Scudder Kemper Says Lawsuit Could Delay Fund's Reorganization

New York, July 2 -- Scudder Kemper Investments Inc., the 15th-biggest U.S. mutual fund company, said a pending lawsuit could delay the reorganization of its New Europe Fund.

Directors of the $360 million Scudder New Europe Fund are proposing to convert the fund to an open-end mutual fund from a closed-end fund whose shares trade on the New York Stock Exchange. The fund's assets would then be merged with Kemper Europe Fund, the company said.

As part of the plan, anyone who redeems shares of the restructured Kemper Europe Fund would pay a fee to the fund that's expected to equal 2 percent of the amount withdrawn within 12 months after the reorganization occurs.

Phillip Goldstein, who owns about 130,000 shares of Scudder New Europe for clients, said investors have a right to vote on whether the fund can charge a 2-percent redemption fee. He filed a motion last month in a U.S. federal court in New York to have a separate vote on the issue.

``The proxy rules require that shareholders have an opportunity to vote separately on that matter,'' Goldstein said.

Officials at New York-based Scudder Kemper said Goldstein's action ``lacks merit,'' declining further comment. Scudder Kemper is a unit of Switzerland's Zurich Financial Services AG.

Shares of Scudder New Europe Fund recently traded on the NYSE at 20 7/8, up 1/8. The reorganization of the two funds has been scheduled to occur in the third quarter.