cash or Deferred Discrimination Rule (as defined
below); or
(ii) satisfy the Special Cash or Deferred Discrimination Rule (as defined
below).
(b) If the Employer has elected to make Employer Thrift Contributions under
Section V of the Adoption Agreement, either:
(i) the combined Employer Thrift, Profit Sharing Deferral and Salary
Deferral Contributions must satisfy the General Cash or Deferred
Discrimination Rule; or
(ii) the Employer Thrift Contributions must satisfy the General Cash or
Deferred Discrimination Rule and the Employer Profit Sharing Deferral
and Salary Deferral Contributions must meet the Special Cash or
Deferred Discrimination Rule; or
(iii) the Employer Thrift Contributions must satisfy the General Cash or
Deferred Discrimination Rule and the combined Employer Thrift, Profit
Sharing Deferral and Salary Deferral Contributions must meet the
Special Cash or Deferred Discrimination Rule,
6.2 General Cash or Deferred Discrimination Rule Defined. To satisfy the
General Cash or Deferred Discrimination Rule, the Plan must satisfy either the
percentage test or the classification test described in Code Section 410(b)(1),
and the Employer Contributions (or relevant portion thereof) must also satisfy
the requirements of Code Section 401(a)(4). In testing whether the requirements
of Code Section 410(b)(1) are satisfied, the Employees who benefit from the Plan
may be either (a) the Employees eligible to participate in the Plan, or (b) the
Employees who participate in the Plan. In testing for discrimination under Code
Section 401(a)(4), the eligible or covered Employees will be considered
depending on the group used to satisfy Code Section 410(b)(1).
6.3 Special Cash or Deferred Discrimination Rule Defined. To satisfy the
Special Cash or Deferred Discrimination Rule, the Plan must satisfy either the
percentage test or the classification test described in Code Section 410(b)(1).
For this purpose, all eligible Employees are considered to benefit from the
Plan. In addition, the Employer Contributions (or relevant portion thereof) must
satisfy one of the following tests:
(a) the actual deferral percentage for the highly compensated Employees
eligible to participate in the Plan (the top 1/3) must not be more than the
actual deferral percentage of all other eligible Employees (lower 2/3)
multiplied by 1.5; or
(b) the excess of the actual deferral percentage for the top 1/3 over the
lower 2/3 is not more than 3 percentage points, and the actual deferral
percentage for the top 1/3 is not more than the actual deferral percentage
of the lower 2/3 multiplied by 2.5.
For purposes of the above, the term "highly compensated Employee" means any
eligible Employee who receives, with respect to the Compensation taken into
account for the Plan Year, more Compensation than two-thirds of all other
eligible Employees. Both 1/3 and 2/3 of all the eligible Employees shall be
rounded to the nearest integer. The "actual deferral percentage" for the top 3
and the lower 2/3 for a Plan Year is the average of the ratios, calculated
separately for each Employee in such group, of the amount of Employer
Contributions (or relevant portion thereof) paid under the Plan for such Plan
Year on behalf of each such Employee for such Plan Year, to the Employee's
Compensation for such Plan Year (prior to any deferral hereunder).
6.4 Responsibilities of Ad7nblistrator. The Administrator shall have the
responsibility of monitoring the Plan's compliance with the limitations of this
Section 6 and shall have the power to take any and all steps it deems necessary
or appropriate to ensure compliance, including, without limitation, restricting
the amount of salary or Profit Sharing Bonus which the highly compensated
Employees may elect to defer, or delaying or holding Employer Contributions in
suspense until it can be determined that no amount in excess of these
limitations will be contributed to the Trust. Any actions taken by the
Administrator under this Section 6.4 shall be pursuant to non-discriminatory
procedures consistently applied.
SECTION 7. TIME AND MANNER OF MAKING CONTRIBUTIONS
7.1 Manner. unless otherwise agreed to by the Trustee, contributions to
said Trustee shall be made only in cash. All contributions may be made in one or
more installments.
7.2 Time. Employer Profit Sharing Deferral or Salary Deferral Contributions
with respect to a Plan Year shall be made no later than 30 days after the end of
that Plan Year (or such later time as is permitted by regulations authorized by
the Secretary of the Treasury or delegate). Employer Thrift Contributions and
Participant Non-Deductible Contributions shall be made before the time limit,
including extensions thereof, for filing the Employer's federal income tax
returns for the Year with or within which the particular Plan Year ends (or such
later time as is permitted by regulations authorized by the Secretary of the
Treasury or delegate). Participant Deductible Voluntary Contributions shall be
made no later than April 15 following the Participant's taxable year for which
such contributions are made. All contributions shall be paid to the
Administrator for transfer to the Trustee. The Administrator shall transfer such
contributions to the Trustee as soon as possible, except to the extent permitted
by Section 6.4 hereof. The Administrator may establish a payroll deduction
system or other procedure to assist the making of Participant Contributions and
Employer Salary Deferral Contributions to the Trust, and the Administrator may
from time to time adopt rules or policies governing the manner in which such
contributions may be made so that the Plan may be conveniently administered.
7.3 Separate Accounts. For each Participant, a separate account shall be
maintained for each of the following types of contributions and the income,
expenses, gains and losses attributable thereto:
(a)Participant Non-Deductible Voluntary Contributions, if selected under
Section VI-A of the Adoption Agreement;
(b) Participant Deductible Voluntary Contributions, if selected under
Section VI-B of the Adoption Agreement;
(c) Employer Profit Sharing Deferral Contributions, if selected under
Section IV of the Adoption Agreement;
(d) Employer Salary Deferral Contributions, if selected under Section IV of
the Adoption Agreement;
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(e) Employer Thrift Contributions, if selected under Section V of the
Adoption Agreement; and
(f) Rollover Contributions, if the Administrator accepts such contributions
pursuant to Section 4.6 hereof.
7.4 Vesting. A Participant's interest in his Account shall always be fully
vested and nonforfeitable.
SECTION 8. DISTRIBUTION UPON DEATH
8.1 Distribution to Beneficiary. If a Participant's employment terminates
because of his death, the Trustee shall, upon the direction of the
Administrator, distribute the Participant's Account or the undistributed
remainder thereof, as the case may be, in accordance with the provisions of
Section 8.2, to the Beneficiary or Beneficiaries validly named in the most
recent Designation of Beneficiary form filed by the Participant with the
Administrator before his death in compliance with Section 16. The
Administrator's direction shall include notification of the Participant's death,
the identity of the Beneficiary or Beneficiaries so named, and the appropriate
manner of distribution.
8.2 Manner of Distribution. A distribution made under this Section 8 shall
be made in such manner as the Participant shall in his most recent Designation
have validly elected. In the absence of such an election, such distribution
shall be made in such manner as the Participant's Beneficiary (or Beneficiaries)
may elect, subject to the approval of the Administrator, or in the absence of
such an election, in such manner as the Administrator shall determine.
SECTION 9. DISTRIBUTION UPON HARDSHIP
If selected by the Employer in Section x of the Adoption Agreement, the
Trustee shall, upon the direction of the Administrator, distribute all or a
portion of a Participant's Employee Salary Deferral Account, Employer Profit
Sharing Deferral Account and Employer Thrift Account prior to the time such
Accounts are otherwise distributable in accordance with Sections 8 and 10
hereof, subject to the following:
9.1 Hardship Defined. Any such distribution shall be made only if, and the
amount of such distribution shall be limited to the extent that, the Participant
demonstrates that he is suffering from "hardship," as that term is defined in
proposed or final regulations (whichever are applicable) promulgated pursuant to
Code Section 401(k), or such other standard as may from time to time be
established or authorized by the Secretary of the Treasury or his delegate for
the purpose of determining the circumstances under and the extent to which
elective contributions to a cash or deferred profit-sharing plan may be
withdrawn on account of hardship without adverse effect upon such a plan's
continued qualification. Any determination of the existence of hardship and the
amount to be distributed on account thereof shall be made by the Administrator
(Or such other person as may be required to make such decisions under the
applicable regulations described above) in accordance with the foregoing rule as
applied in a uniform and non-discriminatory manner.
9.2 Manner of Distribution. A distribution under this Section 9 shall be
made in a lump sum payment to the Participant.
SECTION 10. OTHER DISTRIBUTIONS
10.1 Normal Distribution. The Account of any Participant will normally be
distributed in monthly installments which must commence at or within sixty (60)
days after the end of the Plan Year in which occurs his Normal Retirement Date
(as selected by the Employer in Section II of the Adoption Agreement) or in
which his Employment ceases, whichever is later, to continue over a period of
one hundred and twenty (120) months, The monthly amount shall normally be the
balance of the Participant's Account divided by the remaining number of months
in such one hundred and twenty (120) months, all rounded to the nearest cent,
However, the amount of each monthly installment may be recomputed and adjusted
from time to time no more frequently than monthly as the Trustee may reasonably
determine.
10.2 Optional Distribution. All Participants may request the Administrator
to approve, in its sole discretion, any of the following variations from the
normal pattern of distribution provided that the distribution (i) shall not
commence before the earlier of the Participant's retirement, death, disability,
separation from service, or attainment of age 59 1/2, (ii) extend beyond the
lifetime of the Participant or the joint lifetime of the Participant and his
spouse, as actuarially estimated either at the time of approval or periodically
in a consistent manner, and (iii) the present value of the distributions to be
made to the Participant is more than one-half (1/2) the value of his Account, as
determined at the time this distribution commences:
(a) Distribution made or commencing before his Normal Retirement Date,
(b) Distributions made or commencing after the normal time of distribution
described in Section 10.1.
(c) Distribution of his entire Account at one time,
(d) Installment payments of a fixed amount, such payments to be made until
exhaustion of the Participant's Account,
(e) Distribution in Kind,
(f) Any reasonable combination of the foregoing or any reasonable time or
manner of distribution within the above-stated limitations, including
purchase and distribution of bonds described in Code Section 405(d).
SECTION 11. INVESTMENT OF CONTRIBUTIONS
11.1 Manner of Investment. All contributions to the Account of a
Participant shall be held by the Trustee designated by the Employer in Section
XIV of the Adoption Agreement. The Account of a Participant may only be invested
and reinvested in shares of Designated Investment Companies (in such proportions
as tile Trustee is instructed in accordance with Section VII of the Adoption
Agreement) or such other investments as are permitted by the Distributor, except
to the extent that a Participant's Account is invested in a loan pursuant to
Section 112 hereof. Investment in the shares of more than one Designated
Investment Company is not permitted unless tile value of the Participant's
Account and the value of the investment in the second Designated Investment
Company exceed amounts from time to time determined by the Distributor.
11.2 Investment Decision.
(a) The decision as to the investment of an Account shall be made by the
person designated in Section VII of the Adoption Agreement. If the decision
is made by the Participant, the Participant shall convey investment
instructions to the Administrator and the Administrator shall promptly
transmit those instructions to the Trustee. Further, if the decision is to
be made by the Participant, the right to make such a decision shall remain
with the Participant upon his retirement and shall pass to the Distributee
upon such Participant's death.
(b) The person designated to make the decision as to the investment of an
Account may direct that the investment medium of an Account be changed,
provided that no such change may be made from or to an investment other
than a Designated Investment Company except to the extent permitted by the
terms of that other investment vehicle. If the Distributor determines in
its own judgment that there has been trading of Designated Investment
Companies in the Accounts of the Participants, any Designated Investment
Company may refuse to sell its shares to such Accounts. When an investment
is being made or changed the person designated to do so shall specify the
type of Account to which the change refers.
(c) If any decision as to investments is to be made by the Administrator,
it shall be made on a uniform basis with respect to all Participants.
(d) The Administrator and the Trustee may adopt procedures permitting
Participants to convey their investment instructions directly to the
transfer agent for the Designated Investment Company or Companies or for
any other investment permitted by the Distributor.
SECTION 12. LOANS
If selected by the Employer in Section IX of the Adoption Agreement, the
Trustee shall, upon the direction of the Employer, make one or more loans,
including any renewal thereof, to a Participant. Any such loan shall be subject
to such terms and conditions as the Employer shall determine pursuant to a
uniform policy adopted by the Employer for this purpose, which policy shall be
at least as restrictive as the following:
12.1 Equivalent Basis. No such loan may be made to a disqualified person
within the meaning of Code Section 4975(e), unless such loans are available to
all Participants on a reasonably equivalent basis and are not made available to
officers, shareholders or highly paid Participants in an amount which, when
stated as a percentage of such Participant's Account, is greater than is
available to other Participants.
12.2 Limitation on Amount. The amount of any such loan, when added to the
outstanding balance of all other loans from the Plan (and any other plan of the
Employer) to the Participant, shall not exceed the following:
Participant's Maximum Amount
Account Balance of Loan
$0 - $10,000 100% of Account balance
$110,000 - $20,000 $10,000
$20,000 - $100,000 50% of Account balance
over $100,000 $50,000
The value of the Participant's Account balance shall be as determined by the
Employer; provided, however, that such determination shall in no event take into
account the portion of the Participant's Account attributable to Participant
Deductible Voluntary Contributions.
12.3 Maximum Term, The term of any such loan shall not exceed 5 years;
provided, however, that such limitation shall not apply to any loan used to
acquire, construct, reconstruct, or substantially rehabilitate any dwelling unit
which within a reasonable time is to be used (determined at the time the loan is
made) as a principal residence of the Participant or a member of the family
(within the meaning of Code Section 267(c)(4)) of the Participant.
12.4 Promissory Note, Any such loan shall be evidenced by a promissory note
executed by the Participant and payable to the Trustee, on the earliest of (i) a
fixed maturity date meeting the requirements of Section 12.3 above, but in no
event later than the Participant's Normal Retirement Date,
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(ii) the Participant's death, or (iii) when distribution hereunder is to be made
to the Participant (other than a withdrawal which will not reduce the Value of
his Account to the extent that the aggregate amount owing could not be made as a
new loan within the limitation set forth in Section 12.2 above). Such promissory
note shall be secured by an assignment of the Participant's Account to the
Trustee. Such promissory note shall evidence such terms as are required by this
Section 12.
12.5 Interest. Any such loan shall be subject to a reasonable rate of
interest.
12.6 Repayment. If a note is not paid when the Participant's benefits
hereunder are to be distributed, then any unpaid portion of such loan and unpaid
interest thereon shall be deducted by the Trustee from the Participant's Account
before benefits are paid from or purchased out of the Account. Such deduction
shall, to the extent thereof, cancel the indebtedness of the Participant. If a
note is not paid when it otherwise becomes payable under Section 12.4, or if at
any time the Employer determines that the aggregate amounts owing by a
Participant upon such notes exceed the vested value of the Participant's
Account, the Participant shall be promptly notified in writing that unless such
loan or excess is repaid within 30 days, action will be taken to collect the
same plus any cost of collections.
12.7 Accounting. Loans shall be made only from the Account of the
Participant (exclusive of that portion of the Account attributable to
Participant Deductible Voluntary Contributions) requesting the loan, and shall
be treated as an investment of his Account. All interest payments made with
respect to such loan shall be credited to the Participant's Account.
12.8 Precedence. This Section 12 overrides Section 17 below.
SECTION 13. ADMINISTRATION
13.1 Appointment of Administrator. The Employer may from time to time in
writing appoint one of more persons as Administrator (hereinafter referred to in
the singular) who shall have all power and authority necessary to carry out the
terms of the Plan. A person appointed as Administrator may also serve in any
other fiduciary capacity, including that of Trustee, with respect to the Plan.
The Administrator may resign upon fifteen (15) days advance written notice to
the Employer, and the Employer may at any time revoke the appointment of the
Administrator with or without cause. The Employer shall exercise the power and
fulfill the duties of the Administrator if at any time the position is vacant.
13.2 Named Fiduciaries. The "Named Fiduciaries" within the meaning of the
Act shall be the Administrator and the Trustee.
13.3 Allocation of Responsibilities. Responsibilities upon the Plan shall
be allocated among the Trustee, the Administrator and the Employer as follows:
(a) Trustee: The Trustee shall have exclusive responsibility to hold,
manage and invest, pursuant to instructions communicated to it by the
Administrator under Section VII of the Adoption Agreement and Section 11.2
above, the foods received by it subject to the Trust Agreement under which
it serves.
(b) The Administrator: The Administrator shall have the responsibility sod
authority to control the operation and administration of the Plan in
accordance with its terms including, without limiting the generality of the
foregoing, (1) any investment decisions assigned to it under Section VII of
the Adoption Agreement or transmission to the Trustee of any Participant
investment decision under Section 11.2(2) interpretation of the Plan,
conclusive determination of all questions of eligibility, status, benefits
and rights under the Plan and certification to the Trustee of all benefit
payments under the Plan; (3) hiring of persons to provide necessary
services to the Plan not provided by Employees; (4) preparation and filing
of all statements, returns and reports required to be filed by the Plan
with any agency of Government; (5) compliance with all disclosure
requirements of all state or federal law; (6) maintenance and retention of
all Plan records as required by law, except those required to be maintained
by the Trustee; and (7) all functions otherwise assigned to it under the
terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of the Plan,
as adopted or amended, the designation of the Administrator and Trustee as
provided in the Plan, the delivery to the Administrator and the Trustee of
Employee information necessary for operation of the Plan, the timely making
of the Employer Contributions specified in Sections IV or V of the Adoption
Agreement, and the exercise of all functions provided in or necessary to
the Plan except those assigned in the Plan to other persons. (d) This
Section 13.3 is intended to allocate individual responsibility for the
prudent execution of the functions assigned to each of the Trustee, the
Administrator and the Employer and none of such responsibilities or any
other responsibilty shall be shared among them unless specifically provided
in the Plan, Whenever one such person is required by the Plan to follow the
directions of another, the two shall not be deemed to share responsibility,
but the person who gives the direction shall be responsible for giving it
and the responsibility of the person receiving the direction shall be to
follow it insofar as it is on its face proper under applicable law.
13.4 More Than One Administrator, If more than one individual is appointed
as Administrator under Section 13.1, such individuals shall either exercise the
duties of the Administrator in concert, acting by a majority vote or allocate
such duties among themselves by written agreement delivered to the Employer and
the Trustee. In such a case, the Trustee may rely upon the instruction of any
one of the individuals appointed as Administrator regardless of the allocation
of duties among them.
13.5 No Compensation. The Administrator shall not be entitled to receive
any compensation from the funds held under the Plan for its services in that
capacity unless so determined by the Employer or required by law.
13.6 Record of Acts. The Administrator shall keep a record of all his
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the Employer
at any time. The Employer shall supply, and the Administrator may rely on the
accuracy of, all Employee data and other information needed to administer the
Plan.
13.7 Bond. The Administrator shall be required to give bond for the
faithful performance of his duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
13.8 Agent for Service of Legal Process. The Administrator shall be agent
for service of legal process on the Plan.
13.9 Rules. The Administrator may adopt or amend and shall publish to the
Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
13.10 Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of his responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of all such delegates.
13.11 Claims Procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claims. A claim for benefits by a Participant or
Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or
by course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within sixty (60) days after
the original claim was filed. This notice of denial shall set forth in a
manner calculated to be understood by the claimant (1) the reason or
reasons for denial, (2) specific reference to pertinent plan provisions on
which the denial is based, (3) a description of any additional information
needed to perfect the claim and an explanation of why such information is
necessary, and (4) an explanation of the Plan's claim procedure.
(c) The Participant or Beneficiary shall have sixty (60) days from receipt
of the denial notice in which to make written application for review by the
Administrator, The Participant or Beneficiary may request that the review
be in the nature of a hearing. The Participant or Beneficiary shall have
the rights (1) to have representation, (2) to review pertinent documents,
and (3) to submit comments in writing. (d) The Administrator shall issues
decision on such review within sixty (60) days after receipt of an
application for review, except that such period may be extended for a
period of time not to exceed an additional sixty (60) days if the
Administrator determines that special circumstances (such as the need to
hold a hearing) requires such extension. The decision on review shall be in
writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, and specific references
to the pertinent Plan provisions on which the decision is based.
SECTION 14 FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or Trustee incurred
in the performance of their duties hereunder or under the Trust shall be paid by
the Employer; and to the extent not so paid by the Employer, said fees and
expenses shall be deemed to be an expense of the Trust and the Trustee is
authorized to charge the same to the Accounts of the Participants, and unless
allocable to the Accounts of specific Participants, they shall be charged
against the respective accounts of all or a reasonable group of Participants in
such reasonable manner as the Trustee shall determine,
SECTION 15. BENEFIT RECIPIENT INCOMPETENT
OR DIFFICULT TO ASCERTAIN OR LOCATE
15.1 Incompetency. If, in the sole judgment of the Administrator a
Participant or Beneficiary is physically or mentally incapable of handling his
financial affairs, payment otherwise due him may be made for his benefit in the
sole discretion of the Administrator either to his legal
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representative or to any of his relatives or friends or maybe applied directly
for his support and maintenance, Payment so made in good faith shall completely
discharge the Employer, the Administrator and the Trustee from liability
therefor.
15.2 Difficulty to Ascertain or Locate, If it is impossible or difficult to
ascertain the person who is entitled to receive any benefit under the Plan, the
Administrator in its discretion may direct that such benefit be (i) paid to
another person in order to carry Out the Plan's purposes; or (ii) retained in
the Trust; or (iii) paid to a court pending judicial determination of the right
thereto.
SECTION 16. DESIGNATION OF BENEFICIARY
Each Participant may submit to the Administrator a properly-executed
Designation of Beneficiary form. In order to be effective, such Designation must
have been properly executed and submitted to the Administrator at the home
office thereof before the death of the Participant. The last effective
Designation accepted by the Administrator shall be controlling, and whether or
not fully dispositive of his Account, thereupon shall revoke all Designations
previously submitted by the Participant. Each such executed Designation is
hereby specifically incorporated herein by reference and shall be construed and
enforced in accordance with the laws of the state in which the Employer has its
principal place of business. To the extent that any portion of an Account of a
deceased Participant is not governed by a Designation which names at least one
living Beneficiary designated by the Participant, that portion of the Account
shall be distributed to the estate of the deceased Participant.
SECTION 17. SPENDTHRIFT PROVISION
No interest of any Participant or Beneficiary shall be assigned,
anticipated or alienated in any manner nor shall it be subject to attachment,
bankruptcy proceedings or to any other legal process or to the interference or
control of creditors or others, except to the extent that Participants may
secure loans from the Trust with their Accounts pursuant to Section 12 hereof.
SECTION 18. NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall qualify under Code
Section 401 (a) as that Section exists at the time the Plan is established. If
the Employer fails to obtain or retain such a determination that the Plan so
qualifies, the Plan shall cease to have any of the benefits of Revenue Procedure
80-29 or successor procedure which apply to the Plan as a prototype plan. The
Administrator shall promptly notify the Trustee in writing of any determination
made with respect to the qualified status of the Plan. Notwithstanding any other
provision contained in this Plan, if the Internal Revenue Service determines
that the Plan initially fails to so qualify, then the Employer shall promptly
either amend the Plan under Code Section 401(b) 50 that it does qualify, or
direct the Trustee to terminate the Plan and distribute all the assets of the
Trust equitably among the contributors thereto in proportion to their
contributions, and the Plan shall be considered to be rescinded and of no force
and effect.
SECTION 19. AMENDMENT OR TERMINATION
19.1 Amendment or Termination. The Employer may at any time, and from time
to time amend this Prototype Plan, the Adoption Agreement and the Trust
Agreement (including a change in any election it has made in the Adoption
Agreement), or suspend or terminate this Plan by giving written notice to the
Distributor and to the Trustee, but the Trust may not thereby be diverted from
the exclusive benefit of the Participants, their Beneficiaries, survivors or
estates, or the administrative expenses of the Plan, nor revert to the Employer,
nor may an allocation or contribution theretofore made be changed thereby or an
amendment otherwise operate retroactively except as the same may be deemed
necessary in order to make the Plan qualify under Code Section 401(a). An
amendment shall be deemed necessary for this purpose if counsel for the Employer
certifies that in its opinion the written ruling of the Commissioner of Internal
Revenue that the Plan meets such requirements can be obtained within a
reasonable time only with such retroactive amendment. Any amendment by the
Employer which is other than the amendment of the Employer's prior designation
of an option or provision set forth or referred to in the Adoption Agreement
will constitute a substitution by the Employer of an individually designed plan
for this prototype plan and the general amendment procedure of the Internal
Revenue Service governing individually designed plans will be applicable.
Nothing contained herein shall constitute an agreement or representation by the
Distributor that it will continue to maintain its sponsorship of the Plan
indefinitely.
19.2 Delegation. The Employer hereby delegates to the Distributor the
authority to amend so much of the Adoption Agreement, this Prototype Plan, and
the Trust Agreement, as is in prototype form and, to the extent to which the'
Employer could effect such amendment, the Employer shall be deemed to have
consented to any amendment so made, When an election within the prototype form
has been made by the Employer, it shall be deemed to continue after amendment of
the prototype form unless and until the Employer expressly further amends the
election, notwithstanding that the provision for the election in the amended
prototype form is in a different form or place; provided, however, that if the
amended form inadvertently fails to provide means to duplicate exactly the
earlier election, such earlier election shall continue until such further
amendment. The immediately preceding sentence is subject to the qualification
that each Employer hereby delegates to the Distributor, in the event of such an
amendment of the prototype form, authority to determine conclusively that such a
continuation of an earlier election by the employer is not advisable and to make
the election for the Employer in the amended prototype form which in the
judgment of the Distributor most nearly corresponds with the election made by
the employer before an amendment of the prototype form, provided the following
procedure is followed: the election for the Employer may be made with respect to
any specified Employers as to whom it may be made applicable singly, or such
election may be made with respect to all Employers as to whom it may be made
applicable as a group; and the election shall be made as of an effective date
which has been specified in a notice mailed or delivered, at the last
address(es) of the Employer(s) on the records of the Distributor, to the
Employer(s) at least twenty (20) days before the effective date of the election.
Such notice may be mailed to Employers to whom it cannot be applicable by reason
of a previous election made by the Employer or otherwise, but it shall be
effective only as to those Employers who have received the notice and have not
themselves made a new election with respect to that item since the amendment of
the prototype form and previous to the effective date of such election by the
Distributor. The foregoing delegations of authority to make elections, or to
make amendments, shall not impose any duty on the Distributor to make them nor
shall it affect the interpretation of the Plan if they are not used.
19.3 Distribution of Accounts Upon Termination. Upon termination of the
Plan or complete discontinuance of contributions under it, the Administrator
shall determine whether to pay the interests of Participants, former
Participants and Beneficiaries immediately, to retain such interest in the Trust
and pay them in the future according to Section 10, or to use what other methods
the Administrator deems advisable in order to furnish whatever benefits the
Trust will provide, subject to the limitations of Section 10.2 limiting the
length of the period over which an Account can be paid.
SECTION 20. TRANSFERS
Nothing contained herein or in the Trust shall prevent the merger or
consolidation of the Plan with, or transfer of assets or liabilities of the Plan
to, another plan meeting the requirements of Code Section 401(a) or the transfer
to the Plan of assets or liabilities of another such plan so qualified under the
Code. Any such merger, consolidation or transfer shall be accompanied by the
transfer of such existing records and information as may be necessary to
properly allocate such assets among Participants, including any tax or other
information necessary for the Participants or persons administering the plan
which is receiving the assets. The terms of such merger, consolidation or
transfer must be such that if this Plan then terminated, each Participant would
receive a benefit immediately after the merger, consolidation or transfer equal
to or greater than the benefit be would have received if the Plan had terminated
immediately before the merger, consolidation or transfer.
