<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KEMPER AGGRESSIVE GROWTH FUND
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
<PAGE> 1
October 1997
Kemper
Important News
for Kemper Funds shareholders
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE IS A BRIEF OVERVIEW OF MAJOR MATTERS TO BE VOTED UPON.
================================================================================
Q&A
QUESTIONS AND ANSWERS
Q WHAT IS HAPPENING?
A Zurich Insurance Company, the parent of your fund's investment manager (Zurich
Kemper Investments, Inc. or ZKI) has entered into an agreement with Scudder,
Stevens & Clark, Inc. (Scudder) whereby Zurich will acquire approximately 70% of
Scudder. Upon completion of the transaction, Scudder will change its name to
Scudder Kemper Investments, Inc. (SKI) and ZKI will be combined with SKI.
Because of the transaction, it is necessary for your fund to approve a new
investment management agreement.
The following pages elaborate on Scudder, the proposed new investment management
agreement and the fund board's evaluation of Zurich and Scudder. A vote is also
being sought on a Rule 12b-1 plan (the provisions of which are the same as in
the current Rule 12b-1 plan) for the Class B shares and Class C shares of each
fund, the election of trustees to the Board of Trustees, the selection of
independent auditors, and a change in investment policies to permit a
master/feeder fund structure in the future.
Q WHAT IS SCUDDER?
A Scudder is one of America's oldest and largest investment management firms. It
manages assets invested in equities, fixed-income and money market instruments
in both developed and emerging markets. Scudder provides investment services for
open-end and closed-end funds, and private and institutional clients.
Q HOW WILL THE ZURICH/SCUDDER TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A Your fund and your fund investment will not change. You will still own the
same shares in the same fund. If the new investment management agreement and
Rule 12b-1 plans are approved, your fund shares will not change, the advisory
fee rates for your fund will not change, and the fee rate payable under your
fund's 12b-1 plan will not change.
Zurich and Scudder have committed to provide all resources necessary to provide
your fund with top quality investment management and shareholder services.
[KEMPER LOGO]
<PAGE> 2
Q WILL THE INVESTMENT ADVISORY AND RULE 12B-1 FEE RATES BE THE SAME?
A Yes, the investment advisory and Rule 12b-1 fee rates for your fund will
remain the same.
Q WILL THE BRAND IDENTITY OF THE KEMPER FUNDS SURVIVE?
A Zurich and Scudder intend to maintain the distinct brand identity of the
Kemper Funds. They are also committed to strengthening and enhancing the Kemper
Funds brand and distribution channels, while maintaining its separate brand
identity.
Q WHAT IS A MASTER/FEEDER FUND?
A Rather than investing directly in a portfolio of securities, a feeder fund is
authorized to pool its assets with other mutual funds for investment in a master
fund. A purpose of a master/ feeder fund structure is to achieve operational
efficiencies.
Q HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A After careful consideration, the board members of your fund, including all of
the independent members, recommend that you vote "For" all the items on the
enclosed proxy card.
Q WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY SOLICITATION?
A ZKI -- not your fund -- is paying all costs of the funds' shareholder meeting
and proxy solicitation.
Q WHOM DO I CALL FOR MORE INFORMATION?
A Please call Shareholder Services at (800) 537-1988.
ABOUT THE PROXY CARD
[PROXY CARD SAMPLE] Because each fund must vote separately, you are being
sent a proxy card for each fund account that you have.
Please vote all issues shown on each proxy card that you receive.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each proxy card. On Item 1 (election of trustees),
mark -- For All, Withhold All or For All Except. If you mark an X in the For
All Except box, you should print the name(s) relating to the individual(s) for
whom you wish to withhold authority. On all other Items, mark -- For, Against
or Abstain. Then sign, date and return each of your proxy cards in the
accompanying postage-paid envelope. All registered owners of an account, as
shown in the address on the proxy card, must sign the proxy card. If you are
signing for a corporation, trust or estate, please indicate your title or
position.
We appreciate your continuing support and look forward to serving your future
investment needs.
THANK YOU FOR MAILING YOUR
PROXY CARD PROMPTLY!
<PAGE> 3
KEMPER FUNDS
222 South Riverside Plaza Chicago, Illinois 60606
Telephone (800) 537-1988
October 10, 1997
Dear Kemper Fund Shareholder:
As you read in the Questions and Answers (Q & A) on the outside cover, Zurich
Insurance Company ("Zurich") has entered into an agreement with Scudder, Stevens
& Clark, Inc. ("Scudder") pursuant to which Zurich will acquire approximately
70% of Scudder. Upon completion of the transaction, Scudder will change its name
to Scudder Kemper Investments, Inc. ("SKI"), and your Fund's investment manager,
Zurich Kemper Investments, Inc. ("ZKI") will be combined with SKI. Because of
the transaction, it is necessary for your Fund to approve a new investment
management agreement and a new Rule 12b-1 Plan for Class B and Class C shares.
If the new investment management agreement and Rule 12b-1 Plan are approved,
YOUR FUND SHARES WILL NOT CHANGE, THE ADVISORY FEE RATES FOR YOUR FUND WILL NOT
CHANGE, AND THE FEE RATE PAYABLE UNDER YOUR FUND'S RULE 12B-1 PLAN WILL NOT
CHANGE. FURTHER, YOU SHOULD CONTINUE TO RECEIVE THE HIGH QUALITY INVESTMENT
MANAGEMENT AND SHAREHOLDER SERVICES THAT YOU HAVE COME TO EXPECT OVER THE YEARS.
Your Fund Board has unanimously approved the proposals and recommends them for
your approval. I encourage you to vote in favor of the proposals.
As always, we thank you for your confidence and support.
Sincerely,
/s/ Stephen B. Timbers
Stephen B. Timbers
President [KEMPER LOGO]
<PAGE> 4
KEMPER FUNDS
222 South Riverside Plaza Chicago, Illinois 60606
Telephone (800) 537-1988
NOTICE OF JOINT MEETING OF SHAREHOLDERS
DECEMBER 3, 1997 AND PROXY STATEMENT
October 10, 1997
To the Shareholders:
You are invited to attend a joint special meeting of shareholders of the
following Kemper Funds (each a "Fund" and collectively the "Funds"):
KEMPER TECHNOLOGY FUND ("KTEC")
KEMPER TOTAL RETURN FUND ("KTRF")
KEMPER GROWTH FUND ("KGF")
KEMPER SMALL CAPITALIZATION EQUITY FUND ("KSCF")
KEMPER INCOME AND CAPITAL PRESERVATION FUND ("KICPF")
KEMPER NATIONAL TAX-FREE INCOME SERIES ("KNTIS")
KEMPER DIVERSIFIED INCOME FUND ("KDIF")
KEMPER HIGH YIELD SERIES ("KHYS")
KEMPER U.S. GOVERNMENT SECURITIES FUND ("KGSF")
KEMPER INTERNATIONAL FUND ("KIF")
KEMPER STATE TAX-FREE INCOME SERIES ("KSTIS")
KEMPER PORTFOLIOS ("KP")
KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND ("KARGF")
KEMPER BLUE CHIP FUND ("KBCF")
KEMPER GLOBAL INCOME FUND ("KGIF")
KEMPER VALUE PLUS GROWTH FUND ("KVGF")
KEMPER QUANTITATIVE EQUITY FUND ("KQEF")
KEMPER ASIAN GROWTH FUND ("KAGF")
KEMPER AGGRESSIVE GROWTH FUND ("KAGGF")
The meeting will be held in the Presentation Room on the 32nd Floor at the
offices of the Funds, 222 South Riverside Plaza, Chicago, Illinois on Wednesday,
December 3, 1997 at 2:30 p.m., Chicago time, for the following purposes and to
transact such other business as may properly come before the meeting or any
adjournment of the meeting:
1. To elect nine (9) Trustees to the Board of Trustees.
2. To ratify or reject the selection of Ernst & Young LLP as independent
auditors for the current fiscal year.
3. To approve or disapprove a new investment management agreement with Scudder
Kemper Investments, Inc. ("SKI") (or with Zurich Kemper Investments, Inc.
("ZKI") transferable to SKI).
<PAGE> 5
4. To approve or disapprove a new sub-advisory agreement with Zurich Investment
Management Limited ("ZIML") (including approval of a subsequent assignment)
[for KIF, KGIF and KAGF only].
5. To approve or disapprove a new sub-advisory agreement with Zurich Kemper
Value Advisors, Inc. ("ZKVA") [for KVGF only].
6. For Class B and Class C shareholders only, to approve or disapprove a new
Rule 12b-1 distribution plan with Zurich Kemper Distributors, Inc. ("ZKDI").
7. To approve or disapprove changes in the Fund's fundamental investment
policies to permit a master/feeder fund structure.
The Board of Trustees of each Fund has selected the close of business on
September 17, 1997 as the record date for the determination of shareholders of
each Fund entitled to notice of and to vote at the meeting. Shareholders are
entitled to one vote for each share held.
- ------------------------------------------------------------------------------
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
- ------------------------------------------------------------------------------
<PAGE> 6
The accompanying proxy is solicited by the Boards of Trustees (the "Boards") of
the Funds for voting at the joint special meeting of shareholders of the Funds
to be held on Wednesday, December 3, 1997, and at any and all adjournments
thereof (the "Meeting"). This proxy statement was first mailed to shareholders
on or about October 10, 1997.
THE SERIES FUNDS. Each of KNTIS, KSTIS, KP and KHYS is a "series company" that
issues various series of shares. (Each series also is sometimes described herein
as a "Fund.") Each series has its own investment objective and policies and
operates independently for purposes of investments, dividends and redemptions.
The series of KNTIS are: Kemper Municipal Bond Fund ("KMBF") and Kemper
Intermediate Municipal Bond Fund ("KIMBF").
The series of KSTIS are: Kemper California Tax-Free Income Fund ("KCATF");
Kemper New York Tax-Free Income Fund ("KNYTF"); Kemper Florida Tax-Free
Income Fund ("KFLTF"); Kemper Texas Tax-Free Income Fund ("KTXTF"); Kemper
Ohio Tax-Free Income Fund ("KOHTF"); Kemper Michigan Tax-Free Income Fund
("KMITF"); Kemper New Jersey Tax-Free Income Fund ("KNJTF"); and Kemper
Pennsylvania Tax-Free Income Fund ("KPATF").
The series of KP are: Kemper Cash Reserves Fund ("KCRF"); Kemper U.S.
Mortgage Fund ("KUSMF"); and Kemper Short-Intermediate Government Fund
("KSIGF").
The series of KHYS are: Kemper High Yield Fund ("KHYF") and Kemper High
Yield Opportunity Fund ("KHYOF"). As of September 17, 1997, KHYOF had not
commenced operations and did not have any shareholders.
Each Fund (and each series of each series company) is divided into four classes
of shares, including Class A Shares, Class B Shares, Class C Shares and, except
for KSTIS, Class I Shares. Shares of each class represent a proportionate
interest in that class.
