<PAGE>
As filed with the Securities and Exchange Commission
on December 21, 2000
Securities Act File No.
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
-------
Pre-Effective Amendment No. /____/ Post-Effective Amendment No. /____/
SCUDDER INTERNATIONAL FUND, INC.
(Exact Name of Registrant as Specified in Charter)
345 Park Avenue, New York, New York 10154
(Address of Principal Executive Offices) (Zip Code)
John Millette
Scudder Kemper Investments, Inc.
Two International Place
Boston, MA 02110-4103
(Name and Address of Agent for Service)
(617) 295-1000
(Registrant's Area Code and Telephone Number)
with copies to:
Caroline Pearson, Esq. Joseph R. Fleming, Esq.
Scudder Kemper Investments, Inc. Dechert
Two International Place Ten Post Office Square - South
Boston, MA 02110-4103 Boston, MA 02109-4603
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement is declared effective.
Title of Securities Being Registered:
Shares of Capital Stock ($.01 par value)
of Scudder International Fund, a series of the Registrant
--------------------------------------------------------------------------------
It is proposed that this filing will become effective on January 20, 2001
pursuant to Rule 488
under the Securities Act of 1933.
--------------------------------------------------------------------------------
No filing fee is required because the Registrant has previously registered an
indefinite number of its shares under the Securities Act of 1933, as amended,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
<PAGE>
PART A
INFORMATION REQUIRED IN THE PROXY STATEMENT/PROSPECTUS
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
KEMPER INTERNATIONAL FUND
Please take notice that a Special Meeting of Shareholders (the "Meeting")
of Kemper International Fund (the "Fund") will be held at the offices of Scudder
Kemper Investments, Inc., 13th Floor, Two International Place, Boston, MA 02110-
4103, on May 24, 2001, at 4:00 p.m., Eastern time, for the following purposes:
Proposal 1: To elect Trustees of the Fund.
Proposal 2: To approve an Agreement and Plan of Reorganization for the
Fund (the "Plan"). Under the Plan, (i) all or substantially
all of the assets and all of the liabilities of the Fund would
be transferred to Scudder International Fund, (ii) each
shareholder of the Fund would receive shares of Scudder
International Fund of a corresponding class to those held by
the shareholder in the Fund in an amount equal to the value of
their holdings in the Fund, and (iii) the Fund would then be
terminated.
Proposal 3: To ratify the selection of Ernst & Young LLP as the
independent auditors for the Fund for the Fund's current
fiscal year.
The persons named as proxies will vote in their discretion on any other
business that may properly come before the Meeting or any adjournments or
postponements thereof.
Holders of record of shares of the Fund at the close of business on March
5, 2001 are entitled to vote at the Meeting and at any adjournments or
postponements thereof.
In the event that the necessary quorum to transact business or the vote
required to approve any Proposal is not obtained at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies. Any
such adjournment as to a matter will require the affirmative vote of the holders
of a majority of the Fund's shares present in person or by proxy at the Meeting.
The persons named as proxies will vote FOR any such adjournment those proxies
which they are entitled to vote in favor of that Proposal and will vote AGAINST
any such adjournment those proxies to be voted against that Proposal.
By Order of the Board,
/s/ Philip J. Collora
Philip J. Collora
Secretary
March 6, 2001
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN
IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE (OR TO TAKE ADVANTAGE OF
THE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE PROXY CARD(S)).
YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) (OR YOUR VOTING BY OTHER
AVAILABLE MEANS) MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS.
IF YOU WISH TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON AT THAT TIME,
YOU WILL STILL BE ABLE TO DO SO.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION............................................................ __
PROPOSAL 1: ELECTION OF TRUSTEES....................................... __
PROPOSAL 2: APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION........... __
SYNOPSIS................................................... __
PRINCIPAL RISK FACTORS..................................... __
THE PROPOSED TRANSACTION................................... __
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT
AUDITORS................................................... __
ADDITIONAL INFORMATION.................................................. __
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
March [_], 2001
Relating to the acquisition of the assets of
KEMPER INTERNATIONAL FUND
222 South Riverside Plaza
Chicago, Illinois 60606
(800) [_]
--------------------------
by and in exchange for shares of capital stock of
SCUDDER INTERNATIONAL FUND,
a separate series of
SCUDDER INTERNATIONAL FUND, INC. (the "Acquiring Corporation")
345 Park Avenue
New York, New York 10154
(800) [_]
--------------------------
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of
Kemper International Fund (the "Fund") in connection with three proposals.
Proposal 1 describes the election of Trustees and Proposal 3 proposes the
ratification of the selection of the Fund's auditors.
In Proposal 2, shareholders are asked to vote on an Agreement and Plan of
Reorganization (the "Plan") pursuant to which all or substantially all of the
assets of the Fund would be acquired by Scudder International Fund, a fund with
similar investment characteristics and managed by the same investment manager as
the Fund, in exchange for shares of capital stock of Scudder International Fund
and the assumption by Scudder International Fund of all of the liabilities of
the Fund, as described more fully below (the "Reorganization"). Shares of
Scudder International Fund received would then be distributed to the
shareholders of the Fund in complete liquidation of the Fund. As a result of the
Reorganization, shareholders of the Fund will become shareholders of Scudder
International Fund and will receive shares of Scudder International Fund in an
amount equal to the value of their holdings in the Fund as of the close of
business on the business day preceding the closing of the Reorganization (the
"Valuation Date"). The closing of the Reorganization (the "Closing") is
contingent upon shareholder approval of the Plan. A copy of the Plan is attached
as Exhibit A. The Reorganization is expected to occur on or about June 18, 2001.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Proposals 1 and 2 arise out of a restructuring program proposed by Scudder
Kemper Investments, Inc. ("Scudder Kemper" or the "Investment Manager"), the
investment manager of both the Fund and Scudder International Fund, described in
more detail below. The restructuring program is designed to respond to changing
industry conditions and investor needs. Scudder Kemper seeks to consolidate its
fund line-up and offer all of the open-end funds it advises under the "Scudder"
name. In addition, Scudder Kemper anticipates changing its name to "Zurich
Scudder Investments, Inc." Scudder Kemper believes that the combination of its
open-end, directly-distributed funds (the "Scudder Funds") with the
1
<PAGE>
funds in the Kemper Family of Funds (the "Kemper Funds") will permit it to
streamline its administrative infrastructure and focus its distribution efforts.
The restructuring program will not result in any reduction in the services
currently offered to Kemper Funds shareholders.
Scudder International Fund is a diversified series of shares of capital
stock of the Acquiring Corporation, which is an open-end management investment
company organized as a Maryland corporation. The Fund, which is also
diversified, is the only active series of shares of beneficial interest of
Kemper International Fund (the "Acquired Trust"), an open-end management
investment company organized as a Massachusetts business trust.
In the descriptions of the Proposals below, the word "fund" is sometimes
used to mean an investment company or series thereof in general, and not the
Fund whose proxy statement this is. In addition, for simplicity, actions are
described in this Proxy Statement/Prospectus as being taken by either the Fund
or Scudder International Fund (which are collectively referred to as the "Funds"
and each referred to as a "Fund"), although all actions are actually taken
either by the Acquired Trust or the Acquiring Corporation, on behalf of the
applicable Fund.
This Proxy Statement/Prospectus sets forth concisely the information about
Scudder International Fund that a prospective investor should know before
investing and should be retained for future reference. For a more detailed
discussion of the investment objective, policies, restrictions and risks of
Scudder International Fund, see Scudder International Fund's prospectus dated
December 29, 2000, as supplemented from time to time, which is included in the
materials you received with this document and incorporated herein by reference
(meaning that it is legally part of this document). For a more detailed
discussion of the investment objective, policies, restrictions and risks of the
Fund, see the Fund's prospectus dated March 1, 2001, as supplemented from time
to time, which is also incorporated herein by reference and a copy of which may
be obtained upon request and without charge by calling or writing the Fund at
the telephone number or address listed above.
Also incorporated herein by reference is Scudder International Fund's
statement of additional information dated December 29, 2000, as supplemented
from time to time, which may be obtained upon request and without charge by
calling or writing Scudder International Fund at the telephone number or address
listed above. A Statement of Additional Information, dated March [ ], 2001,
containing additional information about the Reorganization has been filed with
the Securities and Exchange Commission (the "SEC" or the "Commission") and is
incorporated by reference into this Proxy Statement/Prospectus. A copy of this
Statement of Additional Information is available upon request and without charge
by calling or writing Scudder International Fund at the telephone number or
address listed above. Shareholder inquiries regarding Scudder International Fund
may be made by calling (800) [ ] and shareholder inquiries regarding the Fund
may be made by calling (800) [ ]. The information contained in this document
concerning each Fund has been provided by, and is included herein in reliance
upon, that Fund.
The Board of Trustees that oversees the Fund is soliciting proxies from
shareholders of the Fund for the Special Meeting of Shareholders to be held on
May 24, 2001, at Scudder Kemper's offices, 13th Floor, Two International Place,
Boston, MA 02110-4103 at 4:00 p.m. (Eastern time), and at any and all
adjournments or postponements thereof (the "Meeting"). This Proxy
Statement/Prospectus, the Notice of Special Meeting and the proxy card(s) are
first being mailed to shareholders on or about March 6, 2001 or as soon as
practicable thereafter.
The Board of Trustees unanimously recommends that shareholders vote FOR the
nominees listed in Proposal 1, and FOR Proposals 2 and 3.
2
<PAGE>
PROPOSAL 1: ELECTION OF TRUSTEES
At the Meeting, shareholders will be asked to elect eleven individuals to
constitute the Board of Trustees to oversee the Fund. Shareholders are being
asked to elect these individuals to the Board of Trustees in case the Plan, as
described under Proposal 2, is not approved by shareholders. However, if the
Plan is approved, the current Board of Directors of the Acquiring Corporation
will oversee the operations of the combined fund (see "Synopsis - Other
Differences Between the Funds" under Proposal 2).
As discussed further below, Scudder Kemper commenced an initiative to
restructure and streamline the management and operations of the funds it
advises. In connection with that initiative, the Independent Trustees (as
defined below) of the two separate boards of Kemper Funds proposed to
consolidate into a single board. The eleven individuals who have been nominated
for election as Trustees of the Fund were nominated after careful consideration
by the present Board of Trustees. The nominees are listed below. Seven of the
nominees are currently Trustees of the Fund and three of the nominees are
currently trustees or directors of other Kemper Funds. One of the nominees,
although not currently a trustee or director of any Kemper Fund, is a senior
executive officer at Scudder Kemper. These eleven nominees are also being
nominated for election as trustees or directors of most of the other Kemper
Funds. The proposed slate of nominees reflects an effort to consolidate the two
separate boards who have historically supervised different Kemper Funds. The
proposed consolidation is expected to provide administrative efficiencies to
both the Funds and Scudder Kemper.
The persons named as proxies on the enclosed proxy card(s) will vote for
the election of the nominees named below unless authority to vote for any or all
of the nominees is withheld in the proxy. Each Trustee so elected will serve as
a Trustee commencing on July 1, 2001 and until the next meeting of shareholders,
if any, called for the purpose of electing Trustees and until the election and
qualification of a successor or until such Trustee sooner dies, resigns or is
removed as provided in the governing documents of the Fund. Each of the nominees
has indicated that he or she is willing to serve as a Trustee. If any or all of
the nominees should become unavailable for election due to events not now known
or anticipated, the persons named as proxies will vote for such other nominee or
nominees as the current Trustees may recommend. The following tables present
information about the nominees and the Trustees not standing for re-election.
Each nominee's or Trustee's date of birth is in parentheses after his or her
name. Unless otherwise noted, (i) each of the nominees and Trustees has engaged
in the principal occupation(s) noted in the following tables for at least the
most recent five years, although not necessarily in the same capacity, and (ii)
the address of each nominee is c/o Scudder Kemper Investments, Inc., 222 South
Riverside Plaza, Chicago, Illinois 60606.
Nominees for Election as Trustees:
------------------------------------------------------------------------------
Year First
Name (Date of Birth), Principal Occupation and Affiliations Became a Board
Member
------------------------------------------------------------------------------
John W. Ballantine (2/16/46),/(1)/ Retired; formerly, First
Chicago NBD Corporation/The First National Bank of
Chicago: 1996-1998 Executive Vice President and Chief Risk 1999
Management Officer; 1995-1996 Executive Vice President and
Head of International Banking.
------------------------------------------------------------------------------
3
<PAGE>
------------------------------------------------------------------------------
Year First
Name (Date of Birth), Principal Occupation and Affiliations Became a Board
Member
------------------------------------------------------------------------------
Lewis A. Burnham (1/8/33),/(1)/ Retired; formerly, Partner,
Business Resources Group; formerly, Executive Vice 1981
President, Anchor Glass Container Corporation.
------------------------------------------------------------------------------
Linda C. Coughlin (1/1/52),*/(2)/ Managing Director, Scudder 2000
Kemper.
------------------------------------------------------------------------------
Donald L. Dunaway (3/8/37),/(1)/ Retired; formerly, Executive
Vice President, A.O. Smith Corporation (diversified 1981
manufacturer).
------------------------------------------------------------------------------
James R. Edgar (7/22/46),/(3)/ Distinguished Fellow, Nominee
University of Illinois Institute of Government and Public
Affairs; Director, Kemper Insurance Companies (not
affiliated with the Kemper Funds); formerly, Governor,
State of Illinois.
------------------------------------------------------------------------------
William F. Glavin (8/30/58),* Managing Director, Scudder Nominee
Kemper.
------------------------------------------------------------------------------
Robert B. Hoffman (12/11/36),/(1)/ Retired; formerly,
Chairman, Harnischfeger Industries, Inc. (machinery for
the mining and paper industries); formerly, Vice Chairman
and Chief Financial Officer, Monsanto Company
(agricultural, pharmaceutical and nutritional/food 1981
products); formerly, Vice President, Head of International
Operations, FMC Corporation (manufacturer of machinery and
chemicals); Director, Harnischfeger Industries, Inc.
------------------------------------------------------------------------------
Shirley D. Peterson (9/3/41),/(1)/ Retired; formerly,
President, Hood College; formerly, Partner, Steptoe &
Johnson (attorneys); prior thereto, Commissioner, Internal 1995
Revenue Service; prior thereto, Assistant Attorney General
(Tax), U.S. Department of Justice; Director, Bethlehem
Steel Corp.
------------------------------------------------------------------------------
Fred B. Renwick (2/1/30),/(3)/ Professor of Finance, New York Nominee
University, Stern School of Business; Director, the
Wartburg Foundation; Chairman, Investment Committee of
Morehouse College Board of Trustees; Director, American
Bible Society Investment Committee; previously member of
the Investment Committee of Atlanta University Board of
Trustees; formerly Director of Board of Pensions
Evangelical Lutheran Church in America.
------------------------------------------------------------------------------
4
<PAGE>
----------------------------------------------------------------------------
Year First
Name (Date of Birth), Principal Occupation and Affiliations Became a
Board
Member
----------------------------------------------------------------------------
William P. Sommers (7/22/33),/(1)/ Consultant and Director,
SRI Consulting; prior thereto, President and Chief
Executive Officer, SRI International (research and
development); prior thereto, Executive Vice President,
Iameter (medical information and educational service 1981
provider); prior thereto, Senior Vice President and
Director, Booz, Allen & Hamilton Inc. (management
consulting firm); Director, PSI Inc., Evergreen Solar,
Inc. and Litton Industries.
----------------------------------------------------------------------------
John G. Weithers (8/8/33),/(3)/ Formerly, Chairman of the Nominee
Board and Chief Executive Officer, Chicago Stock Exchange;
Director, Federal Life Insurance Company; President of the
Members of the Corporation and Trustee, DePaul University.
------------------------------------------------------------------------------
* Interested person of the Fund, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act").
/(1)/ Messrs. Ballantine, Burnham, Dunaway, Hoffman, Sommers and Ms. Peterson
serve as board members of 26 investment companies, with 45 portfolios
managed by Scudder Kemper.
/(2)/ Ms. Coughlin serves as a board member of 52 investment companies with 97
portfolios managed by Scudder Kemper.
/(3)/ Messrs. Edgar, Renwick and Weithers serve as board members of 16
investment companies with 58 portfolios managed by Scudder Kemper.
Trustees Not Standing for Re-Election:
--------------------------------------------------------------------------------
Present Office with the Fund;
Principal Occupation or Employment
Name (Date of Birth) and Directorships
------------------- -----------------
--------------------------------------------------------------------------------
Donald R. Jones (1/17/30) Trustee; Retired; Director, Motorola, Inc.
(manufacturer of electronic equipment and
components); formerly, Executive Vice
President and Chief Financial Officer,
Motorola, Inc.
--------------------------------------------------------------------------------
Thomas W. Littauer (4/26/55)* Chairman, Trustee and Vice President; Managing
Director, Scudder Kemper; formerly, Head of
Broker Dealer Division of Putnam Investment
Management; formerly, President of Client
Management Services for Fidelity Investments.
--------------------------------------------------------------------------------
* Interested person of the Fund, as defined in the 1940 Act.
5
<PAGE>
Appendix 1 lists the number of shares of the Fund owned directly or
beneficially by the Trustees and by the nominees for election.
Responsibilities of the Board of Trustees -- Board and Committee Meetings
The primary responsibility of the Board is to represent the interests of
the shareholders of the Fund and to provide oversight of the management of the
Fund. The board that is proposed for election at this Meeting is comprised of
two individuals who are considered "interested" Trustees, and nine individuals
who have no affiliation with Scudder Kemper and who are not considered
"interested" Trustees (the "Independent Trustees"). The SEC has recently
proposed a rule that would require a majority of the board members of a fund to
be "independent" if the fund were to take advantage of certain exemptive rules
under the 1940 Act. If the proposed Board of Trustees is approved by
shareholders, more than 75% will be Independent Trustees. The Independent
Trustees have been selected and nominated solely by the current Independent
Trustees of the Fund.
The Trustees meet multiple times during the year to review the investment
performance of the Fund and other operational matters, including policies and
procedures designed to assure compliance with regulatory and other requirements.
Furthermore, the Independent Trustees review the fees paid to the Investment
Manager and its affiliates for investment advisory services and other
administrative and shareholder services. The Trustees have adopted specific
policies and guidelines that, among other things, seek to further enhance the
effectiveness of the Independent Trustees in performing their duties. Many of
these are similar to those suggested in the Investment Company Institute's 1999
Report of the Advisory Group on Best Practices for Fund Directors (the "Advisory
Group Report"). For example, the Independent Trustees select independent legal
counsel to work with them in reviewing fees, advisory and other contracts and
overseeing fund matters, and regularly meet privately with their counsel.
Currently, the Board of Trustees has an Audit Committee and a Nominating
and Governance Committee, the responsibilities of which are described below. In
addition, the Board has a Valuation Committee and a Contract Renewal Committee.
During calendar year 2000, the Board of Trustees met eight times. Each then
current Trustee attended 75% or more of the respective meetings of the Board and
the Committees (if a member thereof) held during calendar year 2000.
Audit Committee
The Audit Committee makes recommendations regarding the selection of
independent auditors for the Fund, confers with the independent auditors
regarding the Fund's financial statements, the results of audits and related
matters, and performs such other tasks as the full Board of Trustees deems
necessary or appropriate. As suggested by the Advisory Group Report, the Audit
Committee is comprised of only Independent Trustees, receives annual
representations from the auditors as to their independence, and has a written
charter that delineates the committee's duties and powers. Currently, the
members of the Audit Committee are Donald L. Dunaway (Chairman), Robert B.
Hoffman and Donald R. Jones. The Audit Committee held five meetings during
calendar year 2000.
Nominating and Governance Committee
The Board of Trustees has a Nominating and Governance Committee, comprised
of only Independent Trustees, that seeks and reviews candidates for
consideration as nominees for membership on the Board and oversees the
administration of the Acquired Trust's Governance Procedures and Guidelines. The
Nominating and Governance Committee has a written charter that delineates the
committee's duties and powers. Shareholders wishing to submit the name of a
candidate for
6
<PAGE>
consideration by the committee should submit their recommendation(s) to the
Secretary of the Acquired Trust. Currently, the members of the Nominating and
Governance Committee are Lewis A. Burnham (Chairman), John W. Ballantine,
Shirley D. Peterson and William P. Sommers. The Nominating and Governance
Committee held one meeting during calendar year 2000.
Officers
The following persons are officers of the Fund:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Present Office with the
Acquired Trust; Principal
Name (Date of Birth) Occupation or Employment Year First Became an Officer/1/
------------------- ------------------------- -------------------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark S. Casady (9/21/60) President; Managing Director,
Scudder Kemper; formerly,
Institutional Sales Manager of an 1998
unaffiliated mutual fund
distributor.
---------------------------------------------------------------------------------------------------------
Thomas W. Littauer (4/26/55) Vice President, Chairman and
Trustee; Managing Director,
Scudder Kemper; formerly, Head of
Broker Dealer Division of an
unaffiliated investment 1998
management firm during 1997;
formerly, President of Client
Management Services of an
unaffiliated investment
management firm from 1991 to 1996.
---------------------------------------------------------------------------------------------------------
Philip J. Collora (11/15/45) Vice President and Secretary;
Attorney, Senior Vice President, 1989
Scudder Kemper.
---------------------------------------------------------------------------------------------------------
Kathryn L. Quirk (12/3/52) Vice President; Managing
Director, Scudder Kemper. 1998
---------------------------------------------------------------------------------------------------------
William F. Truscott (9/14/60) Vice President; Managing
Director, Scudder Kemper. 2000
---------------------------------------------------------------------------------------------------------
Irene Chang (6/6/54) Vice President; Managing Director,
Scudder Kemper. 2000
---------------------------------------------------------------------------------------------------------
Linda J. Wondrack (9/12/64) Vice President; Senior Vice
President, Scudder Kemper. 1998
---------------------------------------------------------------------------------------------------------
John R. Hebble (6/27/58) Treasurer; Senior Vice President,
Scudder Kemper. 1998
---------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Present Office with the
Acquired Trust; Principal
Name (Date of Birth) Occupation or Employment Year First Became an Officer/1/
------------------- ------------------------- -------------------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Maureen E. Kane (2/14/62) Assistant Secretary; Vice
President, Scudder Kemper;
formerly, Assistant Vice
President of an unaffiliated
investment management firm; prior 1998
thereto, Associate Staff Attorney
of an unaffiliated investment
management firm, and Associate,
Peabody & Arnold (law firm).
---------------------------------------------------------------------------------------------------------
Caroline Pearson (4/1/62) Assistant Secretary; Senior Vice
President, Scudder Kemper;
formerly, Associate, Dechert 1998
Price & Rhoads (law firm) 1989 to
1997.
---------------------------------------------------------------------------------------------------------
Brenda Lyons (2/21/63) Assistant Treasurer; Senior Vice
President, Scudder Kemper. 1998
---------------------------------------------------------------------------------------------------------
</TABLE>
/1/ The President, Treasurer and Secretary each holds office until the first
meeting of Trustees in each calendar year and until his or her successor has
been duly elected and qualified, and all other officers hold offices as the
Trustees permit in accordance with the By-laws of the Fund.
Compensation of Trustees and Officers
The Fund pays the Independent Trustees a monthly retainer and an attendance
fee, plus expenses, for each Board meeting and committee meeting attended. As
reflected below, the Trustees currently serve as board members of various other
Kemper Funds. Scudder Kemper supervises the Fund's investments, pays the
compensation and expenses of its personnel who serve as Trustees and officers on
behalf of the Fund and receives a management fee for its services. Several of
the officers and Trustees are also officers, directors, employees or
stockholders of Scudder Kemper and participate in the fees paid to that firm,
although the Fund makes no direct payments to them.
To facilitate the restructuring of the boards of the Kemper Funds, certain
Independent Trustees agreed not to stand for re-election. Independent Trustees
of the Fund are not entitled to benefits under any pension or retirement plan.
However, the Board of each Kemper Fund determined that, particularly given the
benefits that would accrue to the Kemper Funds from the restructuring of the
boards, it was appropriate to provide the four Independent Trustees who were not
standing for re-election for various Kemper Funds a one-time benefit. The cost
of such benefit is being allocated among all the Kemper Funds, with Scudder
Kemper agreeing to bear one-half of the cost of such benefit, given that Scudder
Kemper also benefits from administrative efficiencies of a consolidated board.
Mr. Jones, an Independent Trustee of the Fund who is not standing for re-
election, will receive such a one-time benefit. The amount received on behalf of
each fund for which he serves as a trustee ranges from $1,071 to $8,078.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Trustees who receive compensation from the Acquired Trust.
8
<PAGE>
Column (2) Aggregate compensation received by each Trustee from the
Acquired Trust during calendar year ended December 31, 2000.
Column (3) Total compensation received by each Trustee from funds advised
by Scudder Kemper (collectively, the "Fund Complex") during calendar year ended
December 31, 2000.
Compensation Table
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation From
Name of Trustee from Acquired Trust Fund Complex/(2)(3)/
--------------- ------------------- ------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
John W. Ballantine $ [ ] $ [ ]
---------------------------------------------------------------------------------------------------------
Lewis A. Burnham $ [ ] $ [ ]
---------------------------------------------------------------------------------------------------------
Donald L. Dunaway/(1)/ $ [ ] $ [ ]
---------------------------------------------------------------------------------------------------------
Robert B. Hoffman $ [ ] $ [ ]
---------------------------------------------------------------------------------------------------------
Donald R. Jones $ [ ] $ [ ]
---------------------------------------------------------------------------------------------------------
Shirley D. Peterson $ [ ] $ [ ]
---------------------------------------------------------------------------------------------------------
William P. Sommers $ [ ] $ [ ]
---------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Includes deferred fees. Pursuant to deferred compensation agreements with
the Fund, deferred amounts accrue interest monthly at a rate equal to the yield
of Zurich Money Funds -- Zurich Money Market Fund. Total deferred fees
(including interest thereon) payable from the Fund to Mr. Dunaway are $_______.
/(2)/ Includes compensation for service on the boards of [ ] Kemper
trusts/corporations comprised of [ ] funds. Each Trustee currently serves on the
boards of [ ] Kemper trusts/corporations comprised of [ ] funds.
/(3)/ Aggregate compensation does not reflect amounts paid to the Trustees for
special meetings in connection with the Scudder Kemper restructuring initiative.
Such amounts totaled [$_______, $_______, $_______, $_______, $_______, $_______
and $_______ for Messrs. Ballantine, Burnham, Dunaway, Hoffman, Jones, Sommers
and Ms. Peterson,] respectively.
The Board of Trustees unanimously recommends
that the shareholders of the Fund vote FOR each nominee.
PROPOSAL 2: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. SYNOPSIS
Introduction
The Board of Trustees, including all of the Independent Trustees, approved
the Plan at a meeting held on November 29, 2000. Subject to its approval by the
shareholders of the Fund, the Plan provides for (a) the transfer of all or
substantially all of the assets and all of the liabilities of the Fund to
Scudder International Fund in exchange for Class A, Class B, Class C and Class I
shares of Scudder International Fund; (b) the distribution of such shares to the
shareholders of the Fund in complete liquidation of the Fund; and (c) the
termination of the Fund. As a result of the Reorganization, each shareholder of
the Fund will become a shareholder of Scudder International Fund, a fund with
similar investment characteristics and managed by the same investment manager as
the Fund. Immediately after the Reorganization, each shareholder of the Fund
will hold shares of the class of shares of Scudder
9
<PAGE>
International Fund that corresponds to the class of shares of the Fund held by
that shareholder on the Valuation Date, having an aggregate net asset value
equal to the aggregate net asset value of such shareholder's shares of the Fund
on the Valuation Date.
Scudder Kemper is the investment manager of both Funds. If the
Reorganization is completed, the Fund's shareholders will continue to enjoy all
of the same shareholder privileges as they currently enjoy, such as access to
professional service representatives, exchange privileges and automatic dividend
reinvestment. Services provided to the Class A, Class B, Class C and Class I
shareholders of Scudder International Fund following the Reorganization will be
identical to those currently provided to shareholders of the corresponding class
of the Fund. See "Purchase, Redemption and Exchange Information."
Background of the Reorganization
The Reorganization is part of a broader restructuring program to respond to
changing industry conditions and investor needs. The mutual fund industry has
grown dramatically over the last ten years. During this period of rapid growth,
investment managers expanded the range of fund offerings that are available to
investors in an effort to meet the growing and changing needs and desires of an
increasingly large and dynamic group of investors. With this expansion has come
increased complexity and competition among mutual funds, as well as the
potential for increased confusion among investors. The group of funds advised by
Scudder Kemper has followed this pattern.
As a result, Scudder Kemper has sought ways to restructure and streamline
the management and operations of the funds it advises by consolidating all of
the retail mutual funds that it currently sponsors into a single product line
offered under the "Scudder" name. Scudder Kemper believes, and has advised the
boards, that further reducing the number of funds it advises and adding the
classes of shares currently offered on all Kemper Funds to the Scudder Funds
will benefit fund shareholders. Scudder Kemper has, therefore, proposed the
combination of many Scudder Funds and Kemper Funds that have similar or
compatible investment objectives and policies. Scudder Kemper believes that the
larger funds, along with the fewer number of funds, that result from these
combinations may help to enhance investment performance and increase efficiency
of operations. The restructuring program will not result in any changes in the
shareholder services currently offered to shareholders of the Kemper Funds.
Most of the Scudder Funds have recently adopted a new fee structure for
certain administrative services. Under this fee structure, in exchange for
payment by a fund of a single administrative fee rate, Scudder Kemper provides
or pays for substantially all services that the fund normally requires for its
operations, other than those provided under the fund's investment management
agreement and certain other expenses. This administrative fee enables investors
to determine with greater certainty the expense level that a fund will
experience, and, for the term of the administration agreement, transfers
substantially all of the risk of increased costs to Scudder Kemper. Likewise,
Scudder Kemper receives all of the benefits of economies of scale from increases
in asset size or decreased operating expenses. Scudder International Fund has
implemented such an administrative fee, as described in "Administrative Fee"
below. As part of the restructuring effort, Scudder Kemper has proposed
extending this administrative fee structure to those funds currently offered
under the Kemper name.
The fund consolidations and the consolidation of the boards currently
overseeing the Kemper Funds (see Proposal 1 above) are expected to have a
positive impact on Scudder Kemper, as well. These changes are likely to result
in reduced costs (and the potential for increased profitability) for Scudder
Kemper in advising or servicing funds.
10
<PAGE>
Reasons for the Proposed Reorganization; Board Approval
Since receiving Scudder Kemper's proposals on May 24, 2000, the Independent
Trustees have conducted a thorough review of all aspects of the proposed
restructuring program. They have been assisted in this regard by their
independent counsel and by independent consultants with special expertise in
financial and mutual fund industry matters. In the course of discussions with
representatives of Scudder Kemper, the Independent Trustees have requested, and
Scudder Kemper has accepted, numerous changes designed to protect and enhance
the interests of shareholders. See "The Proposed Transaction - Board Approval of
the Proposed Transaction" below.
In determining whether to recommend that the shareholders of the Fund
approve the Reorganization, the Board of Trustees considered that:
. As part of Scudder Kemper's overall restructuring, the Fund would be
duplicative of another similar fund advised by Scudder Kemper in the
same distribution channel.
. The combined fund would be subject to the lower fee schedule of the
two funds' investment advisory agreements.
. The fixed fee rate under the Administration Agreement is expected to
be less than the estimated current applicable operating expenses the
Fund would otherwise pay.
. It is a condition of the Reorganization that each Fund receive an
opinion of tax counsel that the transaction would be a tax-free
transaction.
. Although the Fund agreed to pay the estimated costs of the
Reorganization allocated to Class A and Class I shares and a portion
of the estimated costs of the Reorganization allocated to Class B and
Class C shares, management has estimated that such allocated costs
will be recoverable from lower overall expense rates within six months
of completion of the Reorganization. Scudder Kemper agreed to pay a
portion of the estimated costs of the Reorganization allocated to
Class B and Class C shares and all of the costs of the Reorganization
that exceed estimated costs.
For these reasons, as more fully described below under "The Proposed
Transaction -- Board Approval of the Proposed Transaction," the Board of
Trustees, including the Independent Trustees, has concluded that:
. the Reorganization is in the best interests of the Fund and its
shareholders; and
. the interests of the existing shareholders of the Fund will not be
diluted as a result of the Reorganization.
Accordingly, the Trustees unanimously recommend approval of the Plan
effecting the Reorganization. If the Plan is not approved, the Fund will
continue in existence unless other action is taken by the Trustees.
Investment Objectives, Policies and Restrictions of the Funds
This Section will help you compare the investment objectives and policies
of the Fund and Scudder International Fund. Please be aware that this is only a
summary. More complete information may be found in the Funds' prospectuses.
11
<PAGE>
The investment objectives, policies and restrictions of the Funds (and,
consequently, the risks of investing in either Fund) are similar. Some
differences do exist. The investment objective of Scudder International Fund is
to seek long-term growth of capital by investing at least 65% of its total
assets in foreign equities (equities issued by foreign-based companies and
listed on foreign exchanges). The investment objective of the Fund is to seek
total return through a combination of capital growth and income. The Fund
invests at least 80% of its total assets in foreign securities (securities
issued by foreign-based issuers). There can be no assurance that either Fund
will achieve its investment objective.
Both Funds have the same portfolio management teams that follow a
substantially similar process in analyzing investment opportunities. Although
Scudder International Fund can invest in companies of any size and from any
country, it invests mainly in common stocks of established companies in
countries with developed economies (other than the U.S.). Similarly, the Fund,
although it may invest in companies of any size and from any country, invests at
least 65% of its total assets in common stocks of established foreign companies
with the potential for capital growth, income or both. The Fund may invest more
than 25% of its total assets in any given developed country that the Investment
Manager believes poses no unique investment risk. In choosing stocks for each
Fund, the Investment Manager uses a combination of bottom-up company research,
top-down analysis of the economic outlooks for various countries and
geographical regions, and analysis of global themes. Scudder International Fund
will normally sell a stock when the Investment Manager believes its price is
unlikely to go much higher, its fundamentals have deteriorated, other
investments offer better opportunities or in the course of adjusting its
emphasis on a given country. The Fund will normally sell a stock when the
Investment Manager believes it has reached its fair value, its underlying
investment theme has matured or the reasons for originally investing no longer
apply.
Scudder International Fund may invest up to 20% of its net assets in
foreign debt securities, including up to 5% of its total assets in debt
securities that are rated below investment-grade (high yield securities, or
"junk bonds"). The Fund may invest up to 35% of its net assets in foreign or
domestic debt securities of any credit quality, including those rated below
investment-grade (i.e., junk bonds). Although each Fund is permitted to use
various types of derivatives (contracts whose value is based on, for example,
indices, currencies or securities), the Investment Manager does not intend to
use them as principal investments for either Fund, and might not use them at
all.
The Funds' fundamental and non-fundamental investment restrictions, as set
forth under "Investment Restrictions" in each Fund's statement of additional
information, are identical, except that the Fund, and not Scudder International
Fund, has a fundamental investment restriction stating that the Fund may not
purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities. Fundamental investment restrictions may not be changed
without the approval of Fund shareholders, while non-fundamental investment
restrictions may be changed by the applicable Board without shareholder
approval. Investors should refer to each Fund's statement of additional
information for a more detailed description of that Fund's investment policies
and restrictions.
Portfolio Turnover
The portfolio turnover rate for Scudder International Fund, i.e., the ratio
of the lesser of annual sales or purchases to the monthly average value of the
portfolio (excluding from both the numerator and the denominator securities with
maturities at the time of acquisition of one year or less), for the fiscal year
ended August 31, 2000 was 83%. The portfolio turnover rate for the Fund for the
fiscal year ended October 31, 2000 was 89%. A higher portfolio turnover rate
involves greater brokerage and
12
<PAGE>
transaction expenses to a fund and may result in the realization of net capital
gains, which would be taxable to shareholders when distributed.
Comparative Considerations
The portfolio characteristics of the combined fund after the Reorganization
will reflect the blended characteristics of the Fund and Scudder International
Fund. The following characteristics are as of ________, 2000 for both Funds and
also reflect the blended characteristics of both Funds after the Reorganization
as of that same date.
Portfolio Composition (1)
As a % of Net Assets
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
% in U.S. % in Non-U.S. % in % in Average
Equities Equities Bonds Other Market-
Cap ($)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fund
------------------------------------------------------------------------------------------------
Scudder International Fund
------------------------------------------------------------------------------------------------
Pro Forma (Combined)(2)
------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund normally invests at least 80% of its total assets in foreign
securities and at least 65% of its total assets in common stocks of established
foreign companies with the potential for capital growth, income or both. Scudder
International Fund normally invests at least 65% of its total assets in foreign
equities. Although Scudder International Fund may invest in companies of any
size and from any country, it invests mainly in common stocks of established
companies in countries with developed economies (other than the U.S.).
(2) Reflects the blended characteristics of the Fund and Scudder International
Fund as of ________, 2000.
Performance
The following table shows how the returns of the Fund and Scudder
International Fund over different periods average out. For context, the table
also includes a broad-based market index (which, unlike the Funds, does not have
any fees or expenses). The performances of both Funds and the index vary over
time, and past performance is not necessarily indicative of future results. All
figures assume reinvestment of dividends and distributions.
Average Annual Total Return
for the Periods Ended December 31, 2000
[Insert Table]
For management's discussion of Scudder International Fund's performance for
the fiscal year ended August 31, 2000, please refer to Exhibit B.
13
<PAGE>
Investment Manager; Fees and Expenses
Each Fund retains the investment management firm of Scudder Kemper,
pursuant to separate contracts, to manage its daily investment and business
affairs, subject to the policies established by each Fund's Trustees. Scudder
Kemper is a Delaware corporation located at 345 Park Avenue, New York, New York
10154-0010.
Pursuant to separate contracts, both Funds pay the Investment Manager a
graduated investment management fee, although the fee rates and breakpoints
differ. The fee is graduated so that increases in a Fund's net assets may
result in a lower annual fee rate and decreases in its net assets may result in
a higher annual fee rate. From its investment management fee received from the
Fund, Scudder Kemper pays to Scudder Investments U.K., Limited ("Scudder UK"), 1
South Place, London, U.K. EC42M 2ZS, the Fund's sub-adviser, a monthly fee at
the annual rate of 0.35% of the portion of the Fund's average daily net assets
allocated by Scudder Kemper to Scudder UK for management. As of August 31,
2000, Scudder International Fund had total net assets of $4,979,196,944 For the
fiscal year ended August 31, 2000, Scudder International Fund paid the
Investment Manager a fee of 0.76% of its average daily net assets. As of
October 31, 2000, the Fund had total net assets of $549,622,992. For the fiscal
year ended October 31, 2000, the Fund paid the Investment Manager a fee of 0.73%
of its average daily net assets.
The fee schedule for the combined fund following the Reorganization will be
identical to the current fee schedule for Scudder International Fund. Currently
the fee schedules for the Fund and Scudder International Fund are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Fund Scudder International Fund
-------------------------------------------------------------------------------------------------
Average Daily Net Assets Fee Rate Average Daily Net Assets Fee Rate
------------------------ -------- ------------------------ --------
<S> <C> <C> <C>
First $250 million 0.75% First $6 billion 0.675%
Next $750 million 0.72% Next $1 billion 0.625%
Next $1.5 billion 0.70% Over $7 billion 0.600%
Next $2.5 billion 0.68%
Next $2.5 billion 0.65%
Next $2.5 billion 0.64%
Next $2.5 billion 0.63%
Over $12.5 billion 0.62%
-------------------------------------------------------------------------------------------------
</TABLE>
Based on the Fund's average daily net assets for the twelve months ended
September 30, 2000, the effective advisory fee rate for the Fund was 0.675%.
Based upon each Fund's average daily net assets for the twelve months ended
September 30, 2000 the effective advisory fee rate for Scudder International
Fund after the Reorganization would be 0.675% of average daily net assets.
Administrative Fee
Scudder International Fund has entered into an administration agreement
with Scudder Kemper (the "Administration Agreement"), pursuant to which Scudder
Kemper provides or pays others to provide substantially all of the
administrative services required by Scudder International Fund (other than those
provided by Scudder Kemper under its investment management agreement with that
Fund) in exchange for the payment by Scudder International Fund of an annual
administrative services fee (the "Administrative Fee") equal to 0.400%, 0.450%,
0.425% and 0.150% of average daily net assets attributable to the Class A, Class
B, Class C and Class I shares, respectively. The fees for the services provided
by Kemper Distributors, Inc. ("KDI") under its current services agreement and
underwriting and
14
<PAGE>
distribution agreement with Scudder International Fund are not covered by, and
are in addition to, the Administrative Fee. One effect of this arrangement is to
make Scudder International Fund's future expense ratio more predictable. On the
other hand, the administrative fee rate does not decrease with economies of
scale from increases in asset size or decreased operating expenses. The details
of this arrangement (including expenses that are not covered) are set out below.
Various service providers (the "Service Providers"), some of which are
affiliated with Scudder Kemper, provide certain services to Scudder
International Fund pursuant to separate agreements. These Service Providers may
differ from current Service Providers of the Fund. Scudder Fund Accounting
Corporation, a subsidiary of Scudder Kemper, computes net asset value for
Scudder International Fund and maintains its accounting records. Kemper Service
Company, also a subsidiary of Scudder Kemper, is the transfer, shareholder
servicing and dividend-paying agent for the Class A, Class B, Class C and Class
I shares of Scudder International Fund. Scudder Trust Company, an affiliate of
Scudder Kemper, provides subaccounting and recordkeeping services for
shareholder accounts in certain retirement and employee benefit plans. As
custodian, Brown Brothers Harriman & Company holds the portfolio securities of
Scudder International Fund, pursuant to a custodian agreement. Other Service
Providers include the independent public accountants and legal counsel for
Scudder International Fund.
Under the Administration Agreement, each Service Provider provides the
services to Scudder International Fund described above, except that Scudder
Kemper pays these entities for the provision of their services to Scudder
International Fund and pays most other fund expenses, including insurance,
registration, printing and postage fees. In return, Scudder International Fund
pays Scudder Kemper the Administrative Fee.
The Administration Agreement will remain in effect with respect to the
Class A, Class B, Class C and Class I shares for an initial term ending
September 30, 2003, subject to earlier termination by the directors that oversee
Scudder International Fund. The fee payable by Scudder International Fund to
Scudder Kemper pursuant to the Administration Agreement will be reduced by the
amount of any credit received from Scudder International Fund's custodian for
cash balances.
Certain expenses of Scudder International Fund are not borne by Scudder
Kemper under the Administration Agreement, such as taxes, brokerage, interest
and extraordinary expenses, and the fees and expenses of the Independent
Trustees (including the fees and expenses of their independent counsel). Scudder
International Fund continues to pay the fees required by its investment
management agreement with Scudder Kemper. In addition, it pays the fees under
its services agreement and underwriting and distribution services agreement with
KDI, as described in "Distribution and Service Fees" below.
Comparison of Expenses
The tables and examples below are designed to assist you in understanding
the various costs and expenses that you will bear directly or indirectly as an
investor in the Class A, Class B, Class C and Class I shares of Scudder
International Fund, and compares these with the expenses of the Fund. [Statement
to be inserted comparing expenses.] Unless otherwise noted, the information is
based on each Fund's expenses and average daily net assets during the twelve
months ended September 30, 2000 and on a pro forma basis as of that date and for
the twelve month period then ended, assuming the Reorganization had been in
effect for the period.
15
<PAGE>
Expense Comparison Table
Class A Shares
<TABLE>
<CAPTION>
Scudder
International Pro Forma
Fund Fund (Combined)(1)
---- ---- --------
Shareholder Fees
----------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on 5.75% 5.75% 5.75%
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge None None None
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed on reinvested None None None
dividends
Redemption Fee (as a percentage of amount redeemed, if None None None
applicable)
Annual Fund Operating Expenses (unaudited)
----------------------------------------
(as a % of average net assets)
-----------------------------
Management Fees 0.73% 0.68%(3) 0.68%
Rule 12b-1/ASF Fees 0.24% 0.25% 0.24%
Other Expenses 0.47% 0.40%(4) 0.40%
Total Annual Fund Operating Expenses 1.44% 1.33% 1.32%
Expense Example of Total Operating Expenses
-------------------------------------------
at the End of the Period(5)
------------------------
One Year $ 713 $ 703 $ 702
Three Years $1,004 $ 972 $ 969
Five Years $1,317 $1,262 $1,257
Ten Years $2,200 $2,084 $2,074
</TABLE>
________________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization, including the implementation of Scudder International
Fund's new investment management agreement and Administration Agreement.
(2) Class A shares purchased under the Large Order NAV Purchase Privilege have
a 1% contingent deferred sales charge if sold during the first year after
purchase and .50% if sold during the second year after purchase.
-16-
<PAGE>
(3) Restated to reflect Scudder International Fund's new investment management
agreement.
(4) Restated to reflect Scudder International Fund's Administration Agreement.
(5) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends,
total operating expenses remain the same and redemptions at the end of each
period.
Expense Comparison Table
Class B Shares
<TABLE>
<CAPTION>
Scudder
International Pro Forma
Fund Fund (Combined)(1)
---- ---- --------
Shareholder Fees
----------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge 4.00% 4.00% 4.00%
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed on None None None
reinvested dividends
Redemption Fee (as a percentage of amount redeemed, if None None None
applicable)
Annual Fund Operating Expenses (unaudited)
-----------------------------------------
(as a % of average net assets)
-----------------------------
Management Fees 0.73% 0.68%(3) 0.68%
Rule 12b-1/ASF Fees 1.00% 1.00% 1.00%
Other Expenses 0.45% 0.45%(4) 0.45%
Total Annual Fund Operating Expenses 2.18% 2.13% 2.13%
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming Redemption at the End of the Period(5)
--------------------------------------------
One Year $ 621 $ 616 $ 616
Three Years $ 982 $ 967 $ 967
Five Years $1,369 $1,344 $1,344
Ten Years $2,154 $2,071 $2,071
</TABLE>
-17-
<PAGE>
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming No Redemption at the End of the
----------------------------------------
Period(5)
------
<TABLE>
<S> <C> <C> <C>
One Year $ 221 $ 216 $ 216
Three Years $ 682 $ 667 $ 667
Five Years $1,169 $1,144 $1,144
Ten Years $2,154 $2,071 $2,071
</TABLE>
___________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization, including the implementation of Scudder International
Fund's new investment management agreement and Administration Agreement.
(2) Contingent deferred sales charges on Class B shares sold during the first
six years of ownership are 4% in the first year, 3% in the second and third
year, 2% in the fourth and fifth year, and 1% in the sixth year.
(3) Restated to reflect Scudder International Fund's new investment management
agreement.
(4) Restated to reflect Scudder International Fund's Administration Agreement.
(5) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same. Assumes conversion to Class
A shares six years after purchase.
Expense Comparison Table
Class C Shares
<TABLE>
<CAPTION>
Scudder
International Pro Forma
Fund Fund (Combined)(1)
---- ---- --------
Shareholder Fees
----------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge 1.00% 1.00% 1.00%
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed on None None None
reinvested dividends
Redemption Fee (as a percentage of amount redeemed, if None None None
applicable)
Annual Fund Operating Expenses (Unaudited)
-----------------------------------------
(as a % of average net assets)
</TABLE>
-18-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Management Fees 0.73% 0.68%(3) 0.68%
Rule 12b-1/ASF Fees 1.00% 1.00% 1.00%
Other Expenses 0.43% 0.43%(4) 0.43%
Total Fund Operating Expenses 2.16% 2.11% 2.11%
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming Redemption at the End of the
-------------------------------------
Period(5)
------
One Year $ 319 $ 314 $ 314
Three Years $ 676 $ 661 $ 661
Five Years $1,159 $1,134 $1,134
Ten Years $2,493 $2,441 $2,441
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming No Redemption at the End of the
----------------------------------------
Period(5)
------
One Year $ 219 $ 214 $ 214
Three Years $ 676 $ 661 $ 661
Five Years $1,159 $1,134 $1,134
Ten Years $2,493 $2,441 $2,441
</TABLE>
___________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization, including the implementation of Scudder International
Fund's new investment management agreement and Administration Agreement.
(2) Contingent deferred sale charge on Class C shares is 1% for shares sold
during the first year after purchase.
(3) Restated to reflect Scudder International Fund's new investment management
agreement.
(4) Restated to reflect Scudder International Fund's Administration Agreement.
(5) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
-19-
<PAGE>
Expense Comparison Table
Class I Shares
<TABLE>
<CAPTION>
Scudder
International Pro Forma
Fund Fund (Combined)(1)
---- ---- --------
Shareholder Fees
----------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge None None None
(Load) (as % of redemption proceeds)
Maximum Deferred Sales Charge (Load) imposed on None None None
reinvested dividends
Redemption Fee (as a percentage of amount redeemed, if None None None
applicable)
Annual Fund Operating Expenses (Unaudited)
----------------------------------------
(as a % of average net assets)
Management Fees 0.73% 0.68%(2) 0.68%
Rule 12b-1/ASF Fees None None None
Other Expenses 0.37% 0.15%(3) 0.15%
Total Annual Fund Operating Expenses 1.10% 0.83% 0.83%
Expense Example of Total Operating Expenses
-------------------------------------------
at the End of the Period(4)
------------------------
One Year $ 112 $ 85 $ 85
Three Years $ 350 $ 265 $ 265
Five Years $ 606 $ 460 $ 460
Ten Years $1,340 $1,025 $1,025
</TABLE>
___________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization, including the implementation of Scudder International
Fund's new investment management agreement and Administration Agreement.
(2) Restated to reflect Scudder International Fund's new investment management
agreement.
(3) Restated to reflect Scudder International Fund's Administration Agreement.
-20-
<PAGE>
(4) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends,
total operating expenses remain the same and redemptions at the end of each
period.
Distribution and Services Fees
Pursuant to an underwriting and distribution services agreement with
Scudder International Fund, KDI, 222 South Riverside Plaza, Chicago, Illinois
60606, an affiliate of the Investment Manager, will act as the principal
underwriter and distributor of the Class A, Class B, Class C and Class I shares
of that Fund and will act as agent of the Fund in the continuing offer of such
shares. Scudder International Fund has adopted distribution plans on behalf of
the Class A, Class B and Class C shares in accordance with Rule 12b-1 under the
1940 Act that are substantially identical to the existing distribution plans
adopted by the Fund, with one exception. As under the current distribution plans
for the Fund, Scudder International Fund pays KDI an asset-based fee at an
annual rate of 0.75% of Class B and Class C shares. The distribution plans for
Scudder International Fund, however, unlike the distribution plans for the Fund,
also authorize the payment to KDI of the 0.25% services fee with respect to the
Class A, Class B and Class C shares pursuant to the services agreement described
below. Neither KDI nor the Trustees of the Fund believe that the services
performed by KDI under the services agreement have been primarily intended to
result in sales of fund shares (i.e., "distribution" services) as defined in
Rule 12b-1, but rather are post-sale administrative and other services provided
to existing shareholders. Nonetheless, to avoid legal uncertainties due to the
ambiguity of the language contained in Rule 12b-1 and eliminate any doubt that
may arise in the future regarding whether the services performed by KDI under
the services agreement are "distribution" services, the distribution plans for
Scudder International Fund authorize the payment of the services fee. The
fact that the services fee is authorized by Scudder International Fund's
distribution plans does not change the fee rate or affect the nature or quality
of the services provided by KDI.
Pursuant to the services agreement with Scudder International Fund, which
is substantially identical to the current services agreement with the Fund, KDI
receives a services fee of up to 0.25% per year with respect to the Class A,
Class B and Class C shares of Scudder International Fund. KDI uses the services
fee to compensate financial services firms ("firms") for providing personal
services and maintenance of accounts for their customers that hold those classes
of shares of Scudder International Fund, and may retain any portion of the fee
not paid to firms to compensate itself for administrative functions performed
for the Fund. All fee amounts are payable monthly and are based on the average
daily net assets of each Fund attributable to the relevant class of shares.
Purchases, Exchanges, and Redemptions
Both Funds are part of the Scudder Kemper complex of mutual funds. The
procedures for purchases, exchanges, and redemptions of Class A, Class B, Class
C and Class I shares of Scudder International Fund are identical to those of the
Fund. Shares of Scudder International Fund are exchangeable for shares of the
same class of most other open-end funds advised by Scudder Kemper offering such
shares.
Corresponding classes of shares of Scudder International Fund have
identical sales charges to those of the Fund. Scudder International Fund has a
maximum initial sales charge of 5.75% on Class A shares. Shareholders who
purchase $1 million or more of Class A shares pay no initial sales charge but
may have to pay a contingent deferred sales charge (a "CDSC") of up to 1% if the
shares are sold within 2 years of the date on which they were purchased. Class B
shares are sold without a front-end sales charge, but may be subject to a CDSC
upon redemption, depending on the length of time the shares are held. The CDSC
begins at 4% for shares sold in the first year,
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declines to 1% in the sixth year and is eliminated after the sixth year. After
six years, Class B shares automatically convert to Class A shares. Class C
shares are sold without a front-end sales charge, but may be subject to a CDSC
of up to 1% if the shares are sold within one year of purchase. Class I shares
are sold without a front-end sales charge or a CDSC.
Class A, Class B, Class C and Class I shares of Scudder International Fund
received in the Reorganization will be issued at net asset value, without a
sales charge, and no CDSC will be imposed on any shares of the Fund exchanged
for shares of Scudder International Fund as a result of the Reorganization.
However, following the Reorganization, any CDSC that applies to shares of the
Fund will continue to apply to shares of Scudder International Fund received in
the Reorganization, using the original purchase date for such shares to
calculate the holding period, rather than the date such shares are received in
the Reorganization.
Services available to Class A, Class B, Class C and Class I shareholders of
Scudder International Fund will be identical to those available to shareholders
of the corresponding classes of the Fund and include the purchase and redemption
of shares through an automated telephone system and over the Internet, telephone
redemptions, and exchanges by telephone to most other Scudder Kemper funds that
offer Class A, Class B, Class C and Class I shares, and reinvestment privileges.
Please see the Fund's prospectus for additional information.
Dividends and Other Distributions
Each Fund intends to distribute its investment company taxable income and
any net realized capital gains in November or December. An additional
distribution may be made if necessary. Shareholders of each Fund can have their
dividends and distributions automatically invested in additional shares of the
same class of that Fund, or a different fund in the same family of funds, at net
asset value and credited to the shareholder's account on the payment date or, at
the shareholder's election, paid in cash. For retirement plans, reinvestment is
the only option.
If the Plan is approved by the Fund's shareholders, the Fund will pay its
shareholders a distribution of all undistributed net investment income and
undistributed realized net capital gains immediately prior to the Closing.
Other Differences Between the Funds
Charter Documents.
The Acquired Trust is established as a Massachusetts business trust
pursuant to a Declaration of Trust (the "Declaration"). The Acquiring
Corporation is organized as a Maryland Corporation under Articles of
Incorporation (the "Articles"). Although the organizational documents of the
Acquired Trust and of the Acquiring Corporation are similar, some differences do
exist. The more significant differences are listed below.
. A trustee of the Acquired Trust may be removed for cause by a majority
of the trustees, while removal without cause requires a majority vote
of shareholders entitled to vote more than 50% of the votes entitled
to be cast on the matter; removal of a director of the Acquiring
Corporation requires a majority vote 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 Acquiring Corporation.
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<PAGE>
. A special meeting of Fund shareholders may be called by shareholders
holding at least 25% (or 10% if the purpose is to determine the
removal of a trustee) of the Fund's shares then outstanding; the
Acquiring Corporation's Articles are silent as to the procedure for
calling a special meeting of stockholders.
. The Acquired Trust's shareholders have the right to vote on the
termination or reorganization of the Acquired Trust or a series
thereof; the Acquiring Corporation's board of directors may liquidate
the Acquiring Corporation or a series of the Acquiring Corporation
without a vote of stockholders.
. The Acquiring Trust's Declaration may be amended by the Trustees if
authorized by a majority vote of the shareholders except in certain
circumstances where a shareholder vote is not required; the Acquiring
Corporation's Articles may be amended or repealed by the Acquiring
Corporation without a vote of stockholders.
Trustees/Directors and Officers.
The Trustees of the Fund, currently and as proposed under Proposal 1, are
different from the Directors of Scudder International Fund. As described in
Scudder International Fund's prospectus that has been included in the materials
that you received with this document, the following individuals comprise the
Board of Directors of Scudder International Fund: Henry P. Becton, Jr., Linda C.
Coughlin, Dawn-Marie Driscoll, Edgar Fiedler, Keith R. Fox, Joan E. Spero, Jean
Gleason Stromberg, Jean C. Tempel, and Steven Zaleznick. In addition, the
officers of the Fund and Scudder International Fund are different. (See Proposal
1 and the Statement of Additional Information for further information.)
Fiscal Year.
The Fund's fiscal year-end is October 31. Scudder International Fund's
fiscal year-end is August 31.
Custodian.
The Fund's custodian is The Chase Manhattan Bank. Scudder International
Fund's custodian is Brown Brothers Harriman & Company.
Auditors.
The Fund's auditors are Ernst & Young LLP. Scudder International Fund's
auditors are PricewaterhouseCoopers LLP.
Tax Consequences
As a condition to the Reorganization, each Fund will have received an
opinion of Willkie Farr & Gallagher in connection with the Reorganization, to
the effect that, based upon certain facts, assumptions and representations, the
Reorganization will constitute a tax-free reorganization within the meaning of
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section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
If the Reorganization constitutes a tax-free reorganization, no gain or loss
will be recognized by the Fund or its shareholders as a direct result of the
Reorganization. See "The Proposed Transaction -- Federal Income Tax
Consequences."
* * *
The preceding is only a summary of certain information contained in this
Proxy Statement/Prospectus relating to the Reorganization. This summary is
qualified by reference to the more complete information contained elsewhere in
this Proxy Statement/Prospectus, the prospectuses and statements of additional
information of the Funds, and the Plan. Shareholders should read this entire
Proxy Statement/Prospectus carefully.
II. PRINCIPAL RISK FACTORS
Because of their similar investment objectives, policies and strategies,
the principal risks presented by Scudder International Fund are similar to those
presented by the Fund. The main risks applicable to each Fund include, among
others, market risk, management risk (i.e., securities selection by the
Investment Manager), the risks associated with foreign securities (including
currency fluctuations, lower liquidity, economic and political risks and
differences in accounting methods) and, to the extent a Fund invests in bonds,
risk associated with interest rates and credit quality. Because the Fund may
invest a greater percentage of its assets in debt securities, especially those
that are rated below investment-grade, it may be subject to a greater degree of
risk associated with rising interest rates or declines in credit quality. In
addition, each Fund may invest a portion of its assets in high yield securities,
or "junk bonds," which entail relatively greater risk of loss of income and
principal than investments in higher rated securities, and may fluctuate more in
value. To the extent that a Fund invests in emerging markets, such Fund would
be subject to the risk that emerging markets tend to be more volatile than
developed markets. Lastly, the Funds are not insured or guaranteed by the FDIC
or any other government agency. Share prices will go up and down, so be aware
that you could lose money.
For a further discussion of the investment techniques and risk factors
applicable to the Funds, see the "Investment Objectives, Policies and
Restrictions of the Funds" herein, and the prospectuses and statements of
additional information for the Funds.
III. THE PROPOSED TRANSACTION
Description of the Plan
As stated above, the Plan provides for the transfer of all or substantially
all of the assets of the Fund to Scudder International Fund in exchange for that
number of full and fractional Class A, Class B, Class C and Class I shares
having an aggregate net asset value equal to the aggregate net asset value of
the shares of the corresponding classes of the Fund as of the close of business
on the Valuation Date. Scudder International Fund will assume all of the
liabilities of the Fund. The Fund will distribute the Class A, Class B, Class C
and Class I shares received in the exchange to the shareholders of the Fund in
complete liquidation of the Fund. The Fund will then be terminated.
Upon completion of the Reorganization, each shareholder of the Fund will
own that number of full and fractional Class A, Class B, Class C and Class I
Shares having an aggregate net asset value equal to the aggregate net asset
value of such shareholder's shares of the corresponding class held in the Fund
as of the close of business on the Valuation Date. Such shares will be held in
an account with Scudder International Fund identical in all material respects to
the account currently maintained by the Fund for such shareholder. In the
interest of economy and convenience, Class A, Class B, Class C and Class I
shares issued to the Fund's shareholders in the Reorganization will be in
uncertificated form. If Class A,
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Class B, Class C or Class I shares of the Fund are represented by certificates
prior to the Closing, such certificates should be returned to the Fund's
shareholder servicing agent. Any Class A, Class B, Class C or Class I shares of
Scudder International Fund distributed in the Reorganization to shareholders in
exchange for certificated shares of the Fund may not be transferred, exchanged
or redeemed without delivery of such certificates.
Until the Closing, shareholders of the Fund will continue to be able to
redeem their shares at the net asset value next determined after receipt by the
Fund's transfer agent of a redemption request in proper form. Redemption and
purchase requests received on or after the Valuation Date by the transfer agent
will be treated as requests received for the redemption or purchase of Class A,
Class B, Class C or Class I shares of Scudder International Fund received by the
shareholder in connection with the Reorganization.
The obligations of the Fund and the Acquiring Corporation, on behalf of
Scudder International Fund under the Plan are subject to various conditions, as
stated therein. The Plan requires that all filings be made with, and all
authority be received from, the SEC and state securities commissions as may be
necessary in the opinion of counsel to permit the parties to carry out the
transactions contemplated by the Plan. Each Fund is in the process of making the
necessary filings. To provide for unforeseen events, the Plan may be terminated:
(i) by the mutual agreement of the parties; (ii) by either party if the Closing
has not occurred by [ ], 2001, unless such date is extended by mutual agreement
of the parties; or (iii) by either party if the other party has materially
breached its obligations under the Plan or made a material misrepresentation in
the Plan or in connection with the Reorganization. The Plan may also be amended
by mutual agreement in writing. However, no amendment may be made following the
shareholder meeting if such amendment would have the effect of changing the
provisions for determining the number of shares of Scudder International Fund to
be issued to the Fund in the Plan to the detriment of the Fund's shareholders
without their approval. For a complete description of the terms and conditions
of the Reorganization, please refer to the Plan at Exhibit A.
Board Approval of the Proposed Transaction
As discussed above, the Reorganization is part of a Scudder Kemper
initiative that is intended to restructure and streamline the management and
operations of the funds Scudder Kemper advises. Scudder Kemper first proposed
the Reorganization to the Trustees of the Fund at a meeting held on May 24,
2000, see "Synopsis--Background of the Reorganization" above. This initiative
includes five major components:
(i) A change in branding to offer virtually all funds advised by Scudder
Kemper under the Scudder Investments name, with a concentration on
intermediary distribution;
(ii) The combination of funds with similar investment objectives and
policies, including in particular the combination of the Kemper
Funds with similar Scudder Funds currently offered to the general
public;
(iii) The liquidation of certain small funds which have not achieved
market acceptance and which are unlikely to reach an efficient
operating size;
(iv) The implementation of an administration agreement for the Kemper
Funds similar to that recently adopted by the Scudder Funds
covering, for a single fee rate, substantially all services required
for the operation of the fund (other than those provided under the
fund's investment management agreement) and most expenses; and
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(v) The consolidation of certain boards overseeing funds advised by
Scudder Kemper.
The Independent Trustees of the Fund reviewed the potential implications of
these proposals for the Fund as well as the various other funds for which they
serve as board members. They were assisted in this review by their independent
legal counsel and by independent consultants with special expertise in financial
and mutual fund industry matters. Following the May 24th meeting, the
Independent Trustees met in person or by telephone on numerous occasions
(including committee meetings) to review and discuss these proposals, both among
themselves and with representatives of Scudder Kemper, including the
"interested" Trustees. In the course of their review, the Independent Trustees
requested and received substantial additional information and suggested numerous
changes to Scudder Kemper's proposals.
Following the conclusion of this process, the Trustees of the Fund, the
board members of other funds involved and Scudder Kemper reached general
agreement on the elements of a restructuring plan that they believed were in the
best interests of shareholders and, where required, agreed to submit elements of
the plan for approval to shareholders of those funds.
On November 29, 2000, the Board of Trustees, including the Independent
Trustees, unanimously approved the terms of the Reorganization and certain
related proposals. The Trustees have also unanimously agreed to recommend that
the Reorganization be approved by the Fund's shareholders.
In determining whether to recommend that the shareholders of the Fund
approve the Reorganization, the Board of Trustees considered that:
. As part of Scudder Kemper's overall restructuring, the Fund would be
duplicative of another similar fund advised by Scudder Kemper in the
same distribution channel.
. The combined fund would be subject to the lower fee schedule of the
two funds' investment advisory agreements.
. The fixed fee rate under the Administration Agreement is expected to
be less than the estimated current applicable operating expenses the
Fund would otherwise pay.
. It is a condition of the Reorganization that each Fund receive an
opinion of tax counsel that the transaction would be a tax-free
transaction.
. Although the Fund agreed to pay the estimated costs of the
Reorganization allocated to Class A and Class I shares and a portion
of the estimated costs of the Reorganization allocated to Class B and
Class C shares, management has estimated that such allocated costs
will be recoverable from lower overall expense rates within six months
of completion of the Reorganization. Scudder Kemper agreed to pay a
portion of the estimated costs of the Reorganization allocated to
Class B and Class C shares and all of the costs of the Reorganization
that exceed estimated costs.
As part of their deliberations, the Trustees considered, among other
things: (a) the fees and expense ratios of the Funds, including comparisons
between the expenses of the Fund and the estimated operating expenses of Scudder
International Fund after the Reorganization, and between the estimated operating
expenses of Scudder International Fund and other mutual funds with similar
investment objectives; (b) the terms and conditions of the Reorganization and
whether the Reorganization would result in the dilution of shareholder
interests; (c) the compatibility of the Funds' investment objectives, policies,
restrictions and portfolios; (d) the service features available to shareholders
of each Fund;
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(e) prospects for Scudder International Fund to attract additional assets; and
(f) the investment performance of each Fund.
As part of their analysis, the Trustees considered direct and indirect
costs to shareholders including: (a) the direct costs of the Reorganization to
be borne by existing shareholders; (b) the potential costs of any necessary
rebalancing of the Fund's portfolio; and (c) the potential tax consequences to
shareholders as a result of differences in the Funds' realized or unrealized
capital gains or losses and capital loss carry-forwards.
Costs. The anticipated costs of the Reorganization allocable to the Fund
are $360,874, which includes board meeting fees, legal, accounting and other
consultant fees, and proxy solicitation costs. Of these costs, $193,586 (100%)
are allocated to and will be borne by the Fund's Class A shares, $119,094
(88.57%) of its allocable portion of $134,460 will be borne by the Fund's Class
B shares, $13,777 (43.46%) of its allocable portion of $31,698 will be borne by
the Fund's Class C shares, and $1,130 (100%) are allocated to and will be borne
by the Fund's Class I shares. Scudder Kemper is bearing the remaining costs,
including any cost overruns (except that Scudder International Fund is bearing
the SEC and state registration and notice fees which are estimated to be
$_________).
The costs of the Reorganization borne by the Fund have been (or will soon
be) expensed, resulting in reductions of $0.0060, $0.0095, $0.0040 and $0.0010
of Class A, Class B, Class C and Class I shares', respectively, net asset value
per share. Management of the Fund expects that reduced operating expenses
resulting from the Reorganization should allow for recovery of the allocated
costs of the Reorganization within six months after the Closing.
Portfolio Transaction Costs. To consider the potential costs of any
necessary rebalancing of the Fund's portfolio as a result of the Reorganization,
the Independent Trustees asked for, and Scudder Kemper provided, an estimate of
the expected turnover of the securities of the Fund, as a percentage of the
assets of the combined fund, as a result of the Reorganization. Scudder Kemper
estimated such turnover at 0%, resulting in transaction costs of less than $0.01
per share of the Fund, which the Trustees considered immaterial.
Potential Tax Consequences. Although the Reorganization will be achieved
on a federally tax-free basis (see "Federal Income Tax Considerations" below),
there are differences in the Funds' realized or unrealized capital gains or
losses and capital loss carry forwards, which at [ ], 2000 were as follows
(although they may differ at the time of the Closing):
[Charts to be inserted]
As noted above, under the terms of the Plan, shareholders of the Fund will
receive shares of Scudder International Fund in an amount equal to the relative
net asset value of their Fund shares. The Trustees considered whether an
adjustment in this formula should be made for the above tax differentials. The
Trustees determined that no adjustment should be made because the potential tax
consequences were not material, quantifiable or predictable because of (1)
uncertainties as to the amounts of any actual future realization of capital
gains or losses in view of future changes in portfolio values, (2) the exemption
of some shareholders from federal income taxation, and (3) the differing
consequences of federal and various other income taxation upon a distribution
received by each shareholder whose tax liability (if any) is determined by the
net effect of a multitude of considerations that are individual to the
shareholder. Shareholders should, however, review their own tax situation to
determine what effect, if any, these potential tax differences may have on them.
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The Trustees also gave extensive consideration to possible economies of
scale that might be realized by Scudder Kemper in connection with the
Reorganization, as well as the other fund combinations included in Scudder
Kemper's restructuring proposal.
Based on all the foregoing, the Board concluded that the Fund's
participation in the Reorganization would be in the best interests of the Fund
and would not dilute the interests of the Fund's shareholders. The Board of
Trustees, including the Independent Trustees, unanimously recommends that
shareholders of the Fund approve the Reorganization.
Description of the Securities to Be Issued
Scudder International Fund is a series of the Acquiring Corporation, a
corporation organized under the laws of the state of Maryland on June 23, 1975.
The Acquiring Corporation's authorized capital consists of approximately 2.25
billion shares of capital stock, par value $0.01 per share, approximately 671
million shares of which are allocated to Scudder International Fund. The
Directors of the Acquiring Corporation are authorized to divide the Acquiring
Corporation's shares into separate series. Scudder International Fund is one of
five series of the Acquiring Corporation. The Directors of the Acquiring
Corporation are also authorized to further divide the shares of the series of
the Acquiring Corporation into classes. The shares of Scudder International Fund
are currently divided into eight classes, Class AARP, Class S, the Barrett
International Shares, Class R, Class A, Class B, Class C and Class I. Although
shareholders of different classes of a series have an interest in the same
portfolio of assets, shareholders of different classes bear different expense
levels because distribution costs and certain other expenses approved by the
Directors of the Acquiring Corporation are borne directly by the Class incurring
such expenses in connection with different methods of distribution and certain
other matters.
Each share of each class of Scudder International Fund represents an
interest in Scudder International Fund that is equal to and proportionate with
each other share of that class of Scudder International Fund. Scudder
International Fund shareholders are entitled to one vote per share held on
matters on which they are entitled to vote. In the areas of shareholder voting
and the powers and conduct of the Trustees, there are no material differences
between the rights of shareholders of the Fund and the rights of shareholders of
Scudder International Fund, other than as described above in "Other Differences
Between the Funds--Charter Documents".
The Acquiring Corporation is organized in Maryland, while the Fund is
established in Massachusetts. Under Massachusetts law, shareholders of a trust
such as the Fund may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. The Fund's Declaration of Trust
contains a disclaimer of liability and provides for indemnification out of the
Fund property of any shareholder held personally liable for the claims and
liabilities to which a shareholder may become subject by reason of being or
having been a shareholder. Thus, the risk of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its obligations.
The Acquiring Corporation does not provide such a disclaimer of liability or
indemnification to its shareholders, because Maryland law generally does not
impose such liability on shareholders.
Federal Income Tax Consequences
The Reorganization is conditioned upon the receipt by each Fund of an
opinion from Willkie Farr & Gallagher substantially to the effect that, based
upon certain facts, assumptions and representations of the parties, for federal
income tax purposes: (i) the transfer to Scudder International Fund of all or
substantially all of the assets of the Fund in exchange solely for Class A,
Class B, Class C and Class I shares and the assumption by Scudder International
Fund of all of the liabilities of the Fund, followed by the distribution of such
shares to the Fund's shareholders in exchange for their shares of the Fund in
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complete liquidation of the Fund, will constitute a "reorganization" within the
meaning of Section 368(a)(1) of the Code, and Scudder International Fund and the
Fund will each be "a party to a reorganization" within the meaning of Section
368(b) of the Code; (ii) no gain or loss will be recognized by the Fund upon the
transfer of all or substantially all of its assets to Scudder International Fund
in exchange solely for Class A, Class B, Class C and Class I shares and the
assumption by Scudder International Fund of all of the liabilities of the Fund
or upon the distribution of the Class A, Class B, Class C and Class I shares to
shareholders of the Fund in exchange for their shares of the Fund; (iii) the
basis of the assets of the Fund in the hands of Scudder International Fund will
be the same as the basis of such assets of the Fund immediately prior to the
transfer; (iv) the holding period of the assets of the Fund in the hands of
Scudder International Fund will include the period during which such assets were
held by the Fund; (v) no gain or loss will be recognized by Scudder
International Fund upon the receipt of the assets of the Fund in exchange for
Class A, Class B, Class C and Class I shares and the assumption by Scudder
International Fund of all of the liabilities of the Fund; (vi) no gain or loss
will be recognized by the shareholders of the Fund upon the receipt of the Class
A, Class B, Class C and Class I shares solely in exchange for their shares of
the Fund as part of the transaction; (vii) the basis of the Class A, Class B,
Class C and Class I shares received by each shareholder of the Fund will be the
same as the basis of the shares of the Fund exchanged therefor; and (viii) the
holding period of Class A, Class B, Class C and Class I shares received by each
shareholder of the Fund will include the holding period during which the shares
of the Fund exchanged therefor were held, provided that at the time of the
exchange the shares of the Fund were held as capital assets in the hands of such
shareholder of the Fund.
After the Closing, Scudder International Fund may dispose of certain
securities received by it from the Fund in connection with the Reorganization,
which may result in transaction costs and capital gains.
While the Fund is not aware of any adverse state or local tax
consequences of the proposed Reorganization, it has not requested any ruling or
opinion with respect to such consequences and shareholders may wish to consult
their own tax adviser with respect to such matters.
Legal Matters
Certain legal matters concerning the federal income tax consequences
of the Reorganization will be passed on by Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, New York 10019. Certain legal matters concerning the issuance
of shares of Scudder International Fund will be passed on by Dechert, Ten Post
Office Square - South, Boston, Massachusetts 02109.
Capitalization
The following table shows on an unaudited basis the capitalization of
the Fund and Scudder International Fund as of September 30, 2000 and on a pro
forma basis as of that date, giving effect to the Reorganization(1):
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<TABLE>
<CAPTION>
Scudder Pro Forma Pro Forma
Fund International Fund Adjustments (Combined)
---- ------------------ ----------- --------
<S> <C> <C> <C> <C>
Net Assets
Class S Shares $4,575,441,003 (3) $ 4,575,441,003
Barrett International Shares 24,281,102 (3) $ 24,281,102
Class R Shares 39,545,883 (3) $ 39,545,883
Class AARP Shares 67,354,345 (3) $ 67,354,345
Class A Shares $372,995,208 (4) $ 372,995,208
Class B Shares $139,373,774 (4) $ 139,373,774
Class C Shares $ 45,011,697 (4) $ 45,011,697
Class I Shares $ 12,860,171 (4) $ 12,860,171
------------ -------------- ------------------
Total Net Assets $570,240,850 $4,706,622,333 - $ 5,276,863,183/(2)/
============ ============== ==================
Shares Outstanding
Class S Shares 84,562,995 84,562,995
Barrett International Shares 447,072 447,072
Class R Shares 733,506 733,506
Class AARP Shares 1,244,712 1,244,712
Class A Shares 31,208,080 (24,314,803) 6,893,277
Class B Shares 12,096,862 (9,521,113) 2,575,749
Class C Shares 3,899,641 (3,067,786) 831,855
Class I Shares 1,056,301 (818,634) 237,667
Net Asset Value per Share
Class S Shares $ 54.11 $ 54.11
Barrett International Shares $ 54.31 $ 54.31
Class R Shares $ 53.91 $ 53.91
Class AARP Shares $ 54.11 $ 54.11
Class A Shares $ 11.95 $ 54.11
Class B Shares $ 11.52 $ 54.11
Class C Shares $ 11.54 $ 54.11
Class I Shares $ 12.17 $ 54.11
</TABLE>
(1) Assumes the Reorganization had been consummated on September 30, 2000, and
is for informational purposes only. No assurance can be given as to how
many shares of Scudder International Fund will be received by the
shareholders of the Fund on the date the
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Reorganization takes place, and the foregoing should not be relied upon to
reflect the number of shares of Scudder International Fund that actually
will be received on or after such date.
(2) Pro forma combined net assets do not reflect expense reductions that would
result from the utilization of Scudder International Fund's administration
fee for an entire year.
(3) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by Scudder International Fund.
(4) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by the Fund.
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The Board of Trustees unanimously recommends that the shareholders of the
Fund vote in favor of this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT AUDITORS
The Board of Trustees, including all of the Independent Trustees, has
selected Ernst & Young LLP to act as independent auditors of the Fund for the
Fund's current fiscal year and recommends that shareholders ratify such
selection. However, if the Plan is approved, as described under Proposal 2,
PricewaterhouseCoopers LLP will serve as the independent auditors for the
combined fund. One or more representatives of Ernst & Young LLP are expected to
be present at the Meeting and will have an opportunity to make a statement if
they so desire. Such representatives are expected to be available to respond to
appropriate questions posed by shareholders or management.
The Board of Trustees unanimously recommends that shareholders of the
Fund vote in favor of this Proposal 3.
ADDITIONAL INFORMATION
Information about the Funds
Additional information about the Acquiring Corporation and the Funds
and the Reorganization has been filed with the SEC and may be obtained without
charge by writing to Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103, or by calling 1-800-[ ].
The Acquiring Corporation and the Acquired Trust are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and the 1940 Act, and in accordance therewith, file reports, proxy material and
other information about each of the Funds with the SEC. Such reports, proxy
material and other information filed by the Acquiring Corporation, and those
filed by the Acquired Trust, can be inspected and copied at the Public Reference
Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the following SEC Regional Offices: Northeast Regional Office, 7 World Trade
Center, Suite 1300, New York, NY 10048; Southeast Regional Office, 1401 Brickell
Avenue, Suite 200, Miami, FL 33131; Midwest Regional Office, Citicorp Center,
500 W. Madison Street, Chicago, IL 60661-2511; Central Regional Office, 1801
California Street, Suite 4800, Denver, CO 80202-2648; and Pacific Regional
Office, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA 90036-3648. Copies
of such material can also be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
The SEC maintains an Internet World Wide Web site (at http://www.sec.gov) which
contains the prospectuses and statements of additional information for the
Funds, materials that are incorporated by reference into the prospectuses and
statements of additional information, and other information about the Acquiring
Corporation and the Funds.
General
Proxy Solicitation. Proxy solicitation costs will be considered
Reorganization expenses and will be allocated accordingly. See "The Proposed
Transaction - Board Approval of the Proposed Transaction." In addition to
solicitation by mail, certain officers and representatives of the Acquired
Trust, officers and employees of Scudder Kemper and certain financial services
firms and their
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<PAGE>
representatives, who will receive no extra compensation for their services, may
solicit proxies by telephone, telegram or personally.
Any shareholder of the Fund giving a proxy has the power to revoke it
by mail (addressed to the Secretary at the principal executive office of the
Fund, c/o Scudder Kemper Investments, Inc., at the address for the Fund shown at
the beginning of this Proxy Statement/Prospectus) or in person at the Meeting,
by executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the Meeting will be
voted as specified in the proxy or, if no specification is made, in favor of
each Proposal.
The presence at any shareholders' meeting, in person or by proxy, of
the holders of at least 30% of the shares of the Acquired Trust (for a trust-
wide vote) or the Fund (for a fund-wide vote) entitled to be cast shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the event that the necessary quorum to transact business or the vote required
to approve any Proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law to permit further solicitation of proxies with respect to that
Proposal. Any such adjournment as to a matter will require the affirmative vote
of the holders of a majority of the Acquired Trust's (for a trust-wide vote) or
the Fund's (for a fund-wide vote) shares present in person or by proxy at the
Meeting. The persons named as proxies will vote in favor of any such
adjournment those proxies which they are entitled to vote in favor of that
Proposal and will vote against any such adjournment those proxies to be voted
against that Proposal. For purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions and broker "non-votes" will be
treated as shares that are present but which have not been voted. Broker non-
votes are proxies received by the Fund from brokers or nominees when the broker
or nominee has neither received instructions from the beneficial owner or other
persons entitled to vote nor has discretionary power to vote on a particular
matter. Accordingly, shareholders are urged to forward their voting
instructions promptly.
The election of the Trustees under Proposal 1 requires the affirmative
vote of a plurality of the shares of the Acquired Trust voting on such election.
Approval of Proposal 2 requires the affirmative vote of the holders of a
majority of the Fund's shares outstanding and entitled to vote thereon.
Approval of Proposal 3 requires the affirmative vote of a majority of the shares
of the Fund voting at the Meeting. Abstentions and broker non-votes will not be
counted in favor of, but will have no other effect on, Proposals 1 and 3, and
will have the effect of a "no" vote on Proposal 2.
Holders of record of the shares of the Fund at the close of business
on March 5, 2001 will be entitled to one vote per share on all business of the
Meeting. As of February 5, 2001, there were [ ] Class A shares, [
] Class B shares, [ ] Class C shares and [ ] Class I
shares of the Fund outstanding.
[As of December 31, 2000, the officers and Directors of the Acquiring
Corporation as a group owned beneficially less than 1% of the outstanding shares
of each class of Scudder International Fund.] Appendix 2 hereto sets forth the
beneficial owners of more than 5% of each class of each Fund's shares. To the
best of each Fund's knowledge, as of December 31, 2000, no person owned
beneficially more than 5% of any class of either Fund's outstanding shares,
except as stated on Appendix 2.
Shareholder Communications Corporation ("SCC") has been engaged to
assist in the solicitation of proxies, at an estimated cost of $[ ]. As
the Meeting date approaches, certain shareholders of the Fund may receive a
telephone call from a representative of SCC if their votes have not yet been
received. Authorization to permit SCC to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of the
Fund. Proxies that are obtained telephonically will be
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<PAGE>
recorded in accordance with the procedures described below. The Trustees believe
that these procedures are reasonably designed to ensure that both the identity
of the shareholder casting the vote and the voting instructions of the
shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the SCC
representative is required to ask for each shareholder's full name and address,
or the last four digits of the shareholder's social security or employer
identification number, or both, and to confirm that the shareholder has received
the proxy materials in the mail. If the shareholder is a corporation or other
entity, the SCC representative is required to ask for the person's title and
confirmation that the person is authorized to direct the voting of the shares.
If the information solicited agrees with the information provided to SCC, then
the SCC representative has the responsibility to explain the process, read the
Proposals on the proxy card(s), and ask for the shareholder's instructions on
the Proposals. Although the SCC representative is permitted to answer questions
about the process, he or she is not permitted to recommend to the shareholder
how to vote, other than to read any recommendation set forth in the Proxy
Statement/Prospectus. SCC will record the shareholder's instructions on the
card. Within 72 hours, the shareholder will be sent a letter or mailgram to
confirm his or her vote and asking the shareholder to call SCC immediately if
his or her instructions are not correctly reflected in the confirmation.
Shareholders may also provide their voting instructions through
telephone touch-tone voting or Internet voting. These options require
shareholders to input a control number which is located on each voting
instruction card. After inputting this number, shareholders will be prompted to
provide their voting instructions on the Proposals. Shareholders will have an
opportunity to review their voting instructions and make any necessary changes
before submitting their voting instructions and terminating their telephone call
or Internet link. Shareholders who vote on the Internet, in addition to
confirming their voting instructions prior to submission, will also receive an
e-mail confirming their instructions.
If a shareholder wishes to participate in the Meeting, but does not
wish to give a proxy by telephone or electronically, the shareholder may still
submit the proxy card(s) originally sent with the Proxy Statement/Prospectus or
attend in person. Should shareholders require additional information regarding
the proxy or replacement proxy card(s), they may contact SCC toll-free at 1-800-
[ ]. Any proxy given by a shareholder is revocable until voted at the
Meeting.
Shareholder Proposals for Subsequent Meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a shareholder meeting
subsequent to the Meeting, if any, should send their written proposals to the
Secretary of the Acquired Trust, c/o Scudder Kemper Investments, Inc., 222 South
Riverside Plaza, Chicago, Illinois 60606, within a reasonable time before the
solicitation of proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion.
Other Matters to Come Before the Meeting. The Board is not aware of
any matters that will be presented for action at the Meeting other than the
matters described in this material. Should any other matters requiring a vote
of shareholders arise, the proxy in the accompanying form will confer upon the
person or persons entitled to vote the shares represented by such proxy the
discretionary authority to vote the shares as to any such other matters in
accordance with their best judgment in the interest of the Acquired Trust and/or
the Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE ADVANTAGE
OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
/s/ Philip J. Collora
Philip J. Collora
Secretary
-34-
<PAGE>
INDEX OF EXHIBITS AND APPENDICES
EXHIBIT A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION........................
EXHIBIT B: MANAGEMENT'S DISCUSSION OF SCUDDER INTERNATIONAL FUND'S
PERFORMANCE.....................................................................
APPENDIX 1: TRUSTEE AND NOMINEE SHAREHOLDINGS.............................
APPENDIX 2: BENEFICIAL OWNERS OF FUND SHARES..............................