SECTION 21. MISCELLANEOUS
21.1 Misrepresentation. Notwithstanding any other provision herein, if an
Employee misrepresents his age or any other fact, any benefit payable to him
hereunder shall be the smaller of: (i) the amount that would be payable if no
facts had been misrepresented, or (ii) the amount that would be payable if the
facts were as misrepresented.
21.2 Legal or Equitable Action. If any legal or equitable action with
respect to the Plan is brought by or maintained against any person, and the
results of such action are adverse to that person, attorney's fees and all other
costs to the Employer, the Administrator or the Trust of defending or bringing
such action shall be charged against the interest, if any, of such person under
the Plan.
21.3 No Enlargement of Plan Rights. It is a condition of the Plan and Trust
Agreement, and each Participant by participating herein expressly agrees, that
he shall look solely to the assets of the Trust for the payment of any benefit
under the Plan.
21.4 No Enlargement of Employment Rights. Nothing appearing in or done
pursuant to the Plan shall be construed to (a) give any person a legal or
equitable right or interest in the assets of the Trust or distribution
therefrom, nor against the Employer, except as expressly provided herein; (b)
create or modify any contract of employment between the Employer and any
Employee or obligate the Employer to continue the services of any Employee; or
(c) allow service as a sole proprietor or partner, or compensation therefor, to
be taken into account for any purpose of the Plan.
21.5 Written Orders. In taking or omitting to take any action under this
Plan or under the Trust, the Trustee may conclusively rely upon and shall be
protected in acting upon any written orders from or determinations by the
Employer or the Administrator as appropriate, or upon any other notices,
requests, consents, certificates or other instruments or papers believed by it
to be genuine and to have been properly executed and, so long as it acts in good
faith, in taking or omitting to take any other action.
19
<PAGE>
21.6 No Release from Liability. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the Act,
Subject thereto neither the Trustee, the Administrator nor any other person
shall have any liability under the Plan, except as a result of his negligence or
wilful misconduct, and in any event the Employer shall fully indemnify and save
harmless all persons from any such liability except that resulting from their
negligence or wilful misconduct.
21.7 Discretionary Actions. Any discretionary action, including the
granting of a loan pursuant to Section 12 hereof, to be taken by the Employer or
the Administrator under this Plan shall be non-discriminatory in nature and all
Employees similarly situated shall be treated in a uniform manner.
21.8 Headings. Headings herein are primarily for convenience of reference,
and if they conflict with the text, the text shall control.
21.9 Applicable Law. This Plan shall, to the extent state law is
applicable, be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the state in which the Employer has
its principal place of business.
21.10 No Reversion. Notwithstanding any other contrary provision of the
Plan, but subject nevertheless to Sections 5, 6 and 18, no part of the assets in
the Trust shall revert to the Employer, and no part of such assets, other than
that amount required to pay taxes or administrative expenses, shall be used for
any purpose other than exclusive benefit of Employees or their Beneficiaries.
21.11 Notices. The Employer will provide the notice to other interested
parties contemplated under Code Section 7476 before requesting a determination
by the Secretary of the Treasury or his delegate with respect to the
qualification of the Plan.
21.12 Conflict. In the event of any conflict between the provisions of this
Plan and the terms of any contract or agreement issued thereunder or with
respect thereto, the provisions of the Plan shall control.
20
<PAGE>
TRUST AGREEMENT
ESTABLISHED PURSUANT TO THE
SCUDDER CASH OR DEFERRED PROFIT SHARING PLAN
The Employer has established the Scudder Cash or Deferred Profit Sharing
Plan for the benefit of the Participants therein, As part of the Plan the
Employer has designated the person or persons specified in the Adoption
Agreement as Trustee(s) to maintain and administer a Trust upon the following
terms and conditions for the investment of contributions under the Plan, The
definitions in Section 2 of the Prototype Plan apply herein,
1. TRUST FUND
The Trustee shall open and maintain a Trust account for the Plan, with such
subdivisions as the Employer may specify pursuant to the Plan; provided,
however, that the maintaining of such subdivisions shall not require the
physical separation of assets.
Whenever a Participant makes a contribution the Administrator shall
ascertain that the Participant has received a copy of the current prospectus
relating to the shares of any Designated Investment Company in which such
contribution is to be invested plus, where required by any state or federal law,
the current prospectus relating to any other investment in which contributions
are to be invested, By remitting such a contribution to the Trustee the
Administrator shall be deemed to warrant to the Trustee that the Participant has
received such a prospectus, and by remitting any other contribution to the
Trustee the Administrator shall be deemed to warrant to the Trustee that the
Administrator has received a current prospectus of any Designated Investment
Company in which it is to be invested, plus, where required by any state or
federal law, the current prospectus relating to any other investment in which
contributions are to be invested.
All contributions to the Trust, and any assets into which such
contributions shall be invested or reinvested shall be hereinafter referred to
in this Trust Agreement as the "Trust Fund."
2. ADMINISTRATOR
The Plan shall be administered by the Administrator as provided for in
Section 13 of the Prototype Plan, and the Trustee shall have no duties with
respect to the administration of the Plan, (However an individual who is a
Trustee may also be Administrator.)
3. TRUSTEE: NUMBER, QUALIFICATIONS AND MAJORITY ACTION
The number of Trustees shall be one, two or three. Any natural person and
any corporation having power to act as a trustee in the premises may be a
Trustee. No person shall be disqualified from being a Trustee by being employed
by the Employer, by being Administrator, by being a trustee under any other plan
of the Employer or by being a Participant in this plan or such other plan.
A Trustee holding office as sole Trustee hereunder shall have all the
powers and duties herein given the Trustees. When the number of Trustees
hereunder is three, any two of them may act, but the third Trustee shall be
promptly informed of the action. When there are two or more Trustees hereunder,
they may, by written instrument communicated to the Employer and the
Administrator allocate among themselves the powers and duties herein given to
the Trustee. If such an allocation is made, to the extent permitted by
applicable law, no Trustee shall be liable either individually or as a trustee
for loss to the Plan from the acts or omissions of another Trustee with respect
to duties allocated to such other Trustee.
4. CHANGE OF TRUSTEE
Any Trustee may resign as Trustee upon notice in writing to the Employer
and the Administrator, and the Employer may remove Trustee upon notice in
writing to the Administrator, and to all the Trustees. The removal of a Trustee
shall be effective immediately, except that a corporation serving as a Trustee
shall be entitled to sixty (60) days' notice which it may waive, and the
resignation of a Trustee shall be effective immediately, provided that neither a
removal nor a resignation of a Trustee shall be effective if the Trustee is the
sole Trustee until a successor Trustee has been appointed and has accepted the
appointment. If within sixty (60) days of the delivery of the written
resignation or removal of a sole Trustee another Trustee shall not have been
appointed and have accepted, the resigning or removed Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee or
may terminate the Plan pursuant to Section 19 of the Prototype Plan. The Trustee
shall not be liable for the acts and omissions of such successor.
At any time when the number of Trustees is one or two the Employer may but
not need appoint one or two additional Trustees, provided that the number of
Trustees shall not be more than three. Such an appointment and the acceptance
thereof shall be in writing, and shall take effect upon the delivery of written
notice thereof to all the Trustees and the Administrator and such acceptance by
the appointed Trustee, provided that if a corporation is a Trustee then in the
absence of its consent such an appointment of an additional or successor Trustee
shall not have become effective until sixty (60) days after its receipt of
notice.
Although any Employer adopting the Plan may choose any Trustee who is
willing to accept the Trust, the Distributor or its successor, may make or may
have made tentative standard arrangements with any bank or trust company with
the expectation it will be used as the Trustee by a substantial group of
Employers. It is also contemplated that more favorable results can be obtained
with a substantial volume of business, and that it may become advisable to
remove such bank or trust company as Trustee and substitute another Trustee.
Therefore, anything else in the prior two paragraphs of this Section 4
notwithstanding, each Employer adopting this Plan hereby agrees that the
Distributor may, upon a date specified in a notice to the affected Employer of
at least thirty (30) days and in the absence of written objection by the
Employer received by the Distributor before such date, (i) remove any such
Trustee and in that case, or if such a Trustee has resigned to a group of
Employers, (ii) appoint such a successor Trustee, provided such action is taken
with respect to all Employers similarly circumstanced of which the Distributor
has knowledge, and provided such notice is given in writing mailed postage
prepaid to the Employer at the latest address which has been furnished the
Distributor directly or supplied to it by such Trustee which is to be succeeded.
If within sixty (60) days after such Trustee's resignation or removal the
Employer has not appointed a successor which has accepted such appointment,
unless the appointment of a successor Trustee is waiting for action by the
Distributor pursuant to the next-preceding sentence according to notice which
has been given, the Trustee may petition an appropriate court for the
appointment of its successor. The Trustee shall not be liable for the acts and
omissions of such successor.
Successor Trustees qualifying under this Section 4 shall have all rights
and powers and all duties and obligations of original Trustees.
5. INVESTMENT OF TRUST FUND
The Trust Fund shall be fully invested and reinvested pursuant to Section
VII of the Adoption Agreement. The Trustee shall have full power and authority
to invest in any property specified in instructions communicated to it by the
Administrator, and the Trustee may invest in property selected by it pursuant to
authority delegated to it and accepted by it, all without regard to the law of
any state regarding proper investment. The Trustee shall have no responsibility
for determining how the Trust Fund is to be invested or to see that investment
instructions communicated to it comply with the terms of the Plan. Annually, on
the Valuation Date or more frequently in the discretion of the Trustee, the
assets of the Trust shall be revalued at fair market value and the accounts of
the Trust shall be proportionately adjusted to reflect income, gains, losses or
expenses, if the system of accounting does not directly accomplish all such
adjustments. The Trust Fund shall be administered separately from, and shall not
include any assets being administered under, any other plan of an employer.
Interim valuations, if any, shall be applied uniformly and in a
non-discriminatory manner for all Employees.
Any assets in the Trust Fund may be registered in the name of the Trustee
or any nominee designated by the Trustee.
6. DISTRIBUTION FROM THE TRUST FUND
The Trustee shall make or cause to be made such distribution from the Trust
Fund as the Administrator may in writing direct upon certification by the
Administrator that the same is for the exclusive benefit of Employees or former
Employees of the Employer or their Beneficiaries, or for the payment of expenses
of administering the Plan.
7. CERTIFICATIONS AND INSTRUCTIONS
Any pertinent vote or resolution of the Board of Directors of the Employer
shall be certified to the Trustee over the signature of the Secretary or an
Assistant Secretary of the Employer and under its corporate seal. The Employer
shall promptly furnish the Trustee from time to time certificates of an officer
of the Employer evidencing the appointment and termination of office of the
individual or individuals appointed as Administrator under Section 13 of the
Prototype Plan.
The Administrator shall furnish the Trustee certificates signed by the
individual or individuals appointed as Administrator, naming the person or
persons authorized to give notice on behalf of the Administrator and providing
specimens of their signatures; and all requests, directions, requisitions for
moneys and instructions by the Administrator to the Trustee shall be writing,
signed by such person or persons as may be designated from time to time by the
Administrator; they may be standing requests, directions, requisitions or
instructions; and may be made to be contingent upon determination made by the
Trustee.
21
<PAGE>
8. ACCOUNTS AND APPROVAL
The Trustee shall keep accurate and detailed accounts of all investments,
receipts and disbursements and other transactions hereunder, and all books and
records relating thereto shall be open at all reasonable times to inspection and
audit by any person or persons designated by the Administrator or by the
Employer.
Within ninety (90) days following the close of each of the Plan Years
selected by the Employer in Section XII of the Adoption Agreement the Trustee
may, and upon the request of the Employer or the Administrator shall, file with
the Administrator and the Employer a written report setting forth all securities
or other investments (including insurance contracts) purchased and sold, all
receipts, disbursements and other transactions effected by them during the
period since the date covered by the next prior report, and showing the
securities and other property held at the end of such period, and such other
information about the Trust Fund as the Administrator shall request. Within
ninety (90) days from the date of mailing or delivery of such report the
Employer shall certify in writing to the Trustee that it has carefully reviewed
the contents of the report and has found therein no matter to which it objects
or takes exception other than those which it therewith sets forth accompanied by
the specific ground or grounds for such objections or exceptions.
9. TAXES
The Trustee may assume that any taxes assessed on or in respect of the
Trust Fund are lawfully assessed unless the Administrator shall in writing
advise the Trustee that in the opinion of counsel for the Employer such taxes
are not lawfully assessed. In the event that the Administrator shall so advise
the Trustee, the Trustee, if so requested by the Administrator and suitable
provision for their indemnity having been made, shall contest the validity of
such taxes in any manner deemed appropriate by the Administrator or counsel for
the Employer. The word "taxes" in this Section 9 shall be deemed to include any
interest or penalties that may be levied or imposed in respect to any taxes
assessed.
10. EMPLOYMENT OF COUNSEL
The Trustee may employ legal counsel (who may be counsel for the Employer)
and shall be fully protected in acting or refraining from acting, upon such
counsel's advice in respect to any legal questions.
11. REIMBURSEMENT AND COMPENSATION OF TRUSTEE
The Trustee shall be entitled to be reimbursed for his reasonable expenses.
An individual Trustee who is an Employee of the Employer shall not be
compensated for his services as Trustee, save as his compensation as an Employee
of the Employer may be such compensation. A corporation, or an individual who is
not an Employee of the Employer, which serves as a Trustee shall be entitled to
reasonable compensation for its or his services. Any taxes of any kind
whatsoever, including transfer taxes incurred in connection with the investment
or reinvestment of the assets of the Trust Fund that may be levied or assessed
in respect to such assets shall, if allocable to the Accounts of specific
Participants, be charged to such Accounts, and if not so allocable, they shall
be equitably apportioned among all such Participants' Accounts. All other
administrative expenses incurred by the Trustee in the performance of his duties
including fees for legal services rendered to them shall be paid by the Employer
within a reasonable time specified by the Trustee or at the Trustee's option may
be equitably apportioned among such Accounts.
12. LIMITATION OF TRUSTEE'S LIABILITY; INDEMNIFICATION
Nothing in this Trust Agreement or the Plan of which it is a part shall
relieve any person from liability for any responsibility under Part 4 of Title I
of the Act. Subject thereto, the Trustee shall have no liability under the Plan,
except as may arise from its negligence or wilful misconduct, and in any event,
the Employer shall fully indemnify the Trustee and save it harmless from any
such liability except that resulting from its negligence or wilful misconduct.
In the application of the foregoing, except as otherwise required by law:
12.1 The Trustee shall have no duty to take any action other than as herein
specified, unless the Administrator shall furnish it with instructions in proper
form and such instructions shall have been specifically agreed to by it, or to
defend or engage in any suit unless it shall have first agreed in writing to do
so and shall have been fully indemnified to its satisfaction.
12.2 The Trustee may conclusively rely upon and shall be protected in
acting in good faith upon any written representation or order from the
Administrator or any other notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and properly executed, or any
instrument or paper if it believes the signature thereon to be genuine.
12.3 The Trustee shall not be liable for interest on any reasonable cash
balances maintained in the Trust.
12.4 The Trustee shall not be obligated to, but may, in its discretion,
receive a contribution from a Participant unless forwarded by the Administrator.
13. AMENDMENT
No part of the corpus or income of the Trust Fund shall be used for or
diverted to purposes other than the exclusive benefit of Participants or their
Beneficiaries or the administrative expenses of the Plan, or revert to the
Employer except as specifically permitted by the terms of the Plan. The right of
the Employer to amend or terminate the Trust Agreement and the delegation of
that right are set forth in Section 19 of the Prototype Plan, subject to the
foregoing and other limitations in the Plan.
The Employer will cause a copy of any amendment of the Adoption Agreement
to be delivered to the Trustee for the Trustee's information.
14. TERMINATION
Upon certification by the Board of Directors of the Employer that the
Employer has terminated the Plan as therein provided and that the Trust Fund or
part thereof is accordingly to be distributed in accordance with the termination
provisions thereof, the Trustee shall pay such amounts from the Trust Fund as
the Administrator may direct, either directly to the persons entitled to receive
such amounts or to the Administrator for distribution, provided the
Administrator further certifies that all such amounts are payable under the Plan
to Participants or their Beneficiaries or for administrative expenses of the
Plan or for other payments in accordance with the provisions thereof.
15. SUCCESSOR TRUSTEES
Any corporation into which a corporation acting as a Trustee hereunder may
be merged or with which it may be consolidated, or any corporation resulting
from any merger, reorganization or consolidation to which such Trustee may be a
party, shall be the successor of the Trustee hereunder, without the necessity of
any appointment or other action, provided it does not resign and is not removed.
16. ENFORCEMENT OF PROVISIONS
To the extent permitted by applicable law, the Employer and the
Administrator shall have the exclusive right to enforce any and all provisions
of this Agreement on behalf of all Employees or former Employees of the Employer
or their Beneficiaries or other persons having or claiming to have an interest
in the Trust Fund or under the Plan. In any action or proceeding affecting the
Trust Fund or any property constituting a part or all thereof, or the
administration thereof or for instructions to the Trustee, the Employer, the
Administrator and the Trustee shall be the only necessary parties; and shall be
solely entitled to any notice of process in connection therewith; and any
judgment that may be entered in such action or proceeding shall be binding and
conclusive on all persons having or claiming to have any interest in the Trust
Fund or under the Plan.
17. VOTING
The Trustee shall deliver, or cause to be executed and delivered, to the
Administrator all notices, prospectuses, financial statements, proxies and proxy
soliciting materials received by the Trustee relating to securities held by the
Trust, and the Administrator shall deliver these to the appropriate Participant
or the Beneficiary of a deceased Participant. The Trustee shall not vote any
securities held by the Trust except in accordance with the written instructions
of the Participant or the Beneficiary of the Participant, if the Participant is
deceased.
18. GOVERNING LAW
This instrument shall, to the extent state law is applicable, be governed
by and interpreted under the laws of the state in which the Employer has its
principal place of business.
19. ACCEPTANCE
The Trustee accepts the trust hereunder.
20. TRANSFER TO EMPLOYER
Anything contained elsewhere in this Agreement to the contrary
notwithstanding, the Employer reserves the right by action of its Board of
directors to direct the Trustee to transfer the Trust Fund to the Employer
subject to claims against it for administrative expenses if the Plan is properly
terminated in accordance with the terms and conditions of the original Plan upon
the Employer's receipt of a determination letter from the Director of Internal
Revenue determining that the Plan initially fails to qualify under Section 401
(a) of the Internal Revenue Code. The Employer shall direct the Trustee to
transfer to Employees such portion of the Trust Fund as the Plan requires to be
transferred to them on account of their contributions, but the Trustee shall not
be required to see to the application of the Trust Fund for this purpose. If
such termination ceases to be possible this section shall be of no further force
or effect.
22
<PAGE>
Telephone
numbers and
addresses
- --------------------------------------------------------------------------------
National toll free
telephone numbers
and addresses
----------------------------------------------------------------------
For information about the Scudder 401(k) program,
CALL (toll-free) 1-800-225-2471
(within Massachusetts, call collect 617-482-3990)
or
WRITE to: Scudder Funds Croup Retirement Plans
175 Federal Street
Boston, MA 02110
A Group Retirement Specialist from Scudder Fund Distributors, Inc.,
underwriter for the Scudder funds, will answer your calls and letters.
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Local addresses
of Scudder Fund
Distributors, Inc.
Boca Raton
150 East Palmetto Park Road
Boca Raton, Florida 33432
305-395-0040
Boston
175 Federal Street
Boston, Massachusetts 02440
617-482-3990
Chicago
Suite 2200, 111 East Wacker Drive
Chicago, Illinois 60604
312-861-2700
Cincinnati
540 Carew Tower
Cincinnati, Ohio 45202
513-621-2733
Cleveland
Suite 700, 1801 East Ninth Street
Cleveland, Ohio 44114
216-241-7744
Dallas
Suite 2124, Plaza of the Americas
700 North Pearl
Dallas, Texas 75201
214-742-1465
1530 Bank of the Southwest Building
Houston, Texas 77002
713-659-3838
Los Angeles
333 South Hope Street
Los Angeles, California 90071
243-6284444
New York
345 Park Avenue
New York, New York 10154
212-350-8200
Philadelphia
Three Girard Plaza
Philadelphia, Pennsylvania 19402
215-864-7200
Portland, Oregon
Benjamin Franklin Plaza
1 S.W. Columbia St.
Portland, Oregon 97258
503-224-3999
San Francisco
Suite 4100, 104 California Street
San Francisco, California 94144
415-981-8191
23
<PAGE>
Scudder
- ---------------------------------------------
This booklet is not to be used in connection
with the offering of any of the Scudder funds
unless preceded or accompanied by the
appropriate current prospectuses. Scudder
Fund Distributors, Inc. is the underwriter
of the Scudder no-load mutual funds.
K-S-33 (C) Scudder Fund Distributors, Inc.