The shareholders of each Fund are being asked to vote on up to six items. On
Item 1 (election of trustees) and Item 2 (ratification of selection of
auditors), each Fund will vote in the aggregate and not by series or class. On
Item 3 (approval of new investment management agreement), each Fund will vote in
the aggregate, except that in the case of KNTIS, KSTIS, KP, and KHYS, each
series will vote separately. On Item 4 (approval of new sub-advisory agreement
with ZIML) and Item 5 (approval of new sub-advisory agreement with ZKVA), each
affected Fund will vote in the aggregate. On Item 6 (approval of new Rule 12b-1
Plan), the Class B Shares and the Class C Shares of each Fund (or in the case of
KNTIS, KSTIS, KP and KHYS, of each series) will each vote separately. On Item 7
2
<PAGE> 7
(approval of a change in the Fund's fundamental investment policies to permit a
master/feeder fund), each Fund will vote in the aggregate, except that in the
case of KNTIS, KSTIS, KP and KHYS, each series will vote separately. The Board
of each Fund recommends an affirmative vote on all items. The vote required to
approve each item is described under the section of this proxy statement
entitled "Miscellaneous."
3
<PAGE> 8
The following table indicates which shareholders are solicited with respect to
each Item:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
ITEM KTEC KTRF KGF KSCF KICPF KNTIS KDIF KHYS KGSF KIF KSTIS KP KARGF
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
1. Elect Trustees X X X X X X X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
2. Ratify selection of auditors X X X X X X X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3. Approval of New Investment X X X X X X X X X X X X X
Management Agreement with Scudder
Kemper Investments, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
4. Approval of New Sub-Advisory X
Agreement with Zurich Investment
Management Limited
- ------------------------------------------------------------------------------------------------------------------------------
5. Approval of New Sub-Advisory
Agreement with Zurich Kemper Value
Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
6. Approval of New Rule 12b-1 Plan X X X X X X X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
7. Approval of changes in X X X X X X X X X X X X X
fundamental investment policies to
permit master/feeder structure
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
ITEM KBCF KGIF KVGF KQEF KAGF KAGGF
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
1. Elect Trustees X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
2. Ratify selection of auditors X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3. Approval of New Investment X X X X X X
Management Agreement with Scudder
Kemper Investments, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
4. Approval of New Sub-Advisory X X
Agreement with Zurich Investment
Management Limited
- ------------------------------------------------------------------------------------------------------------------------------
5. Approval of New Sub-Advisory X
Agreement with Zurich Kemper Value
Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
6. Approval of New Rule 12b-1 Plan X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
7. Approval of changes in X X X X X X
fundamental investment policies to
permit master/feeder structure
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 9
The Board of each Fund has fixed the close of business on September 17, 1997 as
the record date for the determination of shareholders of each Fund entitled to
notice of and to vote at the Meeting. As of September 17, 1997, each Fund had
shares issued and outstanding as set forth in Exhibit A.
INTRODUCTION
On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI Holding Corp.
("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"), Scudder, Stevens & Clark,
Inc. ("Scudder") and the representatives of the beneficial owners of the capital
stock of Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich will become the
majority stockholder in Scudder with an approximately 70% interest, and ZKI will
become a wholly-owned subsidiary of, or be combined with, Scudder
("Transaction"). Upon completion of the Transaction, Scudder will change its
name to Scudder Kemper Investments, Inc. ("SKI"). Scudder, a New York-based
investment adviser and the investment manager for the Scudder and AARP Funds,
has approximately $125 billion under management. ZKI, a Chicago-based investment
adviser and the investment manager for the Kemper Funds, and its affiliates have
approximately $85 billion under management. The headquarters of SKI will be in
New York. Edmond D. Villani, Scudder's Chief Executive Officer, will continue as
Chief Executive Officer of SKI and will become a member of Zurich's Corporate
Executive Board. Some of the terms of the Transaction are also set forth in a
form of second amended and restated Security Holders Agreement ("New SHA") to be
entered into among the beneficial owners of the capital stock of Scudder, the
Scudder Representatives, Scudder, Zurich, ZKIH and the Scudder Kemper
Investments, Inc. Executive Defined Contribution Plan Trust.
Consummation of the Transaction would constitute an "assignment," as that term
is defined in the Investment Company Act of 1940 ("1940 Act"), of each Fund's
current investment management agreement with ZKI. As required by the 1940 Act,
each current investment management agreement provides for its automatic
termination in the event of its assignment. Accordingly, as discussed further
below, a new investment management agreement between each Fund and SKI is being
proposed for approval by shareholders of each Fund.
DESCRIPTION OF THE TRANSACTION.
Under the Transaction Agreement, Zurich will pay $866.7 million in cash to
acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will
5
<PAGE> 10
then transfer a 9.6% fully diluted equity interest in SKI to a defined
contribution plan for the benefit of Scudder and ZKI employees, as well as cash
and warrants on Zurich shares for award to Scudder employees, in each case
subject to five-year vesting schedules. After giving effect to the Transaction,
current Scudder stockholders will have a 29.6% fully diluted equity interest in
SKI and Zurich will have a 69.5% fully diluted interest in SKI. Scudder's name
will be changed to Scudder Kemper Investments, Inc.
The purchase price for Scudder or for ZKI in the Transaction is subject to
adjustment based on the effect on revenues of non-consenting clients, and will
be reduced if the annualized investment management fee revenues (excluding the
effect of market changes, but taking into account new assets under management)
from clients at the time of closing, as a percentage of such revenues as of June
30, 1997 (the "Revenue Run Rate Percentage"), is less than 90%.
At the closing, Zurich and the other stockholders of SKI will enter into the New
SHA. Under the New SHA, Scudder stockholders will be entitled to designate three
of the seven members of the SKI board and two of the four members of an
Executive Committee, which will be the primary management-level committee of
SKI. Zurich will be entitled to designate the other four members of the SKI
board and the other two members of the Executive Committee.
The names, addresses and principal occupations of the initial Scudder-designated
directors of SKI are as follows: LYNN S. BIRDSONG, 345 Park Avenue, New York,
New York, Managing Director of Scudder; CORNELIA M. SMALL, 345 Park Avenue, New
York, New York, Managing Director of Scudder; and EDMOND D. VILLANI, 345 Park
Avenue, New York, New York, President, Chief Executive Officer and Managing
Director of Scudder.
The names, addresses and principal occupations of the initial Zurich-designated
directors of SKI are as follows: LAWRENCE W. CHENG, Mythenquai 2, Zurich,
Switzerland, Chief Investment Officer for Investments and Institutional Asset
Management and the corporate functions of Securities and Real Estate for Zurich
and a member of the Corporate Executive Board of Zurich; STEVEN M. GLUCKSTERN,
Mythenquai 2, Zurich, Switzerland, responsible for Reinsurance, Structured
Finance, Capital Market Products and Strategic Investments, and a member of the
Corporate Executive Board of Zurich; ROLF HUEPPI, Mythenquai 2, Zurich,
Switzerland, Chairman of the Board and Chief Executive Officer of Zurich; and
MARKUS ROHRBASSER, Mythenquai 2, Zurich, Switzerland, Chief Financial Officer
and a member of the Corporate Executive Board of Zurich.
The initial Scudder-designated Executive Committee members will be Messrs.
Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.
6
<PAGE> 11
The New SHA requires the approval of a majority of the Scudder-designated
directors for certain decisions, including changing the name of SKI, effecting a
public offering before April 15, 2005, causing SKI to engage substantially in
non-investment management and related business, making material acquisitions or
divestitures, making changes in SKI's capital structure, dissolving or
liquidating SKI, or entering into certain affiliated transactions with Zurich.
The New SHA also provides for various put and call rights with respect to SKI
stock held by current Scudder employees, limitations on Zurich's ability to
purchase other asset management companies outside of SKI, rights of Zurich to
repurchase SKI stock upon termination of employment of SKI personnel, and
registration rights for stock held by continuing Scudder stockholders.
The Transaction is subject to a number of conditions, including approval by
Scudder stockholders; the Revenue Run Rate Percentages of Scudder and ZKI being
at least 75%; Scudder and ZKI having obtained director and stockholder approvals
from U.S.-registered funds representing 90% of the assets of such funds under
management as of June 30, 1997; the absence of any restraining order or
injunction preventing the Transaction, or any litigation challenging the
Transaction that is reasonably likely to result in an injunction or invalidation
of the Transaction; and the continued accuracy of the representations and
warranties contained in the Transaction Agreement. The Transaction is expected
to close during the fourth quarter of 1997.
Subsequent to the execution of the Transaction Agreement, Zurich agreed to cause
ownership of Zurich Investment Management Limited ("ZIML") to be transferred by
Zurich (or a direct or indirect wholly-owned subsidiary of Zurich) to SKI (or a
direct or indirect wholly-owned subsidiary of SKI). ZIML is a sub-adviser for
certain of the Funds. While the amount of consideration payable to Zurich for
ZIML has not yet been finally agreed upon, it is expected that such
consideration would in no event exceed $50 million, payable in cash or shares of
SKI stock or some combination thereof at the closing of the Transaction or over
some period of time after the closing of the Transaction. Following the
transfer, which is expected to take place at the same time as the closing of the
Transaction, ZIML's board of directors would comprise representatives of Scudder
and Zurich. The capital stock of ZIML initially may be transferred to one or
more wholly-owned subsidiaries of Zurich, but ultimately will be transferred to
SKI or one of its wholly-owned subsidiaries (the "ZIML Transaction"). The ZIML
Transaction will result in an assignment of the sub-advisory agreement under the
1940 Act.
ITEM 1. ELECTION OF BOARD OF TRUSTEES
At the Meeting, nine (9) trustees are to be elected to constitute the Board of
each Fund. All the nominees, except Messrs. Daniel Pierce and
7
<PAGE> 12
Edmond Villani, were elected to the Board of each Fund (except KVGF, KQEF, KAGF
and KAGGF) at a special meeting of shareholders held on September 19, 1995 and
for KVGF, KQEF, KAGF and KAGGF by the initial shareholder (i.e., ZKI) on October
15, 1995, February 14, 1996, October 20, 1996 and December 30, 1996,
respectively.
It is intended that the proxies will be voted for the election of the nominees
described below. The nominees, if elected, will take office upon consummation of
the Transaction and their election and qualification is contingent upon
consummation of the Transaction. The term of each person elected as trustee will
be from the date of the consummation of the Transaction 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 Agreement and Declaration of Trust of
each Fund ("Declaration of Trust"). If the Transaction is not consummated, the
current trustees of each Fund will continue to serve as the Fund's Board (which
are those identified as such below, along with Mr. Stephen B. Timbers, the
president and chief executive officer of ZKI). Since the Funds do not hold
annual meetings, trustees will hold office for an indeterminate period.
All the nominees listed below have consented to serve as trustees of the
respective Funds, if elected. In case any nominee shall be unable or shall fail
to act as a trustee by virtue of an unexpected occurrence, the proxies may be
voted for such other person(s) as shall be determined by the persons acting
under the proxies in their discretion.
<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
------------------------------- -----------------
<S> <C>
David W. Belin (6/20/28) 1976 -- KNTIS; 1977 -- KDIF,
Member, Belin Lamson McCormick KGF, KHYS, KICPF, KSCF, KTEC,
Zumbach Flynn, P.C. (attorneys) KTRF; 1979 -- KGSF; 1981 -- KIF;
1982 -- KP; 1983 -- KSTIS; 1987
-- KARGF, KBCF; 1989 -- KGIF;
1995 -- KVGF, KQEF; 1996 --
KAGF, KAGGF.
Lewis A. Burnham (1/8/33) 1977 -- KDIF, KGF, KHYS, KICPF,
Director, Management Consulting KNTIS, KSCF, KTEC, KTRF; 1979 --
Services, McNulty & Company; formerly KGSF; 1981 -- KIF; 1982 -- KP;
Executive Vice President, Anchor 1983 -- KSTIS; 1987 -- KARGF,
Glass Container Corporation KBCF; 1989 -- KGIF; 1995 --
KVGF, KQEF; 1996 -- KAGF, KAGGF.
</TABLE>
8
<PAGE> 13
<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
------------------------------- -----------------
<S> <C>
Donald L. Dunaway (3/8/37) 1980 -- KDIF, KGSF, KGF, KHYS,
Retired; formerly Executive Vice KICPF, KNTIS, KSCF, KTEC, KTRF;
President, A. O. Smith Corporation 1981 -- KIF; 1982 -- KP; 1983 --
KSTIS; 1987 -- KARGF, KBCF; 1989
-- KGIF; 1995 -- KVGF, KQEF;
1996 -- KAGF, KAGGF.
Robert B. Hoffman (12/11/36) 1981 -- KDIF, KGSF, KGF, KHYS,
Senior Vice President and Chief KICPF, KIF, KNTIS, KSCF, KTEC,
Financial Officer, Monsanto Company; KTRF; 1982 -- KP; 1983 -- KSTIS;
formerly Vice President, FMC 1987 -- KARGF, KBCF; 1989 --
Corporation; prior thereto, Director, KGIF; 1995 -- KVGF, KQEF; 1996
Executive Vice President and Chief -- KAGF, KAGGF.
Financial Officer, Staley
Continental, Inc.
Donald R. Jones (1/17/30) 1988 -- KARGF, KBCF, KDIF, KGSF,
Retired; Director, Motorola, Inc.; KGF, KHYS, KICPF, KIF, KNTIS,
formerly Executive Vice President and KSCF, KSTIS, KTEC, KTRF, KP;
Chief Financial Officer, Motorola, 1989 -- KGIF; 1995 -- KVGF,
Inc. KQEF; 1996 -- KAGF, KAGGF.
Shirley D. Peterson (9/3/41) 1995 -- All Funds, except KVGF,
President, Hood College; formerly KQEF, KAGF and KAGGF; 1995 --
partner, Steptoe & Johnson KVGF, KQEF; 1996 -- KAGF, KAGGF.
(attorneys); prior thereto,
Commissioner, Internal Revenue
Service; prior thereto, Assistant
Attorney General, U.S. Department of
Justice; Director, Bethlehem Steel
Corp.
*Daniel Pierce (3/18/34) Nominee
Chairman of the Board and Managing
Director, Scudder; Director,
Fiduciary Trust Company; Director,
Fiduciary Company Incorporated; Board
member of 14 investment companies
advised by Scudder.
</TABLE>
9
<PAGE> 14
<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
------------------------------- -----------------
<S> <C>
William P. Sommers (7/22/33) 1979 -- KDIF, KGF, KHYS, KNTIS,
President and Chief Executive KSCF, KTEC, KTRF; 1981 -- KGSF,
Officer, SRI International; formerly KICPF, KIF; 1982 -- KP; 1983 --
Executive Vice President, Iameter; KSTIS; 1987 -- KARGF, KBCF; 1989
prior thereto, Senior Vice President -- KGIF; 1995 -- KVGF, KQEF;
and Director, Booz, Allen & Hamilton, 1996 -- KAGF, KAGGF.
Inc. (Retired); Director, Rohr, Inc.,
Therapeutic Discovery Corp., and
Litton Industries.
*Edmond D. Villani (3/4/47) Nominee
President, Chief Executive Officer
and Managing Director, Scudder.
</TABLE>
- ---------------
* Interested persons of Scudder as defined in the Investment Company Act of
1940.
All the nominees, except Messrs. Pierce and Villani, serve as board members of
26 Kemper Funds. Mr. Pierce and Mr. Villani have each been nominated to serve as
a board member of 39 Kemper Funds. A "Kemper Fund" is an investment company for
which ZKI or its affiliates serve as investment manager.
The Board of Trustees of each Fund has a nominating committee, the members of
which are Messrs. Burnham and Sommers and Ms. Peterson. The nominating committee
proposed the nominees for election by the shareholders; and the Board of
Trustees, including the non-interested trustees, concurred. The nominating
committee met once during each Fund's most recently completed fiscal year
(except KSTIS and KARGF, which did not meet). Shareholders wishing to submit the
name of a candidate for consideration by the nominating committee should submit
their recommendations to the secretary of the applicable Fund.
Each Fund's audit committee is composed of Messrs. Dunaway, Hoffman and Jones.
The audit committee met three times during each Fund's most recently completed
fiscal year (except KGF, KSCF, KNTIS, KHYS, KP and KAGGF, which met four times
during each Fund's most recently completed fiscal year). The audit committee of
each Fund 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 Board of Trustees of that Fund assigns.
The Board of each Fund met eight times during the Fund's most recently completed
fiscal year (except for KTEC, KTRF, KICPF, KDIF, KGSF and
10
<PAGE> 15
KBCF, which met seven times). Each then current trustee attended 75% or more of
the respective meetings of the Board and the committees of which he or she was a
member that were held during that period.
Each Fund pays trustees who are not interested persons of such Fund a monthly
retainer and an attendance fee for each Board meeting and committee meeting
attended, plus expense reimbursement. As reflected above, the trustees currently
serve as trustees of various investment companies for which ZKI or its
affiliates serve as investment manager. Trustees or officers who are "interested
persons" receive no compensation from any Fund.
The tables below show, for each trustee entitled to receive compensation from
the Funds, the aggregate compensation paid or accrued by each Fund for its most
recently completed fiscal year and the total compensation that Funds paid or
accrued to each trustee during the calendar year 1996.
<TABLE>
<CAPTION>
NAME OF TRUSTEE KTEC KTRF KGF KSCF KICPF KNTIS KDIF KHYS(1) KGSF
--------------- ---- ---- --- ---- ----- ----- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
David W. Belin(2)....... $6,100 9,100 8,300 5,400 4,900 11,100 6,100 9,800 11,600
Lewis A. Burnham........ 3,700 5,600 5,400 3,600 3,100 7,200 3,600 6,200 6,700
Donald L. Dunaway(2).... 5,800 8,900 8,500 5,400 4,800 11,300 5,700 10,000 11,400
Robert B. Hoffman....... 3,800 5,800 8,700 3,800 3,200 7,600 3,700 6,600 7,000
Donald R. Jones......... 3,800 5,800 5,700 3,800 3,200 7,600 3,700 6,600 7,000
Shirley D. Peterson..... 3,700 5,700 5,400 3,600 3,100 7,300 3,600 6,300 6,800
William P. Sommers...... 3,600 5,500 5,300 3,500 3,000 7,100 3,500 6,100 6,600
</TABLE>
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
KEMPER FUNDS
PAID TO
NAME OF TRUSTEE KIF KSTIS KP KARGF KBCF KGIF KVGF KQEF KAGF(4) KAGGF(4) TRUSTEES(3)
--------------- --- ----- -- ----- ---- ---- ---- ---- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
David W. Belin(2)...... $4,200 7,100 15,600 2,500 2,700 2,800 300 100 -- -- $143,400
Lewis A. Burnham....... 2,800 4,400 11,100 1,700 2,100 2,000 300 100 -- -- 88,800
Donald L. Dunaway(2)... 4,200 7,300 16,400 2,700 2,900 3,000 300 100 -- -- 141,200
Robert B. Hoffman...... 2,900 4,700 11,800 1,800 2,200 2,000 300 100 -- -- 92,100
Donald R. Jones........ 2,900 4,600 11,800 1,800 2,200 2,000 300 100 -- -- 92,100
Shirley D. Peterson.... 2,800 4,400 11,200 1,700 2,100 2,000 300 100 -- -- 89,800
William P. Sommers..... 2,800 4,300 11,000 1,700 2,100 1,900 300 100 -- -- 87,500
</TABLE>
- ---------------
(1) Includes KHYF only.
(2) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with the Funds. Deferred amounts accrue interest
monthly at a rate equal to the yield of Zurich Money Funds--Zurich Money
Market Fund.
(3) Includes compensation for service on the boards of 22 Kemper Funds with 40
fund portfolios. Each trustee currently serves as trustee of 26 Kemper Funds
with 47 fund portfolios.
(4) KAGF and KAGGF have not yet adopted trustee compensation schedules.
11
<PAGE> 16
FUND OFFICERS. Information about the executive officers of the Funds, with their
respective dates of birth and terms of office indicated, is set forth below.
J. Patrick Beimford, Jr. (5/25/50), vice president of KDIF since 1/21/93, is
executive vice president of ZKI.
Daniel J. Bukowski (5/6/63), vice president of KQEF and KVGF since 8/8/95, is
senior vice president and director of quantitative research.
Elizabeth A. Byrnes (2/8/57), vice president of KARGF since 7/13/94, is first
vice president of ZKI.
Tracy M. Chester (9/27/54), vice president of KBCF since 12/8/94, is senior vice
president of ZKI since September 1994; prior thereto, was senior vice president
and portfolio manager of an investment management company; and prior thereto,
managed private accounts.
Philip J. Collora (11/15/45), vice president of KP since 1/28/86, KTEC, KTRF,
KGF, KSCF, KICPF, KNTIS, KDIF, KHYS, KGSF, KIF, KSTIS, and KBCF since 1/17/89,
KARGF since 5/28/87, KGIF since 7/25/89, KVGF since 8/8/95, KQEF since 8/8/95,
KAGF since 5/30/96 and KAGGF since 11/20/96, and secretary of each Fund since
1/25/95, is senior vice president and assistant secretary of ZKI.
Robert S. Cessine (1/5/50), vice president of KICPF since 7/13/94 and KDIF since
5/05/95, is senior vice president of ZKI since January 1993; and prior thereto,
was senior corporate bond analyst at an investment management company.
Jerome L. Duffy (6/29/36), treasurer of KTEC, KTRF and KICPF since 1/20/77, KGF
and KSCF since 2/17/77, KNTIS and KDIF since 4/19/77, KHYS since 11/2/77, KGSF
since 9/25/79, KIF since 1/20/81, KP since 3/3/82, KSTIS since 1/23/83, KARGF
since 5/28/87, KBCF since 1/12/88, KGIF since 8/3/88, KVGF since 8/8/95, KQEF
since 8/8/95 , KAGF since 5/30/96 and KAGGF since 11/20/96, is senior vice
president of ZKI.
William M. Knapp (4/23/61), vice president of KVGF since 1/21/97, is first vice
president of ZKI.
Frank D. Korth (7/11/45), vice president of KTEC since 1/14/94, is senior vice
president of ZKI.
Gary A. Langbaum (12/16/48), vice president of KTRF since 6/15/95, is executive
vice president of ZKI.
Charles R. Manzoni, Jr. (1/23/47), vice president of each Fund since 9/5/96, is
executive vice president, secretary and general counsel of ZKI;
12
<PAGE> 17
secretary, ZKI Holding Corp.; secretary, ZKI Agency, Inc., and formerly,
Partner, Gardner, Carton & Douglas.
Michael A. McNamara (12/28/44), vice president of KDIF since 1/17/89 and KHYS
since 1/22/91, is senior vice president of ZKI.
Christopher J. Mier (8/11/56), vice president of KSTIS since 1/30/90 and KNTIS
since 1/22/91, is senior vice president of ZKI.
John E. Neal (3/9/50), vice president of each Fund since 1/18/96, is president
of Kemper Funds Group, a unit of ZKI, and director of ZKI, ZKVA and ZKDI.
Robert C. Peck, Jr. (10/1/46), vice president of KICPF, KNTIS, KDIF, KHYS, KGSF,
KSTIS, KP, KARGF and KGIF since 8/2/97, is executive vice president, chief
investment officer--fixed income of ZKI, and formerly, executive vice president
and chief investment officer of an unaffiliated investment management firm.
Frank J. Rachwalski, Jr. (3/26/45), vice president of KP since 1/23/84, is
senior vice president of ZKI.
Harry E. Resis, Jr. (11/24/45), vice president of KDIF and KHYS since 1/21/93,
is senior vice president of ZKI.
Steven H. Reynolds (9/11/43), vice president of KIF, KTEC, KTRF, KGF, KSCF,
KBCF, KVGF and KQEF since 1/18/96, KAGF since 5/30/96 and KAGGF since 11/20/96,
is executive vice president, chief investment officer-equities of ZKI.
Kurt R. Stalzer (5/1/58), vice president of KSCF since 1/21/97 and KAGGF since
9/15/97, is senior vice president of ZKI.
Stephen B. Timbers (8/8/44), president of each Fund since 3/11/95, is president,
chief executive officer, chief investment officer and director of ZKI and
director of ZKDI, ZKVA and LTV Corporation; formerly, president and chief
operating officer of Kemper Corporation. Mr. Timbers is also trustee of each of
the Funds.
Jonathan W. Trutter (11/29/57), vice president of KDIF since 5/05/95, is first
vice president of ZKI.
Richard L. Vandenberg (11/16/49), vice president of KGSF, KARGF, KP and KDIF
since 1/21/97, is senior vice president of ZKI.
Elizabeth C. Werth (10/1/47), assistant secretary of each Fund since 3/17/90, is
vice president and director of state registrations of ZKI.
The officers of each Fund are elected by the Board of the Fund on an annual
basis to serve until their successors are elected and qualified. It is
anticipated that, after consummation of the Transaction, the Boards of
13
<PAGE> 18
the Funds will elect new officers who are expected to include persons currently
affiliated with Scudder.
SHAREHOLDINGS
Set forth in Exhibit B is the number of shares of each Fund owned beneficially
by each trustee and nominee as of August 26, 1997.
As of August 26, 1997, no person is known to the Funds to own beneficially more
than five percent of the shares of any class of any Fund, except as shown in
Exhibit B.
ITEM 2. SELECTION OF INDEPENDENT AUDITORS
A majority of the members of each Board who are not "interested" persons of the
Fund has selected Ernst & Young LLP, independent auditors, to audit the books
and records of the Fund for the current fiscal year. This firm has served in
this capacity for each Fund since the Fund was organized and has no direct or
indirect financial interest in a Fund except as independent auditors. The
selection of Ernst & Young LLP as independent auditors of each Fund is being
submitted to the shareholders for ratification. A representative of Ernst &
Young LLP is expected to be present at the Meeting and will be available to
respond to any appropriate questions raised at the Meeting and may make a
statement.
BOARD OF TRUSTEES RECOMMENDATION
The Board of each Fund recommends that shareholders vote FOR the ratification of
the selection of independent auditors.
ITEM 3. NEW INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Zurich Kemper Investments, Inc. ("ZKI") is the investment adviser and manager
for each Fund. ZKI and its indirect parent, Zurich Insurance Company ("Zurich"),
entered into a transaction agreement with Scudder, Stevens & Clark, Inc.
("Scudder") whereby Zurich will acquire approximately 70% of Scudder. Upon
completion of the Transaction, Scudder will change its name to Scudder Kemper
Investments, Inc. ("SKI") and ZKI will be combined with SKI.
As discussed above, consummation of the Transaction would constitute an
"assignment," as that term is defined in the Investment Company Act of 1940 (the
"1940 Act"), of each Fund's current investment management agreement with ZKI. As
required by the 1940 Act, each current investment management agreement provides
for its automatic termination in the event of its assignment. In anticipation of
the Transaction, a new investment management agreement ("management agreement")
between
14
<PAGE> 19
each Fund and SKI is being proposed for approval by shareholders of each Fund.
(Depending on the timing of the combination of the Scudder and ZKI
organizations, the new investment management agreement may initially be between
the Fund and ZKI for some period following the Transaction and then be
transferred to SKI without further action on the part of shareholders of the
Fund. Accordingly, approval of the new agreement with SKI would also include
approval of any interim agreement with ZKI following the assignment of the
current agreement. SKI or ZKI, as party to the new investment management
agreement, is sometimes referred to in this proxy statement as the "investment
manager.") A copy of the form of the new management agreement is attached hereto
as Exhibit C.
BOARD OF TRUSTEES RECOMMENDATION
The Board of each Fund met on June 30, 1997, August 1-2, 1997, August 18, 1997,
and September 15, 1997 to consider the Transaction and its anticipated effects
upon ZKI and the investment management and other services provided to the Funds
by ZKI and its affiliates. In addition, the Independent Trustees also met
separately with counsel on a number of occasions to discuss the Transaction. On
September 15, 1997 the Board of each Fund, including a majority of the trustees
who are not parties to such agreement or interested persons of any such party,
voted unanimously to approve the new management agreement and to recommend it to
shareholders for their approval.
For information about each Board's deliberations and the reasons for its
recommendation, please see "Board of Trustees Evaluation" near the end of this
Item 3.
The Board of each Fund recommends that shareholders vote FOR approval of the new
management agreement.
THE CURRENT INVESTMENT MANAGEMENT AGREEMENT
Each current management agreement provides that the Fund's investment manager
acts as investment adviser, manages the Fund's investments, administers the
Fund's business affairs, furnishes offices, necessary facilities and equipment,
provides clerical, bookkeeping and administrative services, provides shareholder
and information services and permits any of its officers or employees to serve
without compensation as trustees or officers of the Fund if duly elected to such
positions. Under the current management agreement, the Fund agrees to assume and
pay the charges and expenses of its operations including, by way of example, the
compensation of the trustees other than those affiliated with the investment
manager, charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, of any registrar of the Fund and of the
custodian (including fees for safekeeping of securities), costs of calculating
net asset value, all costs of acquiring and disposing of
15
<PAGE> 20
portfolio securities, interest, if any, on obligations incurred by the Fund,
costs of share certificates, membership dues in the Investment Company Institute
or any similar organization, reports and notices to shareholders, other like
miscellaneous expenses and all taxes and fees to federal, state or other
governmental agencies.
Listed below is the annual management fee rate as a percentage of average daily
net assets payable under the current management agreement for each Fund except
KSCF and KAGGF. KSCF and KAGGF each pay at a base annual management fee rate of
.65% of average daily net assets, subject to upward or downward adjustment on
the basis of the investment performance of the Class A Shares of the Fund
compared with the performance of the Standard & Poor's 500 Stock Index. After
the effect of the adjustment, the management fee rate for the KSCF may range
between .35% and .95% and the management fee rate for the KAGGF may range
between .45% and .85%. (See page 11 of Exhibit C for more information regarding
the computation of KSCF's and KAGGF's management fee.) Exhibit J shows the
management fees paid by each Fund to ZKI for the Fund's most recently completed
fiscal year.
<TABLE>
<CAPTION>
KBCF
KDIF KIMBF
KGF KARGF
KHYF KICPF
KTEC KSTIS
APPLICABLE ASSETS KIF KTRF KUSMF KMBF
PER SERIES ($000) KAGF KGIF KVGF KQEF KSIGF KGSF KCRF
----------------- ---- ---- ---- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$0 - $250,000........ .85% .75% .72% .58% .55% .45% .40%
$250,000 -
$1,000,000......... .82 .72 .69 .55 .52 .43 .38
$1,000,000 -
$2,500,000......... .80 .70 .66 .53 .50 .41 .35
$2,500,000 -
$5,000,000......... .78 .68 .64 .51 .48 .40 .32
$5,000,000 -
$7,500,000......... .75 .65 .60 .48 .45 .38 .30
$7,500,000 -
$10,000,000........ .74 .64 .58 .46 .43 .36 .28
$10,000,000 -
$12,500,000........ .73 .63 .56 .44 .41 .34 .26
Over $12,500,000..... .72 .62 .54 .42 .40 .32 .25
</TABLE>
Except for KMBF, KGSF and KCATF, each management agreement provides that the
Fund's investment manager will reimburse the Fund should the operating expenses
of the Fund, including the investment management fee, but excluding taxes,
interest, distribution fees, extraordinary expenses and brokerage commissions or
transaction costs, and any other properly excludable expenses, exceed on an
annual basis the
16
<PAGE> 21
applicable state expense limitations. Currently, there are no state expense
limitations in effect. As to KMBF, KGSF and KCATF, each management agreement
provides that the Fund's investment manager will reimburse the Fund should
operating expenses of the Fund exceed on an annual basis the following levels:
for KMBF and KGSF, 1% of average daily net assets; and for KCATF, 1.5% of the
first $30 million of average daily net assets and 1% of average daily net assets
over $30 million. For this purpose, operating expenses include the investment
management fee but exclude interest, taxes, extraordinary expenses, brokerage
commissions and transaction costs and distribution fees. The investment
management fee and the expense limitation are computed based upon average daily
net assets of each series.
Each management agreement provides that the Fund's investment manager shall not
be liable for any error of judgment or of law, or for any loss suffered by the
Fund in connection with the matters to which the management agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Fund's investment manager in the performance of its
obligations and duties or by reason of its reckless disregard of its obligations
and duties under the management agreement.
Each management agreement may be terminated for such Fund or series thereof
without penalty upon sixty (60) days written notice by either party, or by a
majority vote of the outstanding shares of the Fund or series thereof, and
automatically terminates in the event of its assignment.
ZKI has acted as investment adviser and manager for each Fund since each Fund,
except KGSF, commenced public offering of its shares as shown below. Also shown
is the date of each current management agreement, the date when the current
management agreement was last approved by the trustees and the shareholders of
each Fund, the purpose of the last submission to shareholders of the current
management agreement and the date to which the current management agreement
continues.
<TABLE>
<CAPTION>
APPROVAL OF CURRENT CURRENT
COMMENCEMENT DATE OF AGREEMENT BY AGREEMENT
OF INVESTMENT CURRENT ----------------------- CONTINUED BY
FUND OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS TRUSTEES TO
---- ------------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
KTEC................. 09/07/48 01/04/96 01/21/97 09/19/95(b) 03/01/98
KTRF................. 03/02/64 01/04/96 01/21/97 09/19/95(b) 03/01/98
KGF.................. 04/04/66 01/04/96 01/21/97 09/19/95(b) 03/01/98
KSCF................. 02/20/69 01/04/96 01/21/97 09/19/95(b) 03/01/98
KICPF................ 04/15/74 01/04/96 01/21/97 09/19/95(b) 03/01/98
KNTIS
KMBF............... 04/20/76 01/04/96 01/21/97 09/19/95(b) 03/01/98
KIMBF.............. 11/01/94 01/04/96 01/21/97 09/19/95(b) 03/01/98
</TABLE>
17
<PAGE> 22
<TABLE>
<CAPTION>
APPROVAL OF CURRENT CURRENT
COMMENCEMENT DATE OF AGREEMENT BY AGREEMENT
OF INVESTMENT CURRENT ----------------------- CONTINUED BY
FUND OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS TRUSTEES TO
---- ------------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
KDIF................. 06/23/77 01/04/96 01/21/97 09/19/95(b) 03/01/98
KHYS
KHYF............... 01/26/78 01/04/96 01/21/97 09/19/95(b) 03/01/98
KGSF................. 10/01/79(a) 01/04/96 01/21/97 09/19/95(b) 03/01/98
KIF.................. 05/21/86 01/04/96 01/21/97 09/19/95(b) 03/01/98
KSTIS
KCATF.............. 02/17/83 01/04/96 01/21/97 09/19/95(b) 03/01/98
KNYTF.............. 12/31/85 01/04/96 01/21/97 09/19/95(b) 03/01/98
KFLTF.............. 04/25/91 01/04/96 01/21/97 09/19/95(b) 03/01/98
KTXTF.............. 11/01/91 01/04/96 01/21/97 09/19/95(b) 03/01/98
KOHTF.............. 03/22/93 01/04/96 01/21/97 09/19/95(b) 03/01/98
KMITF.............. 03/15/95 01/04/96 01/21/97 09/19/95(b) 03/01/98
KNJTF.............. 03/15/95 01/04/96 01/21/97 09/19/95(b) 03/01/98
KPATF.............. 03/15/95 01/04/96 01/21/97 09/19/95(b) 03/01/98
KP
KCRF............... 02/06/84 01/04/96 09/15/97 09/19/95(b) 12/01/98
KUSMF.............. 10/26/84 01/04/96 01/21/97 09/19/95(b) 03/01/98
KSIGF.............. 02/01/89 01/04/96 01/21/97 09/19/95(b) 03/01/98
KARGF 09/01/87 01/04/96 01/21/97 09/19/95(b) 03/01/98
KBCF................. 11/23/87 01/04/96 01/21/97 09/19/95(b) 03/01/98
KGIF................. 10/01/89 01/04/96 01/21/97 09/19/95(b) 03/01/98
KVGF................. 10/16/95 01/04/96 01/21/97 10/15/95(c) 03/01/98
KQEF................. 02/15/96 01/26/96 01/21/97 02/14/96(c) 03/01/98
KAGF................. 10/21/96 10/04/96 05/30/96 10/20/96(c) 03/01/98
KAGGF................ 12/31/96 12/20/96 11/20/96 12/30/96(c) 03/01/98
</TABLE>
- ---------------
(a) Date when ZKI assumed investment management responsibilities.
(b) The current management agreement was last submitted to shareholders for
approval in connection with the Zurich/Kemper merger.
(c) The current management agreement was last submitted to shareholders for
approval by the initial shareholder (i.e., ZKI) immediately prior to the
commencement of the public offering of shares.
SUB-ADVISER--ZIML
KTEC, KTRF, KGF, KSCF, KICPF, KDIF, KHYF, KIF, KBCF, KGIF, KVGF, KQEF, KAGF and
KAGGF each use the investment management services of Zurich Investment
Management Limited ("ZIML"), 1 Fleet Place, London, UK, ECM4 7RQ, an indirect
subsidiary of Zurich and an affiliate of ZKI, with respect to investments in
foreign securities pursuant to the sub-advisory agreements between ZKI and ZIML
described below. The current sub-advisory agreements are dated December 1, 1996,
were last approved for continuation by the Board on September 15, 1997, and will
continue, unless replaced or otherwise terminated, until March 1, 1998.
18
<PAGE> 23
As with the investment management agreements, the sub-advisory agreements with
ZIML will terminate upon consummation of the Transaction. As discussed below,
new sub-advisory agreements are proposed for KIF, KGIF and KAGF. (See "Item 4.
New Sub-Advisory Agreement with Zurich Investment Management Limited.") For
KTEC, KTRF, KGF, KSCF, KICPF, KDIF, KHYF, KBCF, KVGF, KQEF and KAGGF, however,
new sub-advisory agreements are not being proposed; rather, it is expected that
the investment manager would assume responsibility for the portion of those
Fund's assets invested in foreign securities. In addition, as described above,
it is expected that ownership of ZIML will be transferred to SKI or to a direct
or indirect wholly-owned subsidiary of SKI upon consummation of the Transaction.
Under the terms of the Sub-Advisory Agreement for a Fund, ZIML renders
investment advisory and management services with regard to that portion of the
Fund's portfolio as may be allocated to ZIML by ZKI from time to time for
management of foreign securities, including foreign currency transactions and
related investments. For its services, ZIML receives from ZKI (not from the
Funds) a monthly fee at the following annual rates on the portion of the average
daily net assets allocated by ZKI to ZIML for management:
KTEC, KTRF, KGF, KSCF, KIF, KBCF, KVGF, KQEF,
KAGF, KAGGF.............................................................. .35%
KICPF, KDIF, KHYF, KGIF.................................................... .30%
Each Sub-Advisory Agreement provides that ZIML will not be liable for any error
of judgment or mistake of law or for any loss suffered by any Fund in connection
with matters to which the Sub-Advisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
ZIML in the performance of its duties or from reckless disregard by ZIML of its
obligations and duties under the Sub-Advisory Agreement.
Each Sub-Advisory Agreement continues in effect from year to year so long as its
continuation is approved at least annually (a) by a majority of the trustees who
are not parties to such agreement or interested persons of any such party except
in their capacity as trustees of the Fund and (b) by the shareholders or the
Board of Trustees. Each Sub-Advisory Agreement may be terminated at any time for
a Fund upon 60 days notice by ZKI, ZIML or the Board of Trustees or by a
majority vote of the outstanding shares of the Fund, and will terminate
automatically upon assignment or upon the termination of the Fund's investment
management agreement. No sub-advisory fees were paid by ZKI to ZIML for each
Fund's 1996 fiscal year, although in prior fiscal years ZKI has paid ZIML for
its services to ZKI with respect to foreign securities investments of certain
Funds.
19
<PAGE> 24
SUB-ADVISER--ZKVA
KVGF uses the investment management services of Zurich Kemper Value Advisors,
Inc. ("ZKVA") with respect to investments in the value portion of KVGF pursuant
to the sub-advisory agreement between ZKI and ZKVA described below. ZKVA is a
wholly-owned subsidiary of ZKI and is located at 280 Park Avenue, New York, New
York 10017. The current sub-advisory agreement is dated January 4, 1996, was
approved on October 15, 1995, by ZKI as the initial shareholder, was last
approved for continuation by the Board on January 21, 1997, and will continue,
unless replaced or otherwise terminated, until March 1, 1998.
As with the investment management agreements, upon consummation of the
Transaction, the sub-advisory agreement with ZKVA will terminate. As discussed
below, a new sub-advisory agreement with ZKVA is being proposed. (See "Item 5.
New Sub-Advisory Agreement with Zurich Kemper Value Advisors, Inc.") However, it
is expected that, upon consummation of the Transaction or soon thereafter, ZKVA
will be combined with SKI, the separate sub-advisory agreement with ZKVA will be
terminated, and all ZKVA functions will be provided by SKI.
Under the terms of the Sub-Advisory Agreement, ZKVA manages the value portion of
KVGF's portfolio and provides such investment advice, research and assistance as
ZKI may, from time to time, reasonably request. ZKVA may, under the terms of the
Sub-Advisory Agreement, render similar services to others including other
investment companies. For its services, ZKVA receives from ZKI (not from the
Fund) a monthly fee at the annual rate of .25% of KVGF's average daily net
assets. ZKVA permits any of its officers or employees to serve without
compensation as trustees or officers of KVGF if elected to such positions.
The Sub-Advisory Agreement provides that ZKVA will not be liable for any error
of judgment or mistake of law or for any loss suffered by KVGF in connection
with matters to which the Sub-Advisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
ZKVA in the performance of its duties or from reckless disregard by ZKVA of its
obligations and duties under the Sub-Advisory Agreement.
The Sub-Advisory Agreement continues by its terms from year to year if such
continuance is specifically approved at least annually (a) by a majority of
trustees who are not parties to such agreement or interested persons of any such
party except in their capacity as trustees of KVGF, and (b) by the shareholders
or the Board of Trustees of KVGF. The Sub-Advisory Agreement may be terminated
at any time upon 60 days' notice by ZKI, ZKVA or the Board of Trustees of KVGF
or by a majority vote of the outstanding shares of KVGF, and will terminate
automatically
20
<PAGE> 25
upon assignment or upon termination of KVGF's investment management agreement.
The sub-advisory fees paid by ZKI to ZKVA for KVGF for the fiscal year ended
November 30, 1996 were $54,000.
NEW INVESTMENT MANAGEMENT AGREEMENT
The new investment management agreement for each Fund is substantially similar
to the current investment management agreement. While the form of the agreement
is different (i.e., a form generally used by Scudder), there is no material
difference in the substance of the obligations of the investment manager under
the agreement except that, under a separate agreement with Scudder Fund
Accounting Corporation ("SFAC"), a subsidiary of Scudder, SFAC, rather than the
Fund's investment manager, will compute the net asset value for each Fund. SFAC
will not charge the Funds for this service and has no current intention to do
so; however, subject to Board approval, at some time in the future, SFAC may
seek payment for its services under the agreement. In addition, except for KSCF
and KAGGF, the management fee under the new agreement is paid at the end of each
month and is computed as 1/12 of the applicable annual rate based upon the
average daily net assets for such month; whereas, under the current agreement,
the management fee is paid at the end of each month and is computed at the
annual rate based upon the average daily net assets. While the annual rates are
the same under the current and new agreements, depending upon the level of net
assets at any time, the fees paid may differ. For KSCF and KAGGF, the management
fee will continue on the same basis as under the current agreement as if there
were no termination of the current agreement. Also, for each Fund except KMBF,
KGSF and KCATF, the expense limitation has been deleted because there are no
longer any state expense limitations in effect.
The new management agreement for each Fund will be dated as of the date of the
consummation of the Transaction, which is expected to occur in the fourth
quarter of 1997, but in no event later than February 28, 1998. The new
management agreement will be for an initial term ending on the same date as
would the current management agreement but for the Transaction, and may continue
thereafter from year to year if specifically approved at least annually by the
vote of "a majority of the outstanding voting securities" of such Fund, as
defined under the 1940 Act, or by the Board and, in either event, the vote of a
majority of the trustees who are not parties to the agreement or interested
persons of any such party, cast in person at a meeting called for such purpose.
BOARD OF TRUSTEES EVALUATION
On June 27, 1997, the Board of each Fund was informed of the Transaction.
Thereafter, each Board was given extensive information
21
<PAGE> 26
about the Transaction and Scudder. The Boards met with senior management
personnel of Zurich and Scudder and had extended discussions regarding Zurich's
and Scudder's plans for ZKI, SKI and the Funds. Throughout the process, the
Independent Trustees of each Board had the assistance of legal counsel, who
prepared, among other things, an analysis of the Board's fiduciary obligations.
The Boards met on June 30, 1997, August 1-2, 1997, August 18, 1997 and September
15, 1997 to consider the Transaction and its effects on the Funds. The
Independent Trustees also met separately with counsel on a number of occasions
to discuss the Transaction. As a result of its review and consideration of the
Transaction and the proposed new management agreements, at its meeting on
September 15, 1997, the Board of each Fund voted unanimously to approve the new
management agreement and to recommend it to the shareholders of each Fund for
their approval.
In connection with its review, each Board obtained substantial information
regarding: the management, financial position and business of Scudder; the
history of Scudder's business and operations; the investment performance of the
investment companies and private accounts advised by Scudder; the anticipated
effect of the Transaction on the Funds and their shareholders; and future plans
of Zurich and Scudder with respect to ZKI, SKI and the Funds. Each Board also
received information regarding the terms of the Transaction and comprehensive
financial information, including: employment agreements with senior Scudder
executives; incentive stock compensation to be given to key ZKI personnel; and
anticipated SKI management and board of directors.
In connection with their deliberations, the Boards of the Funds obtained certain
assurances from Zurich and Scudder, including the following:
- - Zurich and Scudder have provided to the Boards such information as is
reasonably necessary to evaluate the new management and other agreements.
- - Zurich looks upon SKI as the core of Zurich's global asset management
strategy. With that focus, Zurich will devote to SKI and its affairs all
attention and resources that are necessary to provide for each Fund top
quality investment management, shareholder, administrative and product
distribution services.
- - Scudder looks upon the Kemper Funds as a core part of Scudder's global asset
management strategy. With that focus, Scudder will devote to the Kemper Funds
and their affairs all attention and resources that are necessary to provide
for each Fund top quality investment management, shareholder, administrative
and product distribution services.
- - The Transaction will not result in any change in any Fund's investment
objectives or policies.
22
<PAGE> 27
- - The Transaction is not expected to result in any adverse change in the
investment management or operations of the Funds; and neither Zurich nor
Scudder plans to make any material change in the manner in which investment
advisory services or other services are rendered to each Fund which has the
potential to have a material adverse effect upon any Fund.
- - Zurich and Scudder are committed to the continuance, without interruption, of
services to the Funds of the type and quality currently provided by ZKI and
its subsidiaries, or superior thereto.
- - Zurich and Scudder plan to maintain or enhance the SKI facilities and
organization.
- - In order to retain and attract key personnel, Zurich and Scudder intend for
SKI to maintain overall compensation policies and practices at market levels
or better.
- - Zurich and Scudder intend to maintain the distinct brand identity of the
Kemper and Scudder Funds and are committed to strengthening and enhancing both
brands and the distribution channels for both families of Funds, while
maintaining their separate brand identity.
- - Scudder has in place a detailed and comprehensive plan of action to
effectively deal with the year 2000 issue for all SKI operations. The Kemper
Funds will not be transferred from their current systems unless certain
conditions are met.
- - Zurich and Scudder will promptly advise the Boards of decisions materially
affecting the SKI organization as they relate to the Funds. Neither this, nor
any of the other above commitments will be altered by Zurich or Scudder
without the Board's prior consideration.
Zurich and Scudder assured each Board that they intend to comply with Section
15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of its affiliated persons to
receive any amount or benefit in connection with a change in control of the
investment adviser so long as two conditions are met. First, for a period of
three years after the Transaction, at least 75% of the board members of the
investment company must not be "interested persons" of such investment adviser.
The composition of the Board of each Fund, currently and as proposed, would be
in compliance with this provision of Section 15(f). (See Item 1--"Election of
Board of Trustees.") Second, an "unfair burden" must not be imposed upon the
investment company as a result of such transaction or any express or implied
terms, conditions or understandings applicable thereto. The term "unfair burden"
is defined in Section 15(f) to include any arrangement during the two-year
period after the Transaction whereby the investment adviser, or any interested
person of any such adviser, receives or is entitled
23
<PAGE> 28
to receive any compensation, directly or indirectly, from the investment company
or its shareholders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter for such
investment company). Zurich and Scudder are not aware of any express or implied
term, condition, arrangement or understanding that would impose an "unfair
burden" on any Fund as a result of the Transaction. Zurich and Scudder have
agreed that they, and their affiliates, will take no action that would have the
effect of imposing an "unfair burden" on any Fund as a result of the
Transaction. In furtherance thereof, ZKI has undertaken to pay the costs of
preparing and distributing proxy materials to and of holding the meetings of the
Funds' shareholders as well as other fees and expenses in connection with the
Transaction, including the fees and expenses of legal counsel to the Funds and
the Independent Trustees, and Zurich has agreed to indemnify each Fund and the
Independent Trustees for and against any liability and expenses based upon any
action or omission by the Independent Trustees in connection with their
consideration of and action with respect to the Transaction. In addition,
Scudder has agreed to indemnify each Fund and the Independent Trustees for and
against any liability and expenses based upon any misstatements or omissions by
Scudder to the Independent Trustees in connection with their consideration of
the Transaction.
In evaluating each new management agreement, each Board took into account that
the fees and expenses payable by each Fund under the new management agreement
are the same as under the current management agreement, that the services
provided to the Fund are the same (except for services to be provided under a
separate Fund Accounting Agreement as described above) and that the other terms
are substantially similar. Each Board also took into consideration the extent to
which portfolio managers and research personnel would continue their functions
with SKI. Each Board also considered Scudder's representation that the Funds'
shareholder service providers and the terms of the shareholder service
agreements were not being proposed to be changed. Each Board noted that, in
previously approving the continuation of the current management agreements, the
Board had considered a number of factors, including the nature and quality of
services provided by ZKI; investment performance, both of the Fund itself and
relative to that of competitive investment companies; investment management fees
and expense ratios of the Fund and competitive investment companies; ZKI
profitability from managing the Funds; fall-out benefits to ZKI from its
relationship to the Funds, including revenues derived from services provided to
the Funds by affiliates of ZKI; and the potential benefits to ZKI and to the
Funds and their shareholders of receiving research services from broker/dealer
firms in connection with the allocation of portfolio transactions to such firms.
24
<PAGE> 29
The Board also considered that while Scudder is authorized to pay a commission
that is higher than the lowest available in order to receive research
assistance, Scudder does not negotiate arrangements pursuant to which Scudder
receives specific research products or services in exchange for the expectation
that Scudder will direct a specified amount of brokerage commissions to
particular broker-dealers.
The Board discussed the Transaction with the senior management of ZKI, Scudder
and Zurich and among themselves. The Board considered that Zurich is a large,
well-established company with substantial resources, and, as noted above, has
undertaken to devote such resources to SKI as are necessary to provide each Fund
with top quality services. The Board also considered that Scudder is a large,
well-established investment advisory firm with a substantial number of highly
rated funds.
As a result of their review and consideration of the Transaction and the new
management agreements, at its meeting on September 15, 1997, the Board of each
Fund voted unanimously to approve the new management agreement and to recommend
it to the shareholders of the Fund for their approval.
The Board of each Fund recommends that shareholders vote FOR approval of the new
management agreement.
ITEM 4. NEW SUB-ADVISORY AGREEMENT
WITH ZURICH INVESTMENT MANAGEMENT LIMITED
(FOR KIF, KGIF, AND KAGF ONLY.)
Zurich Investment Management Limited ("ZIML") is the sub-adviser for KIF, KGIF
and KAGF. As noted above, the consummation of the Transaction and the ZIML
Transaction each would constitute an "assignment," as defined in the 1940 Act,
of each Fund's current sub-advisory agreement with ZIML. As required by the 1940
Act, each current sub-advisory agreement provides for its automatic termination
in the event of its assignment. In anticipation of the Transaction and the ZIML
Transaction, a new sub-advisory agreement with ZIML is being proposed for
approval by the shareholders of each Fund. The new sub-advisory agreement with
ZIML is on the same terms as the current sub-advisory agreement. A vote in favor
of Item 4 will approve both the new sub-advisory agreement with ZIML to be
effective at the time of the Transaction as well as the sub-advisory agreement
with ZIML to be effective at the time of the ZIML Transaction. A copy of the new
sub-advisory agreement is attached hereto as Exhibit D.
A new sub-advisory agreement will be dated as of the date of the consummation of
the Transaction or the ZIML Transaction and will be in effect for an initial
term ending on the same date as would the current sub-advisory agreement but for
the Transaction (or ZIML Transaction),
25
<PAGE> 30
and may continue thereafter from year to year if such continuance is
specifically approved at least annually by the vote of a "majority of the
outstanding voting securities" of each of the Funds, as defined under the 1940
Act, or the Board, including, in either event, the vote of a majority of the
trustees who are not parties to the agreement or interested persons of any such
party, cast in person at a meeting called for such a purpose.
BOARD OF TRUSTEES RECOMMENDATION
The Board of each Fund recommends that shareholders vote FOR approval of the new
sub-advisory agreement with ZIML.
ITEM 5. NEW SUB-ADVISORY AGREEMENT WITH
ZURICH KEMPER VALUE ADVISORS, INC.
(FOR KVGF ONLY.)
Zurich Kemper Value Advisors, Inc. ("ZKVA") is the sub-adviser for KVGF. As
noted above, the consummation of the Transaction would constitute an
"assignment," as defined in the 1940 Act, of KVGF's current sub-advisory
agreement with ZKVA. As required by the 1940 Act, the current sub-advisory
agreement provides for its automatic termination in the event of its assignment.
In anticipation of the Transaction, a new sub-advisory agreement with ZKVA is
being proposed for approval by the shareholders of KVGF. The new sub-advisory
agreement with ZKVA is on the same terms as the current sub-advisory agreement.
A copy of the new sub-advisory agreement is attached hereto as Exhibit E.
The new sub-advisory agreement will be dated as of the date of the consummation
of the Transaction and will be in effect for an initial term ending on the same
date as would the current sub-advisory agreement but for the Transaction, and
may continue thereafter from year to year if such continuance is specifically
approved at least annually by vote of a "majority of the outstanding voting
securities" of KVGF, as defined under the 1940 Act, or the Board, including, in
either event, the vote of a majority of the trustees who are not parties to the
agreement or interested persons of any such party, cast in person at a meeting
called for such purpose. It is expected, however, that upon consummation of the
Transaction or soon thereafter, ZKVA will be combined with SKI, the separate
sub-advisory agreement with ZKVA will be terminated and all ZKVA functions will
be provided by SKI.
BOARD OF TRUSTEES RECOMMENDATION
The Board of KVGF recommends that shareholders vote FOR approval of the new
sub-advisory agreement with ZKVA.