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<PAGE>
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this [_] day of [_], 2001, by and among Scudder International Fund, Inc. (the
"Acquiring Corporation"), a Maryland corporation, on behalf of Scudder
International Fund (the "Acquiring Fund"), a separate series of the Acquiring
Corporation, Kemper International Fund (the "Acquired Trust"), a Massachusetts
business trust, on behalf of Kemper International Fund (the "Acquired Fund" and,
together with the Acquiring Fund, each a "Fund" and collectively the "Funds"),
the only active series of the Acquired Trust, and Scudder Kemper Investments,
Inc. ("Scudder Kemper"), investment adviser to the Funds (for purposes of
Paragraph 10.2 of the Agreement only). The principal place of business of the
Acquiring Corporation is 345 Park Avenue, New York, New York 10154. The
principal place of business of the Acquired Trust is 222 South Riverside Plaza,
Chicago, Illinois 60606.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all or substantially all of
the assets of the Acquired Fund to the Acquiring Fund in exchange solely for
Class A, Class B, Class C and Class I voting shares of capital stock ($.01 par
value per share) of the Acquiring Fund (the "Acquiring Fund Shares"), the
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund
and the distribution of the Acquiring Fund Shares to the Class A, Class B, Class
C and Class I shareholders of the Acquired Fund in complete liquidation of the
Acquired Fund as provided herein, all upon the terms and conditions hereinafter
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN
EXCHANGE FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED
FUND LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained herein, the Acquired
Fund agrees to transfer to the Acquiring Fund all or substantially all of the
Acquired Fund's assets as set forth in section 1.2, and the Acquiring Fund
agrees in exchange therefor (i) to deliver to the Acquired Fund that number of
full and fractional Class A, Class B, Class C and Class I Acquiring Fund Shares
determined by dividing the value of the Acquired Fund's assets net of any
liabilities of the Acquired Fund with respect to the Class A, Class B, Class C
and Class I shares of the Acquired Fund, computed in the manner and as of the
time and date set forth in section 2.1, by the net asset value of one Acquiring
Fund Share of the corresponding class, computed in the manner and as of the time
and date set forth in section 2.2; and (ii) to assume all of the liabilities of
the Acquired Fund, including, but not limited to, any deferred compensation to
the Acquired Fund board members. All Acquiring Fund Shares delivered to the
Acquired Fund shall be delivered at net asset value without sales load,
commission or other similar fee being imposed. Such transactions shall take
place at the closing provided for in section 3.1 (the "Closing").
<PAGE>
1.2. The assets of the Acquired Fund to be acquired by the
Acquiring Fund (the "Assets") shall consist of all assets, including, without
limitation, all cash, cash equivalents, securities, commodities and futures
interests and dividends or interest or other receivables that are owned by the
Acquired Fund and any deferred or prepaid expenses shown on the unaudited
statement of assets and liabilities of the Acquired Fund prepared as of the
effective time of the Closing in accordance with generally accepted accounting
principles ("GAAP") applied consistently with those of the Acquired Fund's most
recent audited balance sheet. The Assets shall constitute at least 90% of the
fair market value of the net assets, and at least 70% of the fair market value
of the gross assets, held by the Acquired Fund immediately before the Closing
(excluding for these purposes assets used to pay the dividends and other
distributions paid pursuant to section 1.4).
1.3. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in section 3.6.
1.4. On or as soon as practicable prior to the Closing Date as
defined in section 3.1, the Acquired Fund will declare and pay to its
shareholders of record one or more dividends and/or other distributions so that
it will have distributed substantially all of its investment company taxable
income (computed without regard to any deduction for dividends paid) and
realized net capital gain, if any, for the current taxable year through the
Closing Date.
1.5. Immediately after the transfer of Assets provided for in
section 1.1, the Acquired Fund will distribute to the Acquired Fund's
shareholders of record with respect to each class of its shares (the "Acquired
Fund Shareholders"), determined as of the Valuation Time (as defined in section
2.1), on a pro rata basis within that class, the Acquiring Fund Shares of the
same class received by the Acquired Fund pursuant to section 1.1 and will
completely liquidate. Such distribution and liquidation will be accomplished
with respect to each class of the Acquired Fund by the transfer of the Acquiring
Fund Shares then credited to the account of the Acquired Fund on the books of
the Acquiring Fund to open accounts on the share records of the Acquiring Fund
in the names of the Acquired Fund Shareholders. The Acquiring Fund shall have
no obligation to inquire as to the validity, propriety or correctness of such
records, but shall assume that such transaction is valid, proper and correct.
The aggregate net asset value of Class A, Class B, Class C and Class I Acquiring
Fund Shares to be so credited to the Class A, Class B, Class C and Class I
Acquired Fund Shareholders shall, with respect to each class, be equal to the
aggregate net asset value of the Acquired Fund shares of the same class owned by
such shareholders as of the Valuation Time. All issued and outstanding shares
of the Acquired Fund will simultaneously be cancelled on the books of the
Acquired Fund, although share certificates representing interests in Class A,
Class B, Class C and Class I shares of the Acquired Fund will represent a number
of Acquiring Fund Shares after the Closing Date as determined in accordance with
section 2.3. The Acquiring Fund will not issue certificates representing
Acquiring Fund Shares in connection with such exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on the books
of the Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of the Acquired Fund including,
without limitation, the responsibility for filing of regulatory reports, tax
returns, or other documents with the Securities and Exchange Commission (the
"Commission"), any state securities commission, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Acquired Fund.
<PAGE>
1.8. All books and records of the Acquired Fund, including all
books and records required to be maintained under the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and regulations thereunder,
shall be available to the Acquiring Fund from and after the Closing Date and
shall be turned over to the Acquiring Fund as soon as practicable following the
Closing Date.
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of
regular trading on The New York Stock Exchange, Inc. (the "NYSE") on the
business day immediately preceding the Closing Date, as defined in section 3.1
(the "Valuation Time") after the declaration and payment of any dividends and/or
other distributions on that date, using the valuation procedures set forth in
the Acquiring Corporation's Charter, as amended, and then-current prospectus or
statement of additional information, copies of which have been delivered to the
Acquired Fund.
2.2. The net asset value of a Class A, Class B, Class C or Class I
Acquiring Fund Share shall be the net asset value per share computed with
respect to that class as of the Valuation Time using the valuation procedures
referred to in section 2.1. Notwithstanding anything to the contrary contained
in this Agreement, in the event that, as of the Valuation Time, there are no
Class A, Class B, Class C and/or Class I Acquiring Fund Shares issued and
outstanding, then, for purposes of this Agreement, the per share net asset value
of a Class A, Class B, Class C and/or Class I share, as applicable, shall be
equal to the net asset value of one Class S Acquiring Fund Share.
2.3. The number of the Class A, Class B, Class C and Class I Acquiring
Fund Shares to be issued (including fractional shares, if any) in exchange for
the Assets shall be determined with respect to each such class by dividing the
value of the Assets with respect to Class A, Class B, Class C and Class I shares
of the Acquired Fund, as the case may be, determined in accordance with section
2.1 by the net asset value of an Acquiring Fund Share of the same class
determined in accordance with section 2.2.
2.4. All computations of value hereunder shall be made by or under
the direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act and
shall be subject to confirmation by each Fund's respective independent
accountants upon the reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement
shall be June 18, 2001, or such later date as the parties may agree in writing
(the "Closing Date"). All acts taking place at the Closing shall be deemed to
take place simultaneously as of 9:00 a.m., Eastern time, on the Closing Date,
unless otherwise agreed to by the parties. The Closing shall be held at the
offices of Dechert, Ten Post Office Square - South, Boston, MA 02109, or at such
other place and time as the parties may agree.
3.2. The Acquired Fund shall deliver to Acquiring Fund on the Closing
Date a schedule of Assets.
3.3. The Chase Manhattan Bank, custodian for the Acquired Fund, shall
deliver at the Closing a certificate of an authorized officer stating that (a)
the Assets shall have been delivered in proper form to Brown Brothers Harriman &
Company, custodian for the Acquiring Fund, prior to or on the Closing Date and
(b) all necessary taxes in connection with the delivery of the Assets, including
all applicable federal
<PAGE>
and state stock transfer stamps, if any, have been paid or provision for payment
has been made. The Acquired Fund's portfolio securities represented by a
certificate or other written instrument shall be presented by the custodian for
the Acquired Fund to the custodian for the Acquiring Fund for examination no
later than five business days preceding the Closing Date and transferred and
delivered by the Acquired Fund as of the Closing Date by the Acquired Fund for
the account of Acquiring Fund duly endorsed in proper form for transfer in such
condition as to constitute good delivery thereof. The Acquired Fund's portfolio
securities and instruments deposited with a securities depository, as defined in
Rule 17f-4 under the 1940 Act, shall be delivered as of the Closing Date by book
entry in accordance with the customary practices of such depositories and the
custodian for the Acquiring Fund. The cash to be transferred by the Acquired
Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.4. State Street Bank and Trust Company ("State Street"), as transfer
agent for the Acquired Fund, on behalf of the Acquired Fund, shall deliver at
the Closing a certificate of an authorized officer stating that its records
contain the names and addresses of the Acquired Fund Shareholders and the number
and percentage ownership (to three decimal places) of outstanding Class A, Class
B, Class C and Class I Acquired Fund shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date to the Acquired Fund or provide evidence satisfactory to the Acquired Fund
that such Acquiring Fund Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request to effect the transactions contemplated by this
Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the
NYSE or another primary trading market for portfolio securities of the Acquiring
Fund or the Acquired Fund shall be closed to trading or trading thereupon shall
be restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Class A, Class B, Class C and Class I shares of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.6. The liabilities of the Acquired Fund shall include all of the
Acquired Fund's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Closing Date, and whether or not specifically referred to in this Agreement
including but not limited to any deferred compensation to the Acquired Fund's
board members.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Trust, on behalf of the Acquired Fund, represents
and warrants to the Acquiring Fund as follows:
(a) The Acquired Trust is a voluntary association with transferable
shares commonly referred to as a Massachusetts business trust duly organized and
validly existing under the laws of The Commonwealth of Massachusetts with power
under the Acquired Trust's Declaration of Trust, as amended, to own all of its
properties and assets and to carry on its business as it is now being conducted
and, subject to approval of shareholders of the Acquired Fund, to carry out the
Agreement. The Acquired
<PAGE>
Fund, the only active series of the Acquired Trust, is duly designated in
accordance with the applicable provisions of the Acquired Trust's Declaration of
Trust. The Acquired Trust and Acquired Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have material adverse
effect on the Acquired Trust or Acquired Fund. The Acquired Fund has all
material federal, state and local authorizations necessary to own all of the
properties and assets and to carry on its business as now being conducted,
except authorizations which the failure to so obtain would not have a material
adverse effect on the Acquired Fund;
(b) The Acquired Trust is registered with the Commission as an open-
end management investment company under the 1940 Act, and such registration is
in full force and effect and the Acquired Fund is in compliance in all material
respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the 1940 Act and such as may be
required by state securities laws;
(d) Other than with respect to contracts entered into in connection
with the portfolio management of the Acquired Fund which shall terminate on or
prior to the Closing Date, the Acquired Trust is not, and the execution,
delivery and performance of this Agreement by the Acquired Trust will not result
(i) in violation of Massachusetts law or of the Acquired Trust's Declaration of
Trust, as amended, or By-Laws, (ii) in a violation or breach of, or constitute a
default under, any material agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquired Fund is a party or by which it is bound,
and the execution, delivery and performance of this Agreement by the Acquired
Fund will not result in the acceleration of any obligation, or the imposition of
any penalty, under any agreement, indenture, instrument, contract, lease,
judgment or decree to which the Acquired Fund is a party or by which it is
bound, or (iii) in the creation or imposition of any lien, charge or encumbrance
on any property or assets of the Acquired Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Fund or any properties or
assets held by it. The Acquired Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquired Fund at and for the fiscal year ended October 31, 2000, have been
audited by Ernst & Young LLP, independent auditors, and are in accordance with
GAAP consistently applied, and such statements (a copy of each of which has been
furnished to the Acquiring Fund) present fairly, in all material respects, the
financial position of the Acquired Fund as of such date in accordance with GAAP,
and there are no known contingent liabilities of the Acquired Fund required to
be reflected on a balance sheet (including the notes thereto) in accordance with
GAAP as of such date not disclosed therein;
<PAGE>
(g) Since October 31, 2000, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred except as otherwise disclosed to and
accepted in writing by the Acquiring Fund. For purposes of this subsection (g),
a decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired
Fund Shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquired Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquired Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company and
has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code, and will have distributed all
of its investment company taxable income and net capital gain (as defined in the
Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws, (ii) are, and on the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable and not
subject to preemptive or dissenter's rights (recognizing that, under
Massachusetts law, Acquired Fund Shareholders, under certain circumstances,
could be held personally liable for obligations of the Acquired Fund), and (iii)
will be held at the time of the Closing by the persons and in the amounts set
forth in the records of State Street, as provided in section 3.4. The Acquired
Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of the Acquired Fund shares, nor is there
outstanding any security convertible into any of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Fund's assets to be transferred to the
Acquiring Fund pursuant to section 1.2 and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder free of any liens or
other encumbrances, except those liens or encumbrances as to which the Acquiring
Fund has received notice at or prior to the Closing, and upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act and the 1940 Act,
except those restrictions as to which the Acquiring Fund has received notice and
necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquired Trust (including the
determinations required by Rule 17a-8(a) under the 1940 Act), and, subject to
the approval of the Acquired Fund Shareholders, this Agreement constitutes a
valid and binding obligation of the Acquired Trust, on behalf of the Acquired
Fund, enforceable in accordance with its
<PAGE>
terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the National Association of Securities Dealers,
Inc. (the "NASD")), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of
the Acquired Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading; and
(o) The proxy statement of the Acquired Fund to be included in the
Registration Statement referred to in section 5.7 (the "Proxy Statement"),
insofar as it relates to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date, (i) comply in all material
respects with the provisions and Regulations of the 1933 Act, 1934 Act and 1940
Act, as applicable, and (ii) not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements are made, not materially misleading; provided, however, that the
representations and warranties in this section shall not apply to statements in
or omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished or should
have been furnished by the Acquiring Fund for use therein.
4.2. The Acquiring Corporation, on behalf of the Acquiring Fund, represents
and warrants to the Acquired Fund as follows:
(a) The Acquiring Corporation is a corporation duly organized and
validly existing under the laws of the State of Maryland with power under the
Acquiring Corporation's Charter, as amended, to own all of its properties and
assets and to carry on its business as it is now being conducted and, subject to
the approval of shareholders of the Acquired Fund, to carry out the Agreement.
The Acquiring Fund is a separate series of the Acquiring Corporation duly
designated in accordance with the applicable provisions of the Acquiring
Corporation's Charter. The Acquiring Corporation and Acquiring Fund are
qualified to do business in all jurisdictions in which they are required to be
so qualified, except jurisdictions in which the failure to so qualify would not
have material adverse effect on the Acquiring Corporation or Acquiring Fund.
The Acquiring Fund has all material federal, state and local authorizations
necessary to own all of the properties and assets and to carry on its business
as now being conducted, except authorizations which the failure to so obtain
would not have a material adverse effect on the Acquiring Fund;
(b) The Acquiring Corporation is registered with the Commission as an
open-end management investment company under the 1940 Act, and such registration
is in full force and effect and the Acquiring Fund is in compliance in all
material respects with the 1940 Act and the rules and regulations thereunder;
<PAGE>
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The Acquiring Corporation is not, and the execution, delivery and
performance of this Agreement by the Acquiring Corporation will not result (i)
in violation of Maryland law or of the Acquiring Corporation's Charter, as
amended, or By-Laws, or (ii) in a violation or breach of, or constitute a
default under, any material agreement, indenture, instrument, contract, lease or
other undertaking known to counsel to which the Acquiring Fund is a party or by
which it is bound, and the execution, delivery and performance of this Agreement
by the Acquiring Fund will not result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquiring Fund is a party or by
which it is bound, or (iii) in the creation or imposition of any lien, charge or
encumbrance on any property or assets of the Acquiring Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any properties or
assets held by it. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquiring Fund at and for the fiscal year ended August 31, 2000, have been
audited by PricewaterhouseCoopers LLP, independent accountants, and are in
accordance with GAAP consistently applied, and such statements (a copy of each
of which has been furnished to the Acquired Fund) present fairly, in all
material respects, the financial position of the Acquiring Fund as of such date
in accordance with GAAP, and there are no known contingent liabilities of the
Acquiring Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(g) Since August 31, 2000, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred except as otherwise disclosed to
and accepted in writing by the Acquired Fund. For purposes of this subsection
(g), a decline in net asset value per share of the Acquiring Fund due to
declines in market values of securities in the Acquiring Fund's portfolio, the
discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund
shares by Acquiring Fund shareholders shall not constitute a material adverse
change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquiring Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquiring Fund's knowledge, no such return is currently under audit and
no assessment has been asserted with respect to such returns;
<PAGE>
(i) For each taxable year of its operation, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such, has been eligible to
and has computed its federal income tax under Section 852 of the Code, and will
do so for the taxable year including the Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws and (ii) are, and on the Closing Date will be,
duly and validly issued and outstanding, fully paid and non-assessable, and not
subject to preemptive or dissenter's rights. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of the Acquiring Fund shares, nor is there outstanding any security
convertible into any of the Acquiring Fund shares;
(k) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Agreement, will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued and
outstanding Acquiring Fund Shares, and will be fully paid and non-assessable
(recognizing that, under Massachusetts law, Acquiring Fund Shareholders, under
certain circumstances, could be held personally liable for the obligations of
the Acquiring Fund);
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens or other
encumbrances, except those liens or encumbrances as to which the Acquired Fund
has received notice at or prior to the Closing;
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquiring Corporation (including the
determinations required by Rule 17a-8(a) under the 1940 Act) and this Agreement
will constitute a valid and binding obligation of the Acquiring Corporation, on
behalf of the Acquiring Fund, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(n) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the NASD), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(o) The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading;
(p) The Proxy Statement to be included in the Registration Statement,
only insofar as it relates to the Acquiring Fund, will, on the effective date of
the Registration Statement and on the Closing Date, (i) comply in all material
respects with the provisions and Regulations of the 1933 Act,
<PAGE>
1934 Act, and 1940 Act and (ii) not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which such
statements were made, not materially misleading; provided, however, that the
representations and warranties in this section shall not apply to statements in
or omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished or should
have been furnished by the Acquired Fund for use therein; and
(q) The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state securities laws as may be necessary in order to continue its
operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each covenants to operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that (a) such ordinary course of business will include (i) the
declaration and payment of customary dividends and other distributions and (ii)
such changes as are contemplated by the Funds' normal operations; and (b) each
Fund shall retain exclusive control of the composition of its portfolio until
the Closing Date. No party shall take any action that would, or reasonably would
be expected to, result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect. The Acquired
Fund and Acquiring Fund covenant and agree to coordinate the respective
portfolios of the Acquired Fund and Acquiring Fund from the date of the
Agreement up to and including the Closing Date in order that at Closing, when
the Assets are added to the Acquiring Fund's portfolio, the resulting portfolio
will meet the Acquiring Fund's investment objective, policies and restrictions,
as set forth in the Acquiring Fund's Prospectus, a copy of which has been
delivered to the Acquired Fund.
5.2. Upon reasonable notice, the Acquiring Fund's officers and agents shall
have reasonable access to the Acquired Fund's books and records necessary to
maintain current knowledge of the Acquired Fund and to ensure that the
representations and warranties made by the Acquired Fund are accurate.
5.3. The Acquired Fund covenants to call a meeting of the Acquired
Fund Shareholders entitled to vote thereon to consider and act upon this
Agreement and to take all other reasonable action necessary to obtain approval
of the transactions contemplated herein. Such meeting shall be scheduled for no
later than May 24, 2001.
5.4. The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.5. The Acquired Fund covenants that it will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Acquired Fund shares.
5.6. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all actions, and do or
cause to be done, all things reasonably necessary, proper, and/or advisable to
consummate and make effective the transactions contemplated by this Agreement.
<PAGE>
5.7. Each Fund covenants to prepare in compliance with the 1933 Act, the
1934 Act and the 1940 Act the Registration Statement on Form N-14 (the
"Registration Statement") in connection with the meeting of the Acquired Fund
Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquiring Fund will file the Registration Statement,
including the Proxy Statement, with the Commission. The Acquired Fund will
provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the Proxy Statement referred to
in section 4.1(o), all to be included in the Registration Statement, in
compliance in all material respects with the 1933 Act, the 1934 Act and the 1940
Act.
5.8. The Acquired Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other instruments, and will
take or cause to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.9. The Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act and 1940 Act, and such
of the state securities laws as it deems appropriate in order to continue its
operations after the Closing Date and to consummate the transactions
contemplated herein; provided, however, that the Acquiring Fund may take such
actions it reasonably deems advisable after the Closing Date as circumstances
change.
5.10. The Acquiring Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquired Fund, execute and deliver or cause to
be executed and delivered all such assignments, assumption agreements, releases,
and other instruments, and will take or cause to be taken such further action,
as the Acquired Fund may reasonably deem necessary or desirable in order to (i)
vest and confirm to the Acquired Fund title to and possession of all Acquiring
Fund shares to be transferred to the Acquired Fund pursuant to this Agreement
and (ii) assume the liabilities from the Acquired Fund.
5.11. As soon as reasonably practicable after the Closing, the Acquired
Fund shall make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares received at the Closing.
5.12. The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.13. The intention of the parties is that the transaction will qualify as
a reorganization within the meaning of Section 368(a) of the Code. Neither the
Acquiring Corporation, the Acquired Trust, the Acquiring Fund nor the Acquired
Fund shall take any action, or cause any action to be taken (including, without
limitation, the filing of any tax return) that is inconsistent with such
treatment or results in the failure of the transaction to qualify as a
reorganization within the meaning of Section 368(a) of the Code. At or prior to
the Closing Date, the Acquiring Corporation, the Acquired Trust, the Acquiring
Fund and the Acquired Fund will take such action, or cause such action to be
taken, as is reasonably necessary to enable Willkie Farr & Gallagher to render
the tax opinion contemplated herein in section 8.5.
5.14. At or immediately prior to the Closing, the Acquired Fund may declare
and pay to its stockholders a dividend or other distribution in an amount large
enough so that it will have distributed
<PAGE>
substantially all (and in any event not less than 98%) of its investment company
taxable income (computed without regard to any deduction for dividends paid) and
realized net capital gain, if any, for the current taxable year through the
Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of the Acquiring Corporation, on
behalf of the Acquiring Fund, contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as they may
be affected by the transactions contemplated by this Agreement, as of the
Closing Date, with the same force and effect as if made on and as of the Closing
Date; and there shall be (i) no pending or threatened litigation brought by any
person (other than the Acquired Fund, its adviser or any of their affiliates)
against the Acquiring Fund or its investment adviser(s), Board members or
officers arising out of this Agreement and (ii) no facts known to the Acquiring
Fund which the Acquiring Fund reasonably believes might result in such
litigation.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquired Trust, on behalf of
the Acquired Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement are
true and correct on and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Acquired Fund shall reasonably request.
6.3. The Acquired Fund shall have received on the Closing Date an opinion
of Dechert, in a form reasonably satisfactory to the Acquired Fund, and dated as
of the Closing Date, to the effect that:
(a) The Acquiring Corporation has been duly formed and is an existing
corporation; (b) the Acquiring Fund has the power to carry on its business as
presently conducted in accordance with the description thereof in the Acquiring
Fund's registration statement under the 1940 Act; (c) the Agreement has been
duly authorized, executed and delivered by the Acquiring Corporation, on behalf
of the Acquiring Fund, and constitutes a valid and legally binding obligation of
the Acquiring Corporation, on behalf of the Acquiring Fund, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and laws of general applicability relating
to or affecting creditors' rights and to general equity principles; (d) the
execution and delivery of the Agreement did not, and the exchange of the
Acquired Fund's assets for Acquiring Fund Shares pursuant to the Agreement will
not, violate the Acquiring Corporation's Charter, as amended, or By-laws; and
(e) to the knowledge of such counsel, and without any independent investigation,
(i) the Acquiring Corporation is not subject to any litigation or other
proceedings that might have a materially adverse effect on the operations of the
Acquiring Corporation, (ii) the Acquiring Corporation is duly registered as an
investment company with the Commission and is not subject to any stop order; and
(iii) all regulatory consents, authorizations, approvals or filings required to
be obtained or made by the Acquiring Fund under the federal laws of the United
States or the laws of the State of Maryland for the exchange of the Acquired
Fund's assets for Acquiring Fund Shares, pursuant to the Agreement have been
obtained or made.
<PAGE>
The delivery of such opinion is conditioned upon receipt by Dechert
of customary representations it shall reasonably request of each of the
Acquiring Corporation and the Acquired Trust.
6.4. The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
6.5. The Acquiring Fund shall have [(i) adopted a new investment
management agreement and (ii)] entered into an administrative services agreement
with Scudder Kemper, each in a form reasonably satisfactory to the Acquired
Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of the Acquired Trust, on behalf
of the Acquired Fund, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than the Acquiring Fund, its adviser or any of their affiliates) against the
Acquired Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquired Fund which the
Acquired Fund reasonably believes might result in such litigation.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities as of the Closing Date,
certified by the Treasurer of the Acquired Fund.
7.3. The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquiring Corporation, on
behalf of the Acquiring Fund, and dated as of the Closing Date, to the effect
that the representations and warranties of the Acquired Trust with respect to
the Acquired Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund shall
reasonably request.
7.4. The Acquiring Fund shall have received on the Closing Date an opinion
of Dechert, in a form reasonably satisfactory to the Acquiring Fund, and dated
as of the Closing Date, to the effect that:
(a) The Acquired Trust has been duly formed and is an existing
business trust; (b) the Acquired Fund has the power to carry on its business as
presently conducted in accordance with the description thereof in the Acquired
Trust's registration statement under the 1940 Act; (c) the Agreement has been
duly authorized, executed and delivered by the Acquired Trust, on behalf of the
Acquired Fund, and constitutes a valid and legally binding obligation of the
Acquired Trust, on behalf of the Acquired Fund, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
<PAGE>
reorganization, moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity principles; (d) the execution
and delivery of the Agreement did not, and the exchange of the Acquired Fund's
assets for Acquiring Fund Shares pursuant to the Agreement will not, violate the
Acquired Trust's Declaration of Trust, as amended, or By-laws; and (e) to the
knowledge of such counsel, and without any independent investigation, (i) the
Acquired Trust is not subject to any litigation or other proceedings that might
have a materially adverse effect on the operations of the Acquired Trust, (ii)
the Acquired Trust is duly registered as an investment company with the
Commission and is not subject to any stop order, and (iii) all regulatory
consents, authorizations, approvals or filings required to be obtained or made
by the Acquired Fund under the federal laws of the United States or the laws of
The Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Dechert
of customary representations it shall reasonably request of each of the
Acquiring Corporation and the Acquired Trust.
7.5. The Acquired Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquired Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been met on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Acquired Trust's
Declaration of Trust, as amended, and By-Laws, applicable Massachusetts law and
the 1940 Act, and certified copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Fund. Notwithstanding anything herein
to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain material damages or
other relief in connection with, this Agreement or the transactions contemplated
herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions.
8.4. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the
<PAGE>
parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act.
8.5. The parties shall have received an opinion of Willkie Farr &
Gallagher addressed to each of the Acquiring Fund and the Acquired Fund, in a
form reasonably satisfactory to each such party to this Agreement, substantially
to the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to the Acquiring
Fund of all or substantially all of the assets of the Acquired Fund in exchange
solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund, followed by the distribution of such
shares to the Acquired Fund Shareholders in exchange for their shares of the
Acquired Fund in complete liquidation of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Acquiring Fund and the Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Acquired Fund upon the transfer of all or substantially all of
its assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund; (iii) the basis of the assets of the Acquired Fund in the hands
of the Acquiring Fund will be the same as the basis of such assets of the
Acquired Fund immediately prior to the transfer; (iv) the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which such assets were held by the Acquired Fund; (v) no gain or
loss will be recognized by the Acquiring Fund upon the receipt of the assets of
the Acquired Fund in exchange for Acquiring Fund Shares and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund; (vi) no gain
or loss will be recognized by Acquired Fund Shareholders upon the receipt of the
Acquiring Fund Shares solely in exchange for their shares of the Acquired Fund
as part of the transaction; (vii) the basis of the Acquiring Fund Shares
received by Acquired Fund Shareholders will be the same as the basis of the
shares of the Acquired Fund exchanged therefor; and (viii) the holding period of
Acquiring Fund Shares received by Acquired Fund Shareholders will include the
holding period during which the shares of the Acquired Fund exchanged therefor
were held, provided that at the time of the exchange the shares of the Acquired
Fund were held as capital assets in the hands of Acquired Fund Shareholders. The
delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher
of representations it shall request of each of the Acquiring Corporation and
Acquired Trust. Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the condition set forth in this
section 8.5.
9. INDEMNIFICATION
9.1. The Acquiring Fund agrees to indemnify and hold harmless the Acquired
Fund and each of the Acquired Fund's Board members and officers from and against
any and all losses, claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Acquired Fund or any of its
Board members or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out of or
is based on any breach by the Acquiring Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
9.2. The Acquired Fund agrees to indemnify and hold harmless the Acquiring
Fund and each of the Acquiring Fund's Board members and officers from and
against any and all losses, claims, damages, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Acquiring Fund or any of its
Board members or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or
<PAGE>
actions with respect thereto) arises out of or is based on any breach by the
Acquired Fund of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
10. FEES AND EXPENSES
10.1. Each of the Acquiring Corporation, on behalf of the Acquiring Fund,
and the Acquired Trust, on behalf of the Acquired Fund, represents and warrants
to the other that it has no obligations to pay any brokers or finders fees in
connection with the transactions provided for herein.
10.2. The anticipated costs of the Reorganization allocable to the
Acquired Fund are $360,874, which includes board meeting fees, legal, accounting
and other consultant fees, and proxy solicitation costs. Of these costs,
$193,586 (100%) are allocated to and will be borne by the Acquired Fund's Class
A shares, $119,094 (88.57%) of its allocable portion of $134,460 will be borne
by the Acquired Fund's Class B shares, $13,777 (43.46%) of its allocable portion
of $31,698 will be borne by the Acquired Fund's Class C shares, and $1,130
(100%) are allocated to and will be borne by the Acquired Fund's Class I shares.
Scudder Kemper is bearing the remaining costs, including any cost overruns
(except that Scudder International Fund is bearing the SEC and state
registration and notice fees which are estimated to be $_________). Any such
expenses which are so borne by Scudder Kemper will be solely and directly
related to the Reorganization within the meaning of Revenue Ruling 73-54, 1973-1
C.B. 187. Acquired Fund Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Acquiring Fund and the Acquired Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this section
11.2, the representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquiring Fund and Acquired Fund in sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
12.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before
[ ], 2001, unless such date is extended by mutual agreement of the parties, or
(iii) by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Board members or
officers, except for any such material breach or intentional misrepresentation,
as to each of which all remedies at law or in equity of the party adversely
affected shall survive.
<PAGE>
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by any authorized officer of the Acquired
Fund and any authorized officer of the Acquiring Fund; provided, however, that
following the meeting of the Acquired Fund Shareholders called by the Acquired
Fund pursuant to section 5.3 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of the Acquiring
Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement
to the detriment of such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
Acquired Fund, 222 South Riverside Plaza, Chicago, Illinois 60606, with a copy
to Dechert, Ten Post Office Square South, Boston, MA 02109-4603, Attention:
Joseph R. Fleming, Esq., or to the Acquiring Fund, 345 Park Avenue, New York,
New York 10154, with a copy to Dechert, Ten Post Office Square South, Boston, MA
02109-4603, Attention: Joseph R. Fleming, Esq., or to any other address that the
Acquired Fund or the Acquiring Fund shall have last designated by notice to the
other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of the
Acquiring Fund and the Acquired Fund and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
15.4. References in this Agreement to the Acquired Trust mean and refer to
the Board members of the Acquired Trust from time to time serving under its
Declaration of Trust on file with the Secretary of State of The Commonwealth of
Massachusetts, as the same may be amended from time to time, pursuant to which
the Acquired Trust conducts its business. It is expressly agreed that the
obligations of the Acquired Trust hereunder shall not be binding upon any of the
Board members, shareholders, nominees, officers, agents, or employees of the
Acquired Trust or the Acquired Fund personally, but bind only the respective
property of the Acquired Fund, as provided in the Acquired Trust's Declaration
of Trust. Moreover, no series of the Acquired Trust other than the Acquired Fund
shall be responsible for the obligations of the Acquired Trust hereunder, and
all persons shall look only to the assets of the Acquired Fund to satisfy the
obligations of the Acquired Trust hereunder. The execution
<PAGE>
and the delivery of this Agreement have been authorized by the Acquired Trust's
Board members, on behalf of the Acquired Fund, and this Agreement has been
signed by authorized officers of the Acquired Fund acting as such, and neither
such authorization by such Board members, nor such execution and delivery by
such officers, shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
property of the Acquired Fund, as provided in the Acquired Trust's Declaration
of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations, agreements, representations and warranties with respect to each
Fund shall constitute the obligations, agreements, representations and
warranties of that Fund only (the "Obligated Fund"), and in no event shall any
other series of the Acquiring Corporation or the Acquired Trust or the assets of
any such series be held liable with respect to the breach or other default by
the Obligated Fund of its obligations, agreements, representations and
warranties as set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of The Commonwealth of Massachusetts, without regard
to its principles of conflicts of laws.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by an authorized officer and its seal to be affixed thereto and
attested by its Secretary or Assistant Secretary.
Attest: SCUDDER INTERNATIONAL FUND, INC.
on behalf of Scudder International Fund
_________________________
Secretary
________________________________
By: ____________________________
Its: ___________________________
Attest: KEMPER INTERNATIONAL FUND
_________________________
Secretary
_________________________________
By: _____________________________
Its: ____________________________
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
________________________________
By: ____________________________
Its: ___________________________
<PAGE>
EXHIBIT B
Management's Discussion of Scudder International Fund's Performance
<PAGE>
Performance Update
--------------------------------------------------------------------------------
August 31, 2000
--------------------------------------------------------------------------------
Growth of a $10,000 Investment
--------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
Scudder International Fund MSCI
-- Class S shares EAFE & Canada Index*
'90 10000 10000
'91 9728 9977
'92 10334 9959
'93 12337 12517
'94 14192 13852
'95 14344 13970
'96 15640 15103
'97 18245 16598
'98 19392 16419
'99 25610 20715
'00 29985 23236
Yearly periods ended August 31
--------------------------------------------------------------------------------
Fund Index Comparison
--------------------------------------------------------------------------------
Total Return
Period ended 8/31/2000 Growth of Average
$10,000 Cumulative Annual
--------------------------------------------------------------------------------
Scudder International Fund -- Class S shares
--------------------------------------------------------------------------------
1 year $ 11,709 17.09% 17.09%
--------------------------------------------------------------------------------
5 year $ 20,905 109.05% 15.89%
--------------------------------------------------------------------------------
10 year $ 29,985 199.85% 11.61%
--------------------------------------------------------------------------------
MSCI EAFE & Canada Index*
--------------------------------------------------------------------------------
1 year $ 11,217 12.17% 12.17%
--------------------------------------------------------------------------------
5 year $ 16,632 66.32% 10.70%
--------------------------------------------------------------------------------
10 year $ 23,236 132.36% 8.79%
--------------------------------------------------------------------------------
6
<PAGE>
* 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.
Effective August 14, 2000, the Fund offers four share classes: Class S
shares, Barrett International shares, Class R shares and Class AARP
shares. In addition, as of the date noted above, all International
shares of the Fund were redesignated as Class S shares. The total
return information provided is for the Fund's Class S shares class.
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.
7
<PAGE>
Portfolio Management Discussion
--------------------------------------------------------------------------------
August 31, 2000
In the following interview, portfolio manager Irene Cheng discusses Scudder
International Fund's strategy and the market environment during the twelve-month
period ended August 31, 2000.
Q: The international markets performed well over the full twelve-month reporting
period, but have struggled in the six months since the last report. What factors
have been the cause of these swings?
A: Throughout the period -- particularly in the latter half -- the developed
world markets struggled with the faltering euro exchange rate, concerns about
rising interest rates, and dramatic moves in a fairly narrow group of
technology-related stocks. Although these developments have contributed to
negative returns for the fund on a year-to-date basis, full-year performance was
nonetheless strong. Over the twelve-month period ended August 31, 2000, the
Class S shares of the fund produced a total return of 17.09%, well ahead of the
12.17% return of its unmanaged benchmark, the MSCI EAFE + Canada Index. The fund
stacked up well against its peers during the full period, finishing in the top
third of funds in the "international" category, as calculated by Lipper
Analytical Services. Longer term, the fund's relative performance is also
favorable, as it has finished in the top 20% of its category over the three-,
five-, and ten-year periods. In addition, Morningstar(TM) has awarded the fund
an overall rating of four stars as of August 31, 2000. We believe that these
results illustrate the long-term value of the fund's investment strategy,
despite the decline in its share price so far in 2000.
Given our focus on larger cap companies in the more developed economies, it is
not surprising that Europe and Japan -- and indirectly, the United States --
continue to dominate in terms of their influence on the portfolio. Let's look at
each separately:
In Japan, the fund's largest single-country weighting, soft macroeconomic
conditions, and low levels of consumer confidence continue to be problematic.
Ongoing concerns about the sustainability of the country's economic recovery
10
<PAGE>
continue to be a central reason behind this fragile sentiment. The majority of
the fund's holdings in Japan are in sectors experiencing significant long-term
change such as the electronics, telecom, pharmaceutical, and financial sectors.
The Japanese market fared well for most of the first half of the period. By
March, however, the worldwide appetite for technology stocks weakened and the
Japanese market began to retrace some of its gains. Since the larger Japanese
tech companies compete in the global marketplace, the performance of their
stocks tended to be correlated with that of their counterparts in the U.S. and
Europe. In addition, the continued unwinding of domestic cross-shareholdings had
a negative impact on the supply/demand balance in the Japanese equity market.
European markets were influenced by stock market volatility worldwide and the
continued rise of global oil prices and interest rates. For the first half of
the period, European markets experienced an overwhelmingly positive investment
environment. Accelerating economic growth, a strong dollar exchange rate, and
healthy merger and acquisition activity helped fuel the market during that time.
However, this enthusiastic sentiment turned around abruptly as weakness in the
U.S. equity market spread and the European Central Bank began to raise interest
rates. Valuations proved unsustainable during the second half of the period,
particularly among the technology, media, and telecommunications sectors
(commonly referred to as the megasector TMT). And despite the increasing
evidence of solid economic recovery all over the continent, the euro exchange
rate continued its negative trend.
Q: How much progress have you seen with respect to consolidation and corporate
restructuring, two important developments that you have discussed in the past?
A: Restructuring at the corporate level continues to be significant both in
Europe and Japan. However, M&A activity has slowed from the last year's fast
pace. There are several reasons for this slowdown. First, the global economic
upturn has reduced the level of pressure on
11
<PAGE>
companies to address structural issues in their businesses. Second, large M&A
deals are inherently very complex and difficult to execute. The collapse of
several proposed large transactions during this year shows that this cannot be
underestimated. And finally, it seems that the regulatory environment for the
approval of large deals has become less accommodating, particularly in Europe.
Q: How did you position the portfolio throughout the period?
A: The fund entered the period with an overweight position in the TMT areas. We
counterbalanced this exposure with substantial investments in "old economy"
stocks, such as producers of industrial commodities and companies undergoing
significant corporate restructuring. The fund was underweight in areas such as
the retail, financial, and consumer sectors, where we felt that the competitive
landscape was becoming increasingly harsh due to the impact of the Internet and
the trend toward globalization.
This strategy worked particularly well in the first half of the period as our
investments in TMT generally produced outstanding returns. In fact, these were
by and large the only sectors that showed absolute gains during a period when
investors increased their focus on the so-called new economy. Most old economy
stocks, including our investments in companies undergoing significant
restructuring and corporate change, performed below expectations during this
time.
The broad correction in global equity markets that began in March posed several
challenges, including persistent bouts of heightened volatility and a
particularly sharp sell-off in TMT stocks. Concerns about interest-rate hikes in
the United States, Europe, and even Japan, combined with uncertain growth
prospects in these markets, led to a more cautious overall investment
environment. The volatility in the TMT area has been a key factor in the fund's
underperformance year-to-date. Fortunately, we initiated the process of
selective profit-taking during the
12
<PAGE>
beginning of the second half of the period. Some of the proceeds were put to
work in stocks outside the TMT arena, where attractive opportunities had
surfaced in the wake of the market's downturn.
We also reduced our exposure to the more economically sensitive areas of our
portfolio, as it became clearer that the central banks in the United States, and
to a lesser extent Europe, were committed to slowing economic growth. The
proceeds of these sales were largely redeployed to European financials. Stocks
in this sector had declined significantly over the past two years as interest
rates rose, hopes for further consolidation died down, and the Internet
threatened the demise of traditional banking models. Suspecting that this news
was fully discounted into stock prices, we increased our position in this area
during the spring. We are further encouraged that the recent trend towards
reducing capital gains taxes in Europe will allow industry restructuring to once
again gain momentum, and that bank managements are beginning to define promising
strategies to use the Internet to their advantage.
We continue the process of reducing our exposure to those areas where valuations
have become less fundamentally grounded, particularly in TMT. Our actions do not
reflect a view that the technological innovation is about to end, however. We
continue to commit funds to this area, but we're placing greater emphasis on
blue chip companies that we believe are still undervalued in relation to their
growth prospects. Our increased stake in optical telecom-infrastructure
providers is an example of this strategy.
Q: What are some of the important trends that you feel will drive the
performance of the international markets going forward?
A: Although we employ a bottom-up approach to stockpicking, we build the
portfolio with a view to the broader trends unfolding within the global economic
environment. At present, the construction of the portfolio
13
<PAGE>
reflects some of the key themes that we believe will emerge in the year ahead:
. U.S. economic growth will slow, resulting in a global soft landing. As
noted, we have increased our exposure to European financials and
maintain a somewhat overweight position in technology in anticipation
of this development.
. Continental European economic growth will remain strong relative to
Japan and the United Kingdom. We remain underweight in the United
Kingdom, as well as overweight in France, Germany, and Italy.
. In Japan, the pace and sustainability of economic activity are less
predictable. We have decreased our exposure to the region and are
maintaining our focus on stock-specific issues as the main driver for
performance. Additions in the past year include real estate companies,
which are poised to benefit from regulatory reform, and the
introduction of a REIT (real estate investment trust) market. We have
also added several companies in the pharmaceutical sector, which we
believe offer attractive valuations relative to their global peers. We
anticipate that Japanese pharmaceutical companies will also benefit
from industry restructuring over time. The general process of
profit-taking in TMT has led to a reduction in the portfolio's
technology holdings in Japan.
. Corporate restructuring will remain a powerful secular trend, resulting
in increased profitability for corporations in Europe, Japan, and the
Pacific Basin.
. The explosion in mobile telephony, Internet, and PC applications will
prove sustainable, and will likely result in continued growth in demand
for telecommunications infrastructure, content, and consumer access
devices. With an eye towards valuation, we have selectively focused our
exposure on well-managed companies poised to be the winners as these
trends evolve.
14
<PAGE>
We see two main risks over the next 12 months. The first would be a concerted
downturn in the U.S. capital markets, marking the end of a ten-year, bull market
run. A downward spiral in U.S. equities, joined by a falling dollar, would
clearly not bode well for international markets. The second potential risk is a
pickup in inflation, which could result in continued higher interest rates and a
hard landing for the global economy. While neither of these outcomes is likely
in our opinion, we do expect persistent volatility to rock the markets as these
concerns and others continue to occupy investor sentiment. Despite the recent
weakness in the overseas markets, however, we believe that investors who stay in
the international markets for the long term will ultimately be rewarded by the
important changes that continue to transform the overseas economies.
15
<PAGE>
APPENDIX 1
Trustee and Nominee Shareholdings
<PAGE>
APPENDIX 2
Beneficial Owners of Fund Shares
<PAGE>
This Proxy Statement/Prospectus is accompanied by Scudder International
Fund's prospectus offering Class A, Class B, Class C and Class I shares dated
December 29, 2000, which was previously filed with the Securities and Exchange
Commission (the "Commission") via EDGAR on October 30, 2000 (File No. 811-
00642), and is incorporated by reference herein.
Kemper International Fund's prospectus dated March 1, 2000, which was
previously filed with the Commission via EDGAR on March 6, 2000 (File No. 811-
03136), is incorporated by reference herein.
Scudder International Fund's statement of additional information offering
Class A, Class B, Class C and Class I shares dated December 29, 2000, which was
previously filed with the Commission via EDGAR on October 30, 2000 (File No.
811-00642), is incorporated by reference herein.
<PAGE>
PART B
SCUDDER INTERNATIONAL FUND, INC.
______________________________________________
Statement of Additional Information
March [_], 2001
______________________________________________
Acquisition of the Assets of By and in Exchange for Shares of
Kemper International Fund Scudder International Fund, a series of
222 South Riverside Plaza Scudder International Fund, Inc.
Chicago, IL 60606 (the "Acquiring Corporation")
345 Park Avenue
New York, NY 10154
This Statement of Additional Information is available to the shareholders
of Kemper International Fund in connection with a proposed transaction whereby
Scudder International Fund will acquire all or substantially all of the assets
and all of the liabilities of Kemper International Fund in exchange for shares
of the Scudder International Fund (the "Reorganization").
This Statement of Additional Information of the Acquiring Corporation
contains material which may be of interest to investors but which is not
included in the Proxy Statement/Prospectus of the Acquiring Corporation relating
to the Reorganization. This Statement of Additional Information consists of this
cover page and the following documents:
1. Scudder International Fund's statement of additional information offering
Class A, Class B, Class C and Class I shares dated December 29, 2000, which was
previously filed with the Securities and Exchange Commission (the "Commission")
via EDGAR on October 30, 2000 (File No. 811-00642) and is incorporated by
reference herein.
2. Scudder International Fund's annual report to shareholders for the fiscal
year ended August 31, 2000, which was previously filed with the Commission via
EDGAR on October 31, 2000 (File No. 811-00642) and is incorporated by reference
herein.
3. Kemper International Fund's prospectus dated March 1, 2000, which was
previously filed with the Commission via EDGAR on March 6, 2000 (File No. 811-
03136) and is incorporated by reference herein.
4. Kemper International Fund's statement of additional information dated March
1, 2000, which was previously filed with the Commission via EDGAR on March 6,
2000 (File No. 811-03136) and is incorporated by reference herein.
5. Kemper International Fund's annual report to shareholders for the fiscal
year ended October 31, 1999, which was previously filed with the Commission via
EDGAR on December 23, 1999 (File No. 811-03136) and is incorporated by reference
herein.
<PAGE>
6. Kemper International Fund's semi-annual report to shareholders for the
period ended April 30, 2000, which was previously filed with the Commission via
EDGAR on June 29, 2000 (File No. 811-03136) and is incorporated by reference
herein.
7. The financial statements and schedules of Scudder International Fund and
Kemper International Fund required by Regulation S-X for the periods specified
in Article 3 thereof, which are filed herein.
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated March [_], 2001 relating to the Reorganization may be
obtained by writing Kemper International Fund at 222 South Riverside Drive,
Chicago, IL 60606 or by calling [_] at 1-800-[_]. This Statement of Additional
Information should be read in conjunction with the Proxy Statement/Prospectus.
<PAGE>
Pro Forma
Portfolio of Investments
as of September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Scudder Kemper Pro Forma
International International Combined
Par/Share Par/Share Par/Share
Amount Amount Amount
----------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements 2.5%
--------------------------
Repurchase Agreement with Donaldson, 129,471,000 129,471,000
Lufkin & Jenrette, 6.5%, 10/02/2000
---------------
Total Repurchase Agreements (Cost of $129,471,000, $0 and $129,471,000 respectively) 129,471,000
===============
Short Term Investments 2.4%
--------------------------
Deutsche Bank Financial, 10/05/2000 40,000,000 40,000,000
Deutsche Bank Financial,10/20/2000 30,000,000 30,000,000
Verizon Network Technology, 6.490%, 11/07/2000 6,000,000 6,000,000
Verizon Network Funding, 11/28/2000 30,000,000 30,000,000
Federal Home Loan Bank, 10/02/2000 16,600,000 16,600,000
Chase Euro Time Deposit, 6.375%, 10/02/2000 234,000 234,000
Total Short Term Investments (Cost of $105,514,958, $16,831,141, $122,346,099)
Corporate Bonds 0.0%
--------------------
UNITED KINGDOM British Aerospace PLC, 7.450%, 11/29/2003 506,989 (a) 76,707 583,696
Total Corporate Bonds (Cost of $351,328, $0 and $351,328 respectively)
Convertible Bonds 0.2%
---------------------
LUXEMBOURG Eurotunnel Finance Ltd., 04/30/2040 10,250 (b) 10,250
Total Convertible Bonds (Cost of $13,351,889, $0, and $13,351,889 respectively)
Common Stocks 94.9%
------------------
AUSTRALIA 1.3% Broken Hill Proprietary Co., Ltd. 3,174,894 387,344 3,562,238
WMC Ltd. 4,561,074 589,200 5,150,274
Woodside Petroleum, Ltd. 1,124,019 140,100 1,264,119
BELGIUM 0.0% Dexia Strip 8,015 8,015
Dexia 8,015 8,015
CANADA 2.1% Canadian National Railway Co. 1,557,078 189,700 1,746,778
Nortel Networks Corp. 885,317 107,500 992,817
FINLAND 1.2% Nokia Oyj 1,329,660 163,100 1,492,760
FRANCE 18.8% Bouygues 554,350 70,280 624,630
AXA SA 323,348 38,846 362,194
Christian Dior 790,240 101,100 891,340
Banque Nationale de Paris 622,879 78,967 701,846
Etablissements Economiques du Casino Guichard-
Perrachon S.A. 450,360 59,516 509,876
Eurotunnel SA 24,681,677 4,754,834 29,436,511
Suez Lyonnaise des Eaux SA 383,402 46,373 429,775
Lagardere S.C.A. 395,074 49,519 444,593
Aventis SA 1,453,595 179,196 1,632,791
Schneider Electric SA 367,294 44,100 411,394
Total Fina ELF SA 815,528 103,804 919,332
Societe BIC SA 714,069 101,018 815,087
Dassault Systemes S.A. 190,169 23,823 213,992
Rhodia SA 2,286,734 283,820 2,570,554
Pinault-Printemps-Redoute SA 230,597 29,569 260,166
<CAPTION>
Scudder Kemper Pro Forma
International International Combined
Market Market Market
Value ($) Value ($) Value ($)
-------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements 2.5%
--------------------------
Repurchase Agreement with Donaldson, 129,471,000 129,471,000
Lufkin & Jenrette, 6.5%, 10/02/2000
-----------------------------------------------
Total Repurchase Agreements (Cost of $129,471,000, $0 and $129,471,000 respectively 129,471,000 129,471,000
===============================================
Short Term Investments 2.4%
---------------------------
Deutsche Bank Financial, 10/05/2000 39,971,333 39,971,333
Deutsche Bank Financial,10/20/2000 29,897,875 29,897,875
Verizon Network Technology, 6.490%, 11/07/2000 5,959,917 5,959,917
Verizon Network Funding, 11/28/2000 29,685,833 29,685,833
Federal Home Loan Bank, 10/02/2000 16,597,140 16,597,140
Chase Euro Time Deposit, 6.375%, 10/02/2000 234,000 234,000
-----------------------------------------------
Total Short Term Investments (Cost of $105,514,958, $16,831,141, $122,346,099) 105,514,958 16,831,140 122,346,098
===============================================
Corporate Bonds 0.0%
--------------------
UNITED KINGDOM British Aerospace PLC, 7.450%, 11/29/2003 725,129 109,711 834,840
-----------------------------------------------
Total Corporate Bonds (Cost of $351,328, $0 and $351,328 respectively) 725,129 109,711 834,840
===============================================
Convertible Bonds 0.2%
---------------------
LUXEMBOURG Eurotunnel Finance Ltd., 04/30/2040 11,770,065 11,770,065
-----------------------------------------------
Total Convertible Bonds (Cost of $13,351,889, $0, and $13,351,889 respectively) 11,770,065 11,770,065
===============================================
Common Stocks 94.9%
-------------------
AUSTRALIA 1.3% Broken Hill Proprietary Co., Ltd. 33,010,941 4,027,407 37,038,348
WMC Ltd. 18,875,391 2,438,325 21,313,716
Woodside Petroleum, Ltd. 8,357,869 1,041,742 9,399,611
-----------------------------------------------
60,244,201 7,507,474 67,751,675
-----------------------------------------------
BELGIUM 0.0% Dexia Strip 71 71
Dexia 1,173,426 1,173,426
-----------------------------------------------
1,173,497 1,173,497
-----------------------------------------------
CANADA 2.1% Canadian National Railway Co. 45,750,746 5,573,848 51,324,594
Nortel Networks Corp. 52,731,694 6,402,969 59,134,663
-----------------------------------------------
98,482,440 11,976,817 110,459,257
-----------------------------------------------
FINLAND 1.2% Nokia Oyj 53,850,098 6,605,411 60,455,509
-----------------------------------------------
53,850,098 6,605,411 60,455,509
-----------------------------------------------
FRANCE 18.8% Bouygues 27,916,706 3,539,255 31,455,961
AXA SA 42,206,166 5,070,515 47,276,681
Christian Dior 42,548,935 5,443,533 47,992,468
Banque Nationale de Paris 54,879,885 6,957,531 61,837,416
Etablissements Economiques du Casino Guichard-
Perrachon S.A. 27,406,458 3,621,820 31,028,278
Eurotunnel SA 21,332,647 4,109,656 25,442,303
Suez Lyonnaise des Eaux SA 59,411,449 7,185,897 66,597,346
Lagardere S.C.A. 23,920,101 2,998,171 26,918,272
Aventis SA 108,969,851 13,433,564 122,403,415
Schneider Electric SA 23,128,958 2,777,032 25,905,990
Total Fina ELF SA 119,252,479 15,178,981 134,431,460
Societe BIC SA 26,683,492 3,774,863 30,458,355
Dassault Systemes S.A. 15,455,358 1,936,136 17,391,494
Rhodia SA 24,826,627 3,081,379 27,908,006
Pinault-Printemps-Redoute SA 40,573,322 5,202,637 45,775,959
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Compagnie Generale d'Industrie et de
Participations 212,783 25,954 238,737 9,345,667 1,139,929 10,485,596
Credit Lyonnais SA 1,010,969 128,552 1,139,521 36,824,080 4,682,447 41,506,527
Accor SA 382,913 45,946 428,859 14,204,089 1,704,359 15,908,448
STMicroelectronics 1,184,662 145,644 1,330,306 58,039,349 7,135,439 65,174,788
Alcatel 1,280,221 147,791 1,428,012 81,859,100 9,449,961 91,309,061
------------------------------------------
858,784,719 108,423,105 967,207,824
------------------------------------------
GERMANY 11.2% Bayerische Hypo-und Vereinsbank 820,505 101,416 921,921 44,865,957 5,545,519 50,411,476
Commerzbank AG 578,818 73,180 651,998 17,152,417 2,168,581 19,320,998
SAP AG 8,463 8,463 1,627,140 1,627,140
SAP AG Vorzug 123,765 16,404 140,169 30,344,966 4,021,968 34,366,934
E.On AG 2,165,199 272,666 2,437,865 111,520,492 14,043,904 125,564,396
Metro AG 597,400 74,100 671,500 24,447,092 3,032,356 27,479,448
Bayer AG 1,140,192 144,899 1,285,091 42,134,323 5,354,555 47,488,878
Allianz AG 158,668 19,535 178,203 51,986,691 6,400,535 58,387,226
Muenchener Rueckversicherungs-
Gesellschaft AG 173,831 21,639 195,470 51,665,560 6,431,483 58,097,043
Heidelberger Druckmaschinen AG 119,282 119,282 6,669,729 6,669,729
ERGO Versicherungs Gruppe AG 214,903 24,325 239,228 32,125,966 3,636,357 35,762,323
Siemens AG 414,108 49,281 463,389 53,231,193 6,334,788 59,565,981
Celanese AG 95,341 15,396 110,737 1,635,473 264,102 1,899,575
Dresdner Bank AG 1,079,104 134,319 1,213,423 46,967,179 5,846,132 52,813,311
------------------------------------------
516,374,178 63,080,280 579,454,458
------------------------------------------
HONG KONG 1.3% China Mobile 3,581,000 440,000 4,021,000 23,883,285 2,934,556 26,817,841
Legend Holdings Ltd. 12,252,000 1,288,000 13,540,000 11,628,538 1,222,458 12,850,996
Li and Fung Limited 1,704,000 228,000 1,932,000 3,595,190 481,047 4,076,237
Hutchison Whampoa, Ltd. 1,690,300 205,600 1,895,900 22,438,330 2,729,291 25,167,621
------------------------------------------
61,545,343 7,367,352 68,912,695
------------------------------------------
ITALY 5.8% Alleanza Assicurazioni SpA 1,440,400 184,300 1,624,700 19,055,414 2,438,151 21,493,565
Assicurazioni Generali 1,713,000 204,400 1,917,400 55,067,950 6,570,863 61,638,813
Banco Intesa SpA 11,668,959 1,396,835 13,065,794 44,973,591 5,383,572 50,357,163
Mediobanca SpA 5,445,400 682,600 6,128,000 57,774,930 7,242,290 65,017,220
Riunione Adriatica di Sicurta SpA 2,772,450 343,250 3,115,700 36,432,922 4,510,668 40,943,590
Holding di Partecipazioni
Industraili SpA 9,732,500 1,215,600 10,948,100 12,789,533 1,597,427 14,386,960
San Paolo - IMI S.p.A. 2,386,500 307,700 2,694,200 38,769,935 4,998,747 43,768,682
------------------------------------------
264,864,275 32,741,718 297,605,993
------------------------------------------
JAPAN 23.3% NTT Docomo, Inc. 2,564 309 2,873 73,514,613 8,859,600 82,374,213
Chugai Pharmaceutical Co., Ltd. 2,512,000 315,000 2,827,000 45,607,251 5,719,062 51,326,313
DDI Corp. 2,033 259 2,292 13,350,259 1,700,795 15,051,054
Daiwa Securities Co., Inc. 2,489,000 319,000 2,808,000 29,167,249 3,738,189 32,905,438
Mizuho Holdings, Inc. 9,440 1,150 10,590 77,706,252 9,466,334 87,172,586
East Japan Railway Co. 8,530 1,015 9,545 47,415,187 5,642,018 53,057,205
Fujisawa Pharmaceutical Co. 325,000 49,000 374,000 11,963,559 1,803,737 13,767,296
Fujitsu, Ltd. 2,051,000 251,000 2,302,000 47,613,855 5,826,952 53,440,807
Kyocera Corp. 313,000 38,000 351,000 47,766,371 5,799,112 53,565,483
Matsushita Electric Industrial Co., Ltd. 2,218,000 270,000 2,488,000 58,055,309 7,067,148 65,122,457
Mitsubishi Estate Co., Ltd. 2,588,000 332,000 2,920,000 26,952,349 3,457,566 30,409,915
Mitsui Fudosan Co., Ltd. 3,614,000 440,000 4,054,000 45,258,565 5,510,174 50,768,739
Sakura Bank, Ltd. 7,116,000 859,000 7,975,000 53,047,503 6,403,570 59,451,073
Murata Manufacturing Co., Ltd. 238,600 28,900 267,500 32,881,428 3,982,704 36,864,132
Nintendo Co., Ltd. 238,400 28,600 267,000 43,503,811 5,218,997 48,722,808
Nikko Securities Co., Ltd. 3,138,000 381,000 3,519,000 27,862,375 3,382,908 31,245,283
NEC Corp. 2,173,000 269,000 2,442,000 49,340,686 6,107,982 55,448,668
Nippon Telegraph & Telephone Corp. 1,318 159 1,477 12,921,569 1,558,824 14,480,393
Nissan Motor Co., Ltd. 4,966,000 624,000 5,590,000 28,476,878 3,578,246 32,055,124
Nomura Securities Co., Ltd. 2,494,000 316,000 2,810,000 54,207,362 6,868,294 61,075,656
Rohm Company Ltd. 13,800 1,700 15,500 3,779,301 465,566 4,244,867
Sankyo Co., Ltd. 1,958,000 235,000 2,193,000 43,553,367 5,227,294 48,780,661
Sanyo Electric Co., Ltd. 2,943,000 369,000 3,312,000 25,858,768 3,242,231 29,100,999
Sony Corp. 354,500 59,800 414,300 35,935,257 6,061,857 41,997,114
Sony Corp. (ADR) 133,400 133,400 13,465,063 13,465,063
Sumitomo Electric Industries, Ltd. 2,098,000 260,000 2,358,000 36,189,142 4,484,832 40,673,974
TDK Corp. 600 600 76,027 76,027
Toshiba Corp. 5,346,000 656,000 6,002,000 43,066,648 5,284,647 48,351,295
Yamanouchi Pharmaceutical Co., Ltd. 876,000 90,000 966,000 42,130,966 4,328,524 46,459,490
------------------------------------------
1,070,590,943 130,863,190 1,201,454,133
------------------------------------------
KOREA 1.1% SK Telecom Co., Ltd. 139,540 17,290 156,830 34,035,672 4,217,262 38,252,934
Samsung Electronics Co. 79,910 9,820 89,730 14,475,021 1,778,810 16,253,831
------------------------------------------
48,510,693 5,996,072 54,506,765
------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
NETHERLANDS 5.0% VNU NV 467,520 58,710 526,230 23,502,771 2,951,420 26,454,191
ABN AMRO Holding N.V. 2,792,590 339,190 3,131,780 65,021,221 7,897,524 72,918,745
Heineken 581,800 70,400 652,200 32,326,470 3,911,625 36,238,095
Akzo Nobel N.V. 507,110 64,970 572,080 21,378,345 2,738,954 24,117,299
Equant N.V. 646,800 80,200 727,000 23,530,870 2,917,711 26,448,581
Laurus NV 855,700 124,520 980,220 7,320,442 1,065,258 8,385,700
Fortis (NL) NV 506,800 62,100 568,900 15,509,939 1,900,488 17,410,427
Gucci Group N.V. (New York Shares) 406,880 52,200 459,080 41,044,020 5,265,675 46,309,695
----------------------------------------
229,634,078 28,648,655 258,282,733
----------------------------------------
SINGAPORE 0.3% Chartered Semiconductor 224,500 28,800 253,300 13,624,344 1,747,800 15,372,144
----------------------------------------
13,624,344 1,747,800 15,372,144
----------------------------------------
SPAIN 0.9% Telefonica SA 2,190,389 252,871 2,443,260 43,369,220 5,006,790 48,376,010
----------------------------------------
43,369,220 5,006,790 48,376,010
----------------------------------------
SWEDEN 1.2% Ericsson LM 3,489,980 415,300 3,905,280 53,059,576 6,313,974 59,373,550
----------------------------------------
53,059,576 6,313,974 59,373,550
----------------------------------------
SWITZERLAND 3.9% Nestle SA 35,448 4,320 39,768 73,862,823 9,001,563 82,864,386
Roche Holding AG 3,286 417 3,703 28,909,649 3,668,692 32,578,341
Schweizerische Rueckversicherungs
-Gesellschaft 12,140 1,550 13,690 23,188,053 2,960,583 26,148,636
UBS AG 405,567 49,776 455,343 53,991,092 6,626,428 60,617,520
----------------------------------------
179,951,617 22,257,266 202,208,883
----------------------------------------
TAIWAN 0.6% Hon Hai Precision Industry Co., Ltd. 120 120 789 789
Taiwan Semiconductor Manufacturing
Co. 3,827,406 453,860 4,281,266 12,708,733 1,507,022 14,215,755
United Microelectronics Corp., Ltd. 5,027,900 596,300 5,624,200 10,755,381 1,275,569 12,030,950
GigaMedia Ltd. 382,327 51,900 434,227 3,082,511 418,444 3,500,955
----------------------------------------
26,547,414 3,201,035 29,748,449
----------------------------------------
UNITED KINGDOM 16.9% EMI Group PLC 4,435,885 528,017 4,963,902 35,319,843 4,204,230 39,524,073
ARM Holdings PLC 1,474,084 169,245 1,643,329 16,344,997 1,876,629 18,221,626
BOC Group PLC 2,455,683 278,284 2,733,967 32,407,096 3,672,451 36,079,547
British Airways PLC 4,228,209 541,314 4,769,523 17,815,067 2,280,764 20,095,831
SmithKline Beecham PLC 1,916,591 239,794 2,156,385 26,183,014 3,275,884 29,458,898
Cable and Wireless PLC 2,483,180 311,855 2,795,035 35,332,980 4,437,364 39,770,344
Reuters Group PLC 3,793,230 474,473 4,267,703 71,703,768 8,969,006 80,672,774
Diageo PLC 4,333,100 544,800 4,877,900 38,622,448 4,855,994 43,478,442
Bae Systems PLC 6,700,374 792,782 7,493,156 36,060,910 4,266,693 40,327,603
Glaxo Wellcome PLC 847,033 106,540 953,573 25,578,499 3,217,269 28,795,768
Prudential Corp. PLC 2,882,592 357,332 3,239,924 39,231,025 4,863,158 44,094,183
Rio Tinto PLC 3,972,225 506,109 4,478,334 57,457,619 7,320,788 64,778,407
Vodafone AirTouch PLC 29,195,755 3,637,425 32,833,180 108,699,080 13,542,542 122,241,622
Reed International PLC 7,102,700 843,701 7,946,401 56,239,640 6,680,479 62,920,119
Rentokil Initial PLC 5,048,602 617,257 5,665,859 11,296,518 1,381,146 12,677,664
BP Amoco PLC 8,443,909 1,028,969 9,472,878 74,952,274 9,133,633 84,085,907
Shell Transport & Trading PLC 9,227,477 1,124,454 10,351,931 74,968,591 9,135,621 84,104,212
Granada Media PLC 2,591,676 311,519 2,903,195 17,234,631 2,071,600 19,306,231
----------------------------------------
775,448,000 95,185,251 870,633,251
----------------------------------------
----------------------------------------
Total Common Stocks (Cost of $3,771,533,319, $504,941,661, $4,276,474,980 respectively) 4,356,054,636 536,922,190 4,892,976,826
========================================
----------------------------------------
Total Investment Portfolio (Cost of $4,020,222,494, $521,772,802 and 4,541,995,296
respectively) 4,603,535,788 553,863,041 5,157,398,829
========================================
</TABLE>
(a) Par in British pounds.
(b) Represents number of contracts. Each contract equals a nominal value of
EUR 2,931.
<PAGE>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Kemper Pro Forma Pro Forma
International Fund International Fund Adjustments Combined
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Investments, at value $ 4,603,535,788 $ 553,863,041 $ 5,157,398,829
Cash 16,720,048 1,523 16,721,571
Other assets less liabilities 86,366,497 16,376,286 $ - (2) 102,742,783
-------------------- -------------------- -------------------- --------------------
Total Net assets $ 4,706,622,333 $ 570,240,850 $ - $ 5,276,863,183
==================== ==================== ==================== ====================
Net Assets
Class S Shares $ 4,575,441,003 $ 4,575,441,003
Barrett International Shares $ 24,281,102 $ 24,281,102
Class R Shares $ 39,545,883 $ 39,545,883
Class AARP Shares $ 67,354,345 $ 67,354,345
Class A Shares $ 372,995,208 $ 372,995,208
Class B Shares $ 139,373,774 $ 139,373,774
Class C Shares $ 45,011,697 $ 45,011,697
Class I Shares $ 12,860,171 $ 12,860,171
Shares Outstanding
Class S Shares 84,562,995 84,562,995
Barrett International Shares 447,072 447,072
Class R Shares 733,506 733,506
Class AARP Shares 1,244,712 1,244,712
Class A Shares 31,208,080 (24,314,803) 6,893,277
Class B Shares 12,096,862 (9,521,113) 2,575,749
Class C Shares 3,899,641 (3,067,786) 831,855
Class I Shares 1,056,301 (818,634) 237,667
Net Asset Value per Share
Class S Shares $ 54.11 54.11
Barrett International Shares $ 54.31 54.31
Class R Shares $ 53.91 53.91
Class AARP Shares $ 54.11 54.11
Class A Shares $ 11.95 54.11
Class B Shares $ 11.52 54.11
Class C Shares $ 11.54 54.11
Class I Shares $ 12.17 54.11
</TABLE>
<PAGE>
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Kemper
International International Pro Forma Pro Forma
Fund Fund Adjustments Combined
-------------- -------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest and dividend income $ 64,626,358 8,218,883 $ - $ 72,845,241
-------------------------------------------------------------------
Total Investment Income 64,626,358 8,218,883 72,845,241
Expenses
Management fees 36,599,471 4,763,986 (4,278,060) (3) 37,085,397
12B-1 - 3,023,318 - 3,023,318
Trustees Fees 75,525 25,301 - (4) 100,826
All other expenses 17,243,492 2,967,877 604,255 (5) 20,815,624
-------------------------------------------------------------------
Total expenses before reductions 53,918,488 10,780,482 (3,673,805) 61,025,165
Expense reductions - - - -
-------------------------------------------------------------------
Expenses, net 53,918,488 10,780,482 (3,673,805) 61,025,165
-------------------------------------------------------------------
Net investment income (loss) 10,707,870 (2,561,599) 3,673,805 11,820,076
-------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain (loss) from investments and currency 646,519,448 87,999,980 -- 734,519,428
Net unrealized appreciation (depreciation)
of investments and currency (408,781,326) (39,496,298) -- (448,277,624)
-------------------------------------------------------------------
Net increase in net assets from operations $ 248,445,992 $ 45,942,083 $ 3,673,805 $ 298,061,880
===================================================================
</TABLE>
Notes to Pro Forma Combining Financial Statements
(Unaudited)
September 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
Statement of Assets and Liabilities as of September 30, 2000, and the
unaudited pro forma condensed Statement of Operations for the twelve month
period ended September 30, 2000 for Scudder International Fund and Kemper
International Fund as adjusted giving effect to the Reorganization as if it
had occurred as of the beginning of the period. These statements have been
derived from the books and records utilized in calculating daily net asset
value for each fund.
2. Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxxx and $xxxxxx to be borne by the Scudder
International Fund and the Fund, respectively.
3. Represents reduction in management fees resulting from the utilization of
Scudder International Fund's lower investment management agreement for the
entire year.
4. Reduction in trustee fees resulting from the Reorganization.
5. Represents increase in other expenses resulting from the utilization of
Scudder International Fund's administration agreement for the entire year.
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification.
-------- ----------------
A policy of insurance covering Scudder Kemper Investments, Inc., its
affiliates including Scudder Investor Services, Inc., and all of the
registered investment companies advised by Scudder Kemper Investments,
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 states 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.
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.
<PAGE>
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 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,
based on a review of facts readily available to the Corporation at the
time
<PAGE>
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 fore, 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 thereafter 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 16. Exhibits.
-------- --------
(1) (a)(1) Articles of Amendment and Restatement of the
Registrant as of January 24, 1991.
(Incorporated by reference to Post-Effective
Amendment No. 56 to the Registrant's
Registration Statement on form N-1A, as
amended (the "Registration Statement").)
<PAGE>
(a)(2) Articles Supplementary dated September 17,
1992. (Incorporated by reference to Post-
Effective Amendment No. 56 to the
Registration Statement.)
(a)(3) Articles Supplementary dated December 1,
1992. (Incorporated by reference to Post-
Effective Amendment No. 56 to the
Registration Statement.)
(a)(4) Articles Supplementary dated August 3, 1994.
(Incorporated by reference to Post-Effective
Amendment No. 56 to the Registration
Statement.)
(a)(5) Articles Supplementary dated February 20,
1996. (Incorporated by reference to Exhibit
1(e) to Post-Effective Amendment No. 46 to
the Registration Statement.)
(a)(6) Articles Supplementary dated September 5,
1996. (Incorporated by reference to Exhibit
1(f) to Post-Effective Amendment No. 52 to
the Registration Statement.)
(a)(7) Articles Supplementary dated December 12,
1996. (Incorporated by reference to Post-
Effective Amendment No. 55 to the
Registration Statement.)
(a)(8) Articles Supplementary dated March 3, 1997.
(Incorporated by reference to Post-Effective
Amendment No. 55 to the Registration
Statement.)
(a)(9) Articles Supplementary dated December 23,
1997. (Incorporated by reference to Post-
Effective Amendment No. 65 to the
Registration Statement.)
(a)(10) Articles Supplementary dated March 2, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 65 to the Registration
Statement.)
(a)(11) Articles Supplementary dated March 31, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 65 to the Registration
Statement.)
(a)(12) Articles of Transfer from Scudder
Institutional Fund, Inc. dated April 3, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 67 to the Registration
Statement.)
(a)(13) Articles Supplementary dated June 7, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 72 to the Registration
Statement.)
(a)(14) Articles Supplementary dated March 31, 2000.
(Incorporated by reference to Post-Effective
Amendment No. 79 to the Registration
Statement.)
<PAGE>
(2) (b)(1) Amended and Restated By-Laws of the Registrant
dated March 4, 1991. (Incorporated by reference to
Post-Effective Amendment No. 56 to the
Registration Statement.)
(b)(2) Amended and Restated By-Laws of the Registrant
dated September 20, 1991. (Incorporated by
reference to Post-Effective Amendment No. 56 to
the Registration Statement.)
(b)(3) Amended and Restated By-Laws of the Registrant
dated December 12, 1991. (Incorporated by
reference to Post-Effective Amendment No. 56 to
the Registration Statement.)
(b)(4) 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.)
(b)(5) Amended and Restated By-Laws of the Registrant
dated December 3, 1997. (Incorporated by reference
to Post-Effective Amendment No. 59 to the
Registration Statement.)
(b)(6) Amended and Restated By-Laws of the Registrant
dated February 7, 2000 is incorporated by
reference to Post-Effective Amendment No. 80 to
the Registration Statement.
(3) Inapplicable.
(4) Form of Agreement and Plan of Reorganization is
filed herein as Exhibit A to Part A.
(5) Inapplicable.
(6) (d)(1) Investment Management Agreement between the
Registrant, on behalf of Scudder International
Fund, and Scudder Kemper Investments, Inc. dated
September 7, 1998. (Incorporated by reference to
Post-Effective Amendment No. 67 to the
Registration Statement.)
(d)(2) Investment Management Agreement between the
Registrant, on behalf of Scudder Latin America
Fund, and Scudder Kemper Investments, Inc. dated
September 7, 1998. (Incorporated by reference to
Post-Effective Amendment No. 67 to the
Registration Statement.)
(d)(3) Investment Management Agreement between the
Registrant, on behalf of Scudder Pacific
Opportunities Fund, and Scudder Kemper
Investments, Inc. dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 67 to the Registration Statement.)
<PAGE>
(d)(4) Investment Management Agreement between the
Registrant, on behalf of Scudder Greater Europe
Growth Fund, and Scudder Kemper Investments, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 67 to
the Registration Statement.)
(d)(5) Investment Management Agreement between the
Registrant, on behalf of Scudder Emerging Markets
Growth Fund, and Scudder Kemper Investments, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 67 to
the Registration Statement.)
(d)(6) Investment Management Agreement between the
Registrant, on behalf of Scudder International
Growth and Income Fund, and Scudder Kemper
Investments, Inc. dated September 7, 1998.
(Incorporated by reference to Post-Effective
Amendment No. 67 to the Registration Statement.)
(d)(7) Investment Management Agreement between the
Registrant, on behalf of Scudder International
Value Fund, and Scudder Kemper Investments, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 67 to
the Registration Statement.)
(d)(8) Investment Management Agreement between the
Registrant, on behalf of Scudder International
Growth Fund, and Scudder Kemper Investments, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 67 to
the Registration Statement.)
(d)(9) Form of Investment Management Agreement between
the Registrant, on behalf of Scudder International
Fund, Inc. and Scudder Kemper Investments, Inc.
dated August 28, 2000. (Incorporated by reference
to Post-Effective Amendment No. 80 to the
Registration Statement.)
(d)(10) Amended and Restated Investment Management
Agreement between the Registrant, on behalf of
Scudder Pacific Opportunities Fund and Scudder
Kemper Investments, Inc. dated May 8, 2000.
(Incorporated by reference to Post-Effective
Amendment No. 80 to the Registration Statement.)
(7) (e)(1) Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc. dated September 7,
1998. (Incorporated by reference to Post-Effective
Amendment No. 67 to the Registration Statement.)
(e)(2) Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc. dated May 8, 2000.
(Incorporated by reference to Post-Effective
Amendment No. 80 to the Registration Statement.)
<PAGE>
(8) Inapplicable.
(9) (g)(1) Custodian Contract between the Registrant, on
behalf of Scudder Latin America Fund, and Brown
Brothers Harriman & Co. dated November 25, 1992.
(Incorporated by reference to Post-Effective
Amendment No. 56 to the Registration Statement.)
(g)(2) Custodian Contract between the Registrant, on
behalf of Scudder Pacific Opportunities Fund, and
Brown Brothers Harriman & Co. dated November 25,
1992. (Incorporated by reference to Post-Effective
Amendment No. 56 to the Registration Statement.)
(g)(3) 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.)
(g)(4) 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.)
(g)(5) Fee schedule for Exhibit (9)(g)(4). (Incorporated
by reference to Post-Effective Amendment No. 55 to
the Registration Statement.)
(g)(6) Master Subcustodian Agreement between Brown
Brothers Harriman & Co. and Morgan Guaranty Trust
Company of New York, Brussels office, dated
November 15, 1976. (Incorporated by reference to
Post-Effective Amendment No. 56 to the
Registration Statement.)
(g)(7) Fee schedule for Exhibit (9)(g)(6). (Incorporated
by reference to Post-Effective Amendment No. 56 to
the Registration Statement.)
(g)(8) Subcustodian Agreement between Brown Brothers
Harriman & Co. and The Bank of New York, London
office, dated January 30, 1979. (Incorporated by
reference to Post-Effective Amendment No. 56 to
the Registration Statement.)
(g)(9) Fee schedule for Exhibit (9)(g)(8). (Incorporated
by reference to Post-Effective Amendment No. 56 to
the Registration Statement.)
(g)(10) Master Subcustodian Agreement between Brown
Brothers Harriman & Co. and The Chase Manhattan
Bank, N.A., Singapore office, dated June 9, 1980.
(Incorporated by reference to Post-Effective
Amendment No. 56 to the Registration Statement.)
(g)(11) Fee schedule for Exhibit (9)(g)(10). (Incorporated
by reference to Post-Effective Amendment No. 56 to
the Registration Statement.).
<PAGE>
(g)(12) Master Subcustodian Agreement between Brown
Brothers Harriman & Co. and The Chase Manhattan
Bank, N.A., Hong Kong office, dated June 4, 1979.
(Incorporated by reference to Post-Effective
Amendment No. 56 to the Registration Statement.)
(g)(13) Fee schedule for Exhibit (9)(g)(12). (Incorporated
by reference to Post-Effective Amendment No. 56 to
the Registration Statement.)
(g)(14) Master Subcustodian Agreement between Brown
Brothers Harriman & Co. and Citibank, N.A., New
York office, dated July 16, 1981. (Incorporated by
reference to Post-Effective Amendment No. 56 to
the Registration Statement.)
(g)(15) Fee schedule for Exhibit (9)(g)(14). (Incorporated
by reference to Post-Effective Amendment No. 56 to
the Registration Statement.)
(10) (a) Rule 12(b)-1 and Administrative Services Plan with
respect to Scudder International Fund Class R
shares. (Incorporated by reference to Post-
Effective Amendment No. 72 to the Registration
Statement.)
(b)(1) Plan with respect to Scudder International Fund
pursuant to Rule 18f-3. (Incorporated by reference
to Post-Effective Amendment No. 58 to the
Registration Statement.)
(b)(2) Amended Plan with respect to Scudder International
Fund pursuant to Rule 18f-3 dated June 7, 1999.
(Incorporated by reference to Post-Effective
Amendment No. 72 to the Registration Statement.)
(b)(3) Plan with respect to Scudder Latin America Fund
pursuant to Rule 18f-3. (Incorporated by reference
to Post-Effective Amendment No. 80 to the
Registration Statement.)
(b)(4) Plan with respect to Scudder Pacific Opportunities
Fund pursuant to Rule 18f-3. (Incorporated by
reference to Post-Effective Amendment No. 80 to
the Registration Statement.)
(b)(5) Plan with respect to Scudder Greater Europe Growth
Fund pursuant to Rule 18f-3. (Incorporated by
reference to Post-Effective Amendment No. 80 to
the Registration Statement.)
(b)(6) Plan with respect to Scudder Emerging Markets
Growth Fund pursuant to Rule 18f-3. (Incorporated
by reference by Post-Effective Amendment No. 80 to
the Registration Statement.)
(b)(7) Amended and Restated Plan with respect to Scudder
International Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-Effective
Amendment No. 80 to the Registration Statement.)
<PAGE>
(b)(8) Amended and Restated Plan with respect to Scudder
Pacific Opportunities Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-Effective Amendment
No. 80 to the Registration Statement.)
(b)(9) Amended and Restated Plan with respect to Scudder Latin
America Fund pursuant to Rule 18f-3. (Incorporated by
reference to Post-Effective Amendment No. 80 to the
Registration Statement.)
(b)(10) Amended and Restated Plan with respect to Scudder
Greater Europe Growth Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-Effective Amendment
No. 80 to the Registration Statement.)
(b)(11) Amended and Restated Plan with respect to Scudder
Emerging Markets Growth Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-Effective Amendment
No. 80 to the Registration Statement.)
(b)(12) Amended and Restated Plan with respect to Scudder
International Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-Effective Amendment
No. 80 to the Registration Statement.)
(b)(13) Scudder Funds Amended and Restated Multi-Distribution
System Plan is filed herewith.
(11) Opinion and Consent of Dechert is filed herewith.
(12) Opinion and Consent of Willkie, Farr & Gallagher is to
be filed by post-effective amendment.
(13) (h)(1) Transfer Agency and Service Agreement between the
Registrant and Scudder Service Corporation dated
October 2, 1989. (Incorporated by reference to Post-
Effective Amendment No. 56 to the Registration
Statement.)
(h)(2) Fee schedule for Exhibit (13)(h)(1). (Incorporated by
reference to Post-Effective Amendment No. 56 to the
Registration Statement.)
(h)(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.)
(h)(4) Letter Agreement between the Registrant and Cazenove,
Inc. dated January 23, 1978, with respect to the
pricing of securities. (Incorporated by reference to
Post-Effective Amendment No. 56 to the Registration
Statement.)
<PAGE>
(h)(5) 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.)
(h)(6) Shareholder Services Agreement between the Registrant
and Charles Schwab & Co., Inc. dated June 1, 1990.
(Incorporated by reference to Post-Effective Amendment
No. 56 to the Registration Statement.)
(h)(7) 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.)
(h)(8) 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.)
(h)(9) Fund Accounting Services Agreement between the
Registrant, on behalf of Scudder International Fund,
and Scudder Fund Accounting Corporation dated April 12,
1995. (Incorporated by reference to Post-Effective
Amendment No. 45 to the Registration Statement.)
(h)(10) 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.)
(h)(11) 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.)
(h)(12) 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.)
(h)(13) Fund Accounting Services Agreement between the
Registrant, on behalf of Scudder International Growth
and Income Fund dated June 3, 1997. (Incorporated by
reference to Post-Effective Amendment No. 56 to the
Registration Statement.)
(h)(14) Fund Accounting Services Agreement between the
Registrant, on behalf of Scudder International Growth
Fund dated June 30, 1998. (Incorporated by reference to
Post-Effective Amendment No. 67 to the Registration
Statement.)
<PAGE>
(h)(15) Fund Accounting Services Agreement between the
Registrant, on behalf of Scudder International Value
Fund dated June 30, 1998. (Incorporated by reference to
Post-Effective Amendment No. 67 to the Registration
Statement.)
(h)(16) Administrative Services Agreement between Scudder
International Fund, Inc., on behalf of Scudder
International Fund, and Scudder Investors Service
Company. (Incorporated by reference to Post-Effective
Amendment No. 72 to the Registration Statement.)
(h)(17) Fee schedule for Exhibit (13)(h)(16). (Incorporated by
reference to Post-Effective Amendment No. 72 to the
Registration Statement.)
(h)(18) Agency Agreement between Scudder International Fund,
Inc., and Kemper Service Company dated June 7, 1999.
(Incorporated by reference to Post-Effective Amendment
No. 72 to the Registration Statement.)
(h)(19) Form of Administrative Agreement between the Registrant
on behalf of Scudder International Fund, Inc. and
Scudder Kemper Investments, Inc. dated October 2, 2000.
(Incorporated by reference to Post-Effective Amendment
No. 80 to the Registration Statement.)
(14) Consents of Independent Accountants are filed herewith.
(15) Inapplicable.
(16) Powers of Attorney are filed herewith.
(17) Form of Proxy is filed herewith.
Item 17. Undertakings.
-------- -------------
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933 (the "1933 Act") [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be
deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
<PAGE>
(3) The undersigned Registrant undertakes to file, by post-effective
amendment, an opinion of counsel supporting the tax consequences of
the proposed reorganization within a reasonable time after receipt of
such opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Scudder International Fund, Inc. has duly caused
this Registration Statement on Form N-14 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 21st day of December, 2000.
SCUDDER INTERNATIONAL FUND, INC.
By: /s/ Linda C. Coughlin
---------------------
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Linda C. Coughlin President and Director December 21, 2000
---------------------------
Linda C. Coughlin
/s/ Henry P. Becton, Jr. * Director December 21, 2000
---------------------------
Henry P. Becton, Jr.
/s/ Dawn-Marie Driscoll * Director December 21, 2000
---------------------------
Dawn-Marie Driscoll
/s/ Edgar R. Fiedler * Director December 21, 2000
---------------------------
Edgar R. Fiedler
/s/ Keith R. Fox * Director December 21, 2000
---------------------------
Keith R. Fox
/s/ Joan E. Spero * Director December 21, 2000
---------------------------
Joan E. Spero
/s/ Jean Gleason Stromberg* Director December 21, 2000
---------------------------
Jean Gleason Stromberg
/s/ Jean C. Tempel * Director December 21, 2000
---------------------------
Jean C. Tempel
/s/ Steven Zaleznick * Director December 21, 2000
---------------------------
Steven Zaleznick
/s/ John R. Hebble Treasurer (Principal Financial December 21, 2000
--------------------------- and Accounting Officer)
John R. Hebble
</TABLE>
*By: /s/ Joseph R. Fleming December 21, 2000
----------------------
Joseph R. Fleming,
Attorney-in-fact
*Executed pursuant to powers of attorney filed herein as an exhibit to the
Registrant's Registration Statement on Form N-14.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SCUDDER INTERNATIONAL FUND, INC.
<PAGE>
SCUDDER INTERNATIONAL FUND, INC.
EXHIBIT INDEX
Exhibit 10(b)(13) Scudder Funds Amended and Restated Multi-Distribution System
Plan
Exhibit 11 Opinion and Consent of Dechert
Exhibit 14 Consents of Independent Accountants
Exhibit 16 Powers of Attorney
Exhibit 17 Form of Proxy