International Fund
Series
<TABLE>
<CAPTION>
DATE OF DISTRIBUTIONS REINV CAP TOTAL CAPITAL TOTAL MARCH ADJUSTED ANNUAL
DIST CAP GAIN INCOME PRICE SHARE AMT SHARE AMT SERIES SERIES PRICES DATE NAV PRICE RETURNS
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.8397 8.42048 13.81 3/78 116.286828
8/28/78 0.49643 0.28557 15.75 0.03152 0.04965 7.05528 8.83856 15.78 3/79 139.472532 19.94
8/27/79 1.35633 0.49272 15.17 0.08941 0.12189 7.68609 9.91588 14.95 3/80 148.242459 6.29
8/15/80 1.23081 0.57199 17.43 0.07061 0.10343 8.22884 10.94149 19.06 3/81 208.544838 40.68
8/14/81 0.03395 0.4043 17.65 0.00192 0.02483 8.24466 11.21317 15.42 3/82 172.907075 -17.09
8/18/82 0.54 14.19 0.00000 0.03805 8.24466 11.63989 19.54 3/83 227.443380 31.54
8/15/83 0.31 20.80 0.00000 0.01490 8.24466 11.81337 24.29 3/84 286.946647 26.16
5/2/84 0.577 0.103 23.16 0.02491 0.02936 8.45007 12.16022 23.03 3/85 280.049805 -2.40
5/2/85 0.129 0.405 22.43 0.00575 0.02381 8.49867 12.44972 36.93 3/86 459.768177 64.17
5/00/86 1.6835 0.492 37.47 0.04493 0.05806 8.88051 13.17255
12/31/86 4.25 0 38.38 0.11073 0.11073 9.86389 14.63121 44.05 3/87 644.504691 40.18
5/00/87 4.574 0.456 41.37 0.11056 0.12159 10.95447 16.41015
12/31/87 4.6423 0.5371 30.60 0.15171 0.16926 12.61636 19.18776 33.43 3/88 641.446785 -0.47
5/00/88 0.555 0.125 33.20 0.01672 0.02048 12.82727 19.58076
12/00/88 2.50 32.63 0.07662 0.07662 13.81005 21.08097 34.79 3/89 733.407048 14.34
10 YEARS 5 YEARS 1 YEAR ANNUALIZED
DATE OF BEGIN BEGIN BEGIN RETURNS
DIST $1000 $1000 $1000
8/28/78 $1,000 18.05 10 YEARS
8/27/79 $1,063 20.65 5 YEARS
8/15/80 $1,495 14.30 1 YEAR
8/14/81 $1,240
8/18/82 $1,631
8/15/83 $2,057 $1,000 CUMULATIVE
5/2/84 $2,008 $ 976 RETURNS
5/2/85 $3,296 $1,602
5/00/86 425.843 10 YEARS
12/31/86 $4,621 $2,246 155.590 5 YEARS
5/00/87 14.336 1 YEAR
12/31/87 $4,599 $2,235 $1,000
5/00/88
12/00/88 $5,258 $2,556 $1,143
<CAPTION>
CAP ONLY CAP
DATE OF DISTRIBUTIONS REINV CAP TOTAL CAPITAL TOTAL MARCH ADJUSTED ANNUAL
DISTRIBUTION CAP GAIN INCOME PRICE SHARE AMT SHARE AMT SERIES SERIES PRICES DATE NAV PRICE RETURNS
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.8397 8.42048 13.81 3/78 94.456257
8/28/78 0.49643 0.28557 15.75 0.03152 0.04965 7.05528 8.83856 15.78 3/79 111.332365 17.87
8/27/79 1.35633 0.49272 15.17 0.08941 0.12189 7.68609 9.91588 14.95 3/80 114.906996 3.21
8/15/80 1.23081 0.57199 17.43 0.07061 0.10343 8.22884 10.94149 19.06 3/81 156.841605 36.49
8/14/81 0.03395 0.4043 17.65 0.00192 0.02483 8.24466 11.21317 15.42 3/82 127.132715 -18.94
8/18/82 0.54 14.19 0.00000 0.03805 8.24466 11.63989 19.54 3/83 161.100730 26.72
8/15/83 0.31 20.8 0.00000 0.01490 8.24466 11.81337 24.29 3/84 200.262883 24.31
5/2/84 0.577 0.103 23.16 0.02491 0.02936 8.45007 12.16022 23.03 3/85 194.605073 -2.83
5/2/85 0.129 0.405 22.43 0.00575 0.02381 8.49867 12.44972 36.93 3/86 313.82872X 61.28
5/00/86 1.6835 0.492 37.47 0.04493 0.05806 8.88051 13.17255
12/31/86 4.25 0 38.38 0.11073 0.11073 9.86389 14.63121 44.05 3/87 434.504190 38.44
5/00/87 4.574 0.456 41.37 0.11056 0.12159 10.95447 16.41015
12/31/87 4.8175 0.3619 30.6 0.15743 0.16926 12.67908 19.18776 33.43 3/88 423.861715 -2.45
5/00/88 0.555 0.125 33.20 0.01672 0.02048 12.89104 19.58076
12/00/88 2.50 32.63 0.07662 0.07662 13.87870 21.08097 34.79 3/89 482.840118 13.91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Scudder International Annual Report for the fiscal year ended
March 31, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER>1
<NAME> Scudder International Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 1,925,260,733
<INVESTMENTS-AT-VALUE> 2,585,671,373
<RECEIVABLES> 32,165,341
<ASSETS-OTHER> 709,597
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,618,546,311
<PAYABLE-FOR-SECURITIES> 28,939,107
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,576,518
<TOTAL-LIABILITIES> 35,515,625
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,921,042,575
<SHARES-COMMON-STOCK> 53,734,143
<SHARES-COMMON-PRIOR> 55,022,967
<ACCUMULATED-NII-CURRENT> 1,417,347
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 249,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 660,321,404
<NET-ASSETS> 2,583,030,686
<DIVIDEND-INCOME> 38,314,671
<INTEREST-INCOME> 7,385,262
<OTHER-INCOME> 0
<EXPENSES-NET> 29,395,448
<NET-INVESTMENT-INCOME> 16,304,485
<REALIZED-GAINS-CURRENT> 104,826,570
<APPREC-INCREASE-CURRENT> 140,573,351
<NET-CHANGE-FROM-OPS> 261,704,406
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (68,670,750)
<DISTRIBUTIONS-OF-GAINS> (64,600,067)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,978,853
<NUMBER-OF-SHARES-REDEEMED> (15,775,731)
<SHARES-REINVESTED> 2,508,054
<NET-CHANGE-IN-ASSETS> 68,076,369
<ACCUMULATED-NII-PRIOR> (14,026,160)
<ACCUMULATED-GAINS-PRIOR> 27,744,228
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 20,989,160
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 2,565,801,055
<PER-SHARE-NAV-BEGIN> 45.71
<PER-SHARE-NII> (0.30)
<PER-SHARE-GAIN-APPREC> (4.50)
<PER-SHARE-DIVIDEND> 1.28
<PER-SHARE-DISTRIBUTIONS> 1.19
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 48.07
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