26
<PAGE> 31
ITEM 6. NEW RULE 12B-1 DISTRIBUTION PLAN
(FOR CLASS B AND CLASS C SHAREHOLDERS ONLY)
INTRODUCTION
Rule 12b-1 under the 1940 Act (the "Rule"), provides, among other things, that
an investment company (mutual fund) may bear expenses of distributing its shares
only pursuant to a plan (a "Rule 12b-1 Plan") adopted in accordance with the
Rule. Zurich Kemper Distributors, Inc. ("ZKDI"), acting as principal underwriter
and distributor for each Fund, distributes each Fund's Class B Shares and Class
C Shares pursuant to a Rule 12b-1 Plan.
Consummation of the Transaction may constitute an "assignment," as that term is
defined in the 1940 Act, of each Fund's Rule 12b-1 Plan, which provides for its
automatic termination in the event of its assignment. In anticipation of the
Transaction a new Rule 12b-1 Plan is being submitted for shareholder approval of
each Fund's Class B and Class C shareholders. THE NEW RULE 12B-1 PLAN IS ON THE
SAME TERMS AS THE FUND'S CURRENT RULE 12B-1 PLAN. A form of the new Rule 12b-1
Plan for each Fund is attached hereto as Exhibit F. NO CHANGE IN FEES IS BEING
PROPOSED.
On September 15, 1997, the Board of each Fund, including a majority of the
"non-interested" trustees, voted unanimously to approve the new Rule 12b-1 Plan
for each Fund, and directed that it be submitted to the Class B and Class C
shareholders of each Fund at the Meeting, along with a recommendation that they
approve the Rule 12b-1 Plan.
If the new Rule 12b-1 Plan is approved by a class, it will become effective for
that class and will replace the current Rule 12b-1 Plan upon consummation of the
Transaction.
DESCRIPTION OF THE NEW RULE 12B-1 PLAN
As noted above, a form of the new Rule 12b-1 Plan is attached as Exhibit F and
this summary is qualified in its entirety by reference to Exhibit F. THE NEW
RULE 12B-1 PLAN DESCRIBED BELOW IS ON THE SAME TERMS AS THE CURRENT RULE 12B-1
PLAN FOR EACH FUND.
Under each Fund's Rule 12b-1 Plan, ZKDI receives a distribution fee, payable as
an expense of the Class B Shares and the Class C Shares, which ZKDI uses to pay
for distribution services for those classes. ZKDI bears all the expenses of
providing such services, including the payment of any commissions or
distribution fees. ZKDI provides for the preparation of advertising or sales
literature and bears the cost of printing and mailing prospectuses to persons
other than shareholders. ZKDI bears the cost of qualifying and maintaining the
qualification of Fund Shares for sale under the securities laws of the various
states, and each Fund bears the expense of registering its Shares with the SEC.
ZKDI may enter into related selling
27
<PAGE> 32
group agreements with various broker-dealers, including affiliates of ZKDI, that
provide distribution services to investors. ZKDI also may provide some of the
distribution services. (See "Other Information--Underwriter" below.)
CLASS B SHARES. Each Fund's Class B Shares are sold to the public at net asset
value with a contingent deferred sales charge ("CDSC"), and automatic conversion
to Class A after a specified period of time. ZKDI receives a fee from each Fund,
payable monthly, at the annual rate of .75 of 1% of average daily net assets of
each Fund attributable to Class B Shares. This fee is accrued daily as an
expense of Class B Shares. ZKDI also receives any CDSC. ZKDI currently
compensates firms for sales of Class B Shares at a commission rate of 3.75%.
CLASS C SHARES. Each Fund's Class C Shares are sold to the public at net asset
value with a CDSC for shares redeemed during the first year following purchase.
ZKDI receives a fee from each Fund, payable monthly for as long as the shares
are owned, at the annual rate of .75 of 1% of average daily net assets of each
Fund attributable to Class C Shares. This fee is accrued daily as an expense of
Class C Shares. ZKDI also receives any CDSC. ZKDI currently pays firms for sales
of Class C Shares a distribution fee, payable quarterly, at an annual rate of
.75 of 1% of net assets attributable to Class C Shares maintained and serviced
by the firm. A firm becomes eligible for the distribution fee based upon assets
in accounts in the month of purchase and the fee continues until terminated by
ZKDI or a Fund.
The table below shows, as to the Rule 12b-1 Plan for the Class B Shares and the
Class C Shares of each Fund, the date adopted, the date last approved by the
trustees and the date to which it continues.
<TABLE>
<CAPTION>
CLASS B AND CLASS C RULE 12B-1 PLAN
-------------------------------------------
DATE APPROVAL BY DATE
FUND ADOPTED TRUSTEES CONTINUED TO
---- ------- ----------- ------------
<S> <C> <C> <C>
KTEC...................... 01/04/96 01/21/97 03/01/98
KTRF...................... 01/04/96 01/21/97 03/01/98
KGF....................... 01/04/96 01/21/97 03/01/98
KSCF...................... 01/04/96 01/21/97 03/01/98
KICPF..................... 01/04/96 01/21/97 03/01/98
KNTIS
KMBF.................... 01/04/96 01/21/97 03/01/98
KIMBF................... 01/04/96 01/21/97 03/01/98
KDIF...................... 01/04/96 01/21/97 03/01/98
KHYS
KHYF.................... 01/04/96 01/21/97 03/01/98
KGSF.................... 01/04/96 01/21/97 03/01/98
KIF..................... 01/04/96 01/21/97 03/01/98
</TABLE>
28
<PAGE> 33
<TABLE>
<CAPTION>
CLASS B AND CLASS C RULE 12B-1 PLAN
-------------------------------------------
DATE APPROVAL BY DATE
FUND ADOPTED TRUSTEES CONTINUED TO
---- ------- ----------- ------------
<S> <C> <C> <C>
KSTIS
KCATF................... 01/04/96 01/21/97 03/01/98
KNYTF................... 01/04/96 01/21/97 03/01/98
KFLTF................... 01/04/96 01/21/97 03/01/98
KTXTF................... 01/04/96 01/21/97 03/01/98
KOHTF................... 01/04/96 01/21/97 03/01/98
KMITF................... 01/04/96 01/21/97 03/01/98
KNJTF................... 01/04/96 01/21/97 03/01/98
KPATF................... 01/04/96 01/21/97 03/01/98
KP
KCRF.................... 01/04/96 09/15/97 12/01/98
KUSMF................... 01/04/96 01/21/97 03/01/98
KSIGF................... 01/04/96 01/21/97 03/01/98
KARGF..................... 01/04/96 01/21/97 03/01/98
KBCF...................... 01/04/96 01/21/97 03/01/98
KGIF...................... 01/04/96 01/21/97 03/01/98
KVGF...................... 10/16/95 01/21/97 03/01/98
KQEF...................... 02/15/96 01/21/97 03/01/98
KAGF...................... 10/21/96 09/15/97 03/01/98
KAGGF..................... 12/31/96 09/15/97 03/01/98
</TABLE>
The table below shows the distribution fees paid by each Fund to ZKDI for its
Class B Shares and Class C Shares for the most recent fiscal year of that Fund.
Information is not provided for KAGF and KAGGF because they recently commenced
operations and do not yet have fiscal year data.
<TABLE>
<CAPTION>
CLASS B RULE 12B-1 PLAN FEES CLASS C RULE 12B-1 PLAN FEES
FISCAL PAID TO ZKDI BY FUND PAID TO ZKDI BY FUND
FUND YEAR END ($000) ($000)
---- -------- ---------------------------- ----------------------------
<S> <C> <C> <C>
KTEC................. 10/31/96 $ 413 $ 21
KTRF................. 10/31/96 8,464 60
KGF.................. 09/30/96 6,149 57
KSCF................. 09/30/96 1,743 35
KICPF................ 10/31/96 572 31
KNTIS
KMBF............... 09/30/96 285 20
KIMBF.............. 09/30/96 27 6
KDIF................. 10/31/96 1,909 33
KHYS
KHYF............... 09/30/96 7,450 245
KGSF................. 10/31/96 475 51
KIF.................. 10/31/96 541 32
</TABLE>
29
<PAGE> 34
<TABLE>
<CAPTION>
CLASS B RULE 12B-1 PLAN FEES CLASS C RULE 12B-1 PLAN FEES
FISCAL PAID TO ZKDI BY FUND PAID TO ZKDI BY FUND
FUND YEAR END ($000) ($000)
---- -------- ---------------------------- ----------------------------
<S> <C> <C> <C>
KSTIS
KCATF.............. 08/31/97 $ 166 $ 10
KNYTF.............. 08/31/97 67 16
KFLTF.............. 08/31/97 27 3
KTXTF.............. 08/31/97 5 2
KOHTF.............. 08/31/97 63 3
KMITF.............. 08/31/97 7 1
KNJTF.............. 08/31/97 20 1
KPATF.............. 08/31/97 13 3
KP
KCRF............... 09/30/96 1,380 48
KUSMF.............. 09/30/96 9,328 12
KSIGF.............. 09/30/96 1,403 25
KARGF................ 08/31/97 51 9
KBCF................. 10/31/96 233 12
KGIF................. 12/31/96 347 4
KVGF................. 11/30/96 65 2
KQEF(a).............. 11/30/96 3 3
</TABLE>
- ---------------
(a) For the period February 15, 1996 (commencement of operations) to November
30, 1996.
The new Rule 12b-1 Plan will be in effect for an initial term ending on the same
date as would the current Rule 12b-1 Plan but for the Transaction and may
continue thereafter from year to year for a class if specifically approved at
least annually by vote of "a majority of the outstanding voting securities" of
that class, as defined under the 1940 Act, or by the Board, including, in either
event, the vote of a majority of the "non-interested" trustees, cast in person
at a meeting called for such purpose.
Pursuant to the new Rule 12b-1 Plan, ZKDI will prepare reports to the Board of a
Fund on a quarterly basis for the Fund's Class B Shares and Class C Shares
showing the amounts paid to the various firms and such other information as from
time to time the Board may reasonably request. The Rule requires the Board to
review such reports at least quarterly.
In approving the new Rule 12b-1 Plan, the Board of each Fund determined, as with
the current Rule 12b-1 Plan, that there is a reasonable likelihood that the new
Rule 12b-1 Plan would benefit the Fund and its shareholders. In doing so, each
Board considered several factors, including that the new Rule 12b-1 Plan would
(i) enable investors to choose the purchasing option best suited to their
individual situations, thereby encouraging current shareholders to make
additional investments in each Fund and attracting new investors and assets to
the Funds to the benefit of
30
<PAGE> 35
each Fund and its shareholders, (ii) facilitate distribution of each Fund's
shares, (iii) help maintain the competitive position of each Fund in relation to
other funds that have implemented or are seeking to implement similar
distribution arrangements, and (iv) permit possible economies of scale through
increased Fund size.
BOARD OF TRUSTEES RECOMMENDATION
As a result of its consideration of the foregoing factors, the Board of each
Fund voted unanimously to approve the new Rule 12b-1 Plans and to submit them to
the shareholders for their approval.
The Board of each Fund recommends that shareholders vote FOR approval of the new
Rule 12b-1 Plan.
ITEM 7. CHANGES TO EACH FUND'S FUNDAMENTAL INVESTMENT POLICIES TO PERMIT A
MASTER FUND/FEEDER FUND STRUCTURE
For greater investment flexibility, ZKI has recommended that each Fund make
certain changes to its fundamental investment policies to permit the Fund to
invest all or substantially all of its investable assets, except to the extent
required to remain uninvested to satisfy near-term cash requirements, in an
open-end management investment company having the same investment objectives and
substantially similar policies and restrictions as the Fund (a "Master Fund").
The proposed fundamental investment policies are set forth in Exhibit G.
The proposed changes to each Fund's fundamental investment policies would permit
the Fund to adopt a "Master Fund/Feeder Fund Structure." Rather than investing
directly in a portfolio of securities, a Fund would be authorized to pool its
assets with other mutual funds for investment in a Master Fund, making it a
"Feeder Fund." A purpose of such an arrangement is to achieve operational
efficiencies, assuming that the assets of the Master Fund are greater than the
assets of any individual Feeder Fund. While each Board has not determined that
any Fund should convert to a Master Fund/Feeder Fund Structure at this time,
each Board believes it could be in the best interests of some or all Funds at
some future date, and in that case the Board could do so without further
approval by shareholders.
If the proposed changes in the investment policies are approved by shareholders
of a Fund, the Fund's Board could vote at some time in the future to convert
that Fund into a Feeder Fund under which all or substantially all of the
investment assets of the Fund would be invested in a Master Fund. The Feeder
Fund would transfer its assets to a Master Fund in exchange for an interest in
the Master Fund having the same net asset value as the value of the assets
transferred. (The ownership interests of the Fund's shareholders will not be
altered by this change.)
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<PAGE> 36
Under each Fund's Declaration of Trust, the affirmative vote of the shareholders
of the affected series entitled to vote more than fifty percent of the votes
entitled to be cast on the matter is required to sell or transfer substantially
all of the assets of the Fund. One way to convert a Fund to a Master Fund/Feeder
Fund Structure is through a sale or transfer of assets. Thus, approval to
convert a Fund into a Master/Feeder Fund Structure through a sale or transfer of
assets requires, under a conservative interpretation of each Fund's Declaration
of Trust, the affirmative vote of a majority of the shares of the Fund (or the
affected series of the Fund, if applicable). Approval of Item 7 by shareholders
is also, therefore, deemed to constitute approval of the Board's discretionary
authority to convert a Fund into a Master Fund/Feeder Fund Structure through a
sale or transfer of assets.
Any Master Fund in which a Feeder Fund would invest would be required to have
the same investment objective and substantially similar policies and
restrictions as the Feeder Fund. Accordingly, by investing in a Master Fund, a
Feeder Fund would continue to pursue its present investment objectives and
policies in substantially the same manner as it does currently, except that it
would do so through its investment in the Master Fund rather than through direct
investments in the types of securities dictated by its investment objectives and
policies. The Master Fund, whose shares could be offered to institutional
investors in addition to a Feeder Fund, would invest in the same type of
securities in which the Fund would have invested directly, providing
substantially the same investment results to the Feeder Fund's shareholders.
However, the expense ratios, the yields, and the total returns of other
investors in the Master Fund may be different from those of the Feeder Fund due
to differences in Feeder Fund expenses.
By investing substantially all of its assets in a Master Fund, a Feeder Fund may
be in a position to realize directly or indirectly certain economies of scale,
in that a larger investment portfolio resulting from multiple Feeder Funds is
expected to achieve a lower ratio of operating expenses to net assets. A Master
Fund may be offered to an undetermined number of institutional investors.
However, there can be no assurance that any such additional investments in a
Master Fund by other Feeder Funds will take place or that economies of scale may
be realized.
If a Fund invests substantially all of its assets in a Master Fund, the Fund may
no longer require active portfolio management services. In this event, if the
shareholders of a Fund approve the proposed policy changes and the Board
converts the Fund into a Feeder Fund, then the existing investment management
agreement may be terminated or no fee would be charged; in such case, the Fund's
Board would likely enter into an administration agreement for the provision of
certain administrative services to the Fund, likely including those currently
provided under the
32
<PAGE> 37
existing investment management agreement, with compensation at such rates as may
be approved by the Board.
MASTER FUNDS. The investment objective of any Master Fund would be the same as
the investment objective of the applicable Feeder Fund that would invest in it.
If a Fund's Board votes to convert a Fund into a Feeder Fund, the Fund's assets
will no longer be directly invested in the securities of multiple issuers, but
rather will be invested in the securities of a single issuer, i.e., the Master
Fund, which would be registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). A Master
Fund may have a different Board than the Feeder Fund.
A Feeder Fund may withdraw its investment in a Master Fund at any time if the
Board determines that it is in the best interest of the shareholders of the
Feeder Fund to do so or if the investment policies or restrictions of the Master
Fund were changed so that they were inconsistent with the policies and
restrictions of the Feeder Fund. Upon any such withdrawal, the Board of the
Feeder Fund would consider what action might be taken, including the investment
of all the assets of the Feeder Fund in another pooled investment entity having
substantially the same investment objective as the Feeder Fund or the retaining
of an investment adviser to directly invest the Fund's assets in accordance with
its investment objective and policies. If another pooled investment vehicle with
substantially the same investment objective could not be found, it might have a
significant impact on the investment of shareholders in the Feeder Fund.
Whenever a Feeder Fund is asked to vote on a proposal by the Master Fund, the
Feeder Fund will hold a meeting of shareholders if required by applicable law or
its policies, and cast its vote with respect to the Master Fund in the same
proportion as its shareholders vote on the proposal.
Once its assets are invested in a Master Fund, a Feeder Fund will value its
holdings (i.e., shares issued by the Master Fund) at their fair value, which
will be based upon the daily net asset value of the Master Fund. The net income
of the Feeder Fund will be determined at the same time and on the same days as
the net income of the Master Fund is determined, which are the same time and
days that the Feeder Fund uses for this purpose.
TAX CONSIDERATIONS. The implementation of the proposed new Master Fund/Feeder
Fund structure is not expected to have any adverse tax effects on the Fund or
its shareholders.
Each Feeder Fund would be expected to intend to continue to qualify and elect to
be treated as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). To so qualify, a Feeder
Fund must meet certain income,
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<PAGE> 38
distribution, and diversification requirements. It is expected that any Feeder
Fund's investment in a Master Fund will satisfy these requirements. Provided
each Feeder Fund meets these requirements and distributes all of its net
investment income and realized capital gains to its shareholders in accordance
with the timing requirements imposed by the Code, the Feeder Fund will not pay
any Federal income or excise taxes.
BOARD OF TRUSTEES RECOMMENDATION
As a result of its consideration of the foregoing facts, the Board of each Fund
voted unanimously to approve the change in fundamental investment policies to
permit a Master/Feeder fund structure conversion at the Board's discretion and
to submit them to the shareholders for their approval.
The Board of each Fund recommends that shareholders vote FOR approval of the new
fundamental investment policies permitting conversion, at the Board's
discretion, into a Master Fund/Feeder Fund structure.
OTHER INFORMATION
ZKI. Zurich Kemper Investments, Inc. ("ZKI"), 222 South Riverside Plaza,
Chicago, Illinois 60606, is the investment manager of each Fund and provides
each Fund with continuous professional investment supervision. ZKI is one of the
largest investment managers in the country and has been engaged in the
management of investment funds for more than forty-nine years. ZKI and its
affiliates provide investment advice and manage investment portfolios for the
Kemper Funds, affiliated insurance companies and other corporate, pension,
profit-sharing and individual accounts representing approximately $85 billion
under management. ZKI acts as investment manager or principal underwriter for 32
open-end and seven closed-end investment companies, with 86 separate investment
portfolios, representing more than 2.5 million shareholder accounts. ZKI is an
indirect subsidiary of Zurich Insurance Company, a leading internationally
recognized provider of insurance and financial services in property/casualty and
life insurance, reinsurance and structured financial solutions as well as asset
management ("Zurich").
The investment companies to which ZKI and its affiliates render investment
management services, and the related management fees, are identified in Exhibit
H.
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<PAGE> 39
The names, addresses and principal occupations of the principal executive
officer and the directors of ZKI are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Stephen B. Timbers, Chief Executive President, Chief Executive
Officer and Director Officer and Chief Investment
222 South Riverside Plaza Officer, ZKI
Chicago, Illinois 60606
John E. Neal, Director President, Kemper Funds Group
222 South Riverside Plaza
Chicago, Illinois 60606
William E. Chapman II, Director President, Kemper Retirement
222 South Riverside Plaza Plans Group
Chicago, Illinois 60606
</TABLE>
ZIML. Zurich Investment Management Limited ("ZIML"), 1 Fleet Place, London, U.K.
EC4M 7RQ, is an indirect subsidiary of Zurich. The names, addresses and
principal occupations of the principal executive officer and the directors of
ZIML are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Dennis H. Ferro, Chief Executive Chief Executive Officer and
Officer and Director Managing Director--Equities,
1 Fleet Place ZIML
London, U.K. EC4M 7RQ
Gordon K. Johns, Director Managing Director, ZIML
1 Fleet Place
London, U.K. EC4M 7RQ
Laurence W. Cheng, Director Member of Corporate Executive
1 Fleet Place Board and Chief Investment
London, U.K. EC4M 7RQ Officer for Investments and
International Asset Management,
Zurich
Richard D. W. Hass, Director Finance Director, Compliance
1 Fleet Place Officer and Joint Secretary,
London, U.K. EC4M 7RQ ZIML
</TABLE>
ZKVA. Zurich Kemper Value Advisors, Inc. ("ZKVA"), 280 Park Avenue, New York,
New York 10017, is a wholly-owned subsidiary of ZKI.
35
<PAGE> 40
The names, addresses and principal occupations of the principal executive
officer and the directors of ZKVA are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
George Keith, Chief Executive Officer President and Chief Executive
280 Park Avenue Officer, ZKVA
40th Floor
New York, New York 10017
Stephen B. Timbers, Director President, Chief Executive
222 South Riverside Plaza Officer and Chief Investment
Chicago, Illinois 60606 Officer, ZKI
John E. Neal, Director President, Kemper Funds Group
222 South Riverside Plaza
Chicago, Illinois 60606
</TABLE>
TRANSFER AGENT AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105 is the Funds'
transfer agent and dividend-paying agent. Pursuant to a services agreement with
IFTC, Zurich Kemper Service Company ("ZKSC"), an affiliate of ZKI, serves as
"Shareholder Service Agent" of the Funds and, as such, performs all of IFTC's
duties as transfer agent and dividend-paying agent. IFTC receives as transfer
agent, and pays to ZKSC, annual account fees of $6 per account (a maximum of $8
for KNTIS, KSTIS and KCRF accounts) plus account set up, maintenance,
transaction and out-of-pocket expense reimbursement. For the most recently
completed fiscal year IFTC remitted shareholder service fees to ZKSC as set
forth in Exhibit J. It is anticipated that ZKSC will continue to provide
transfer agent services after consummation of the Transaction.
ADMINISTRATIVE SERVICES. Zurich Kemper Distributors, Inc. ("ZKDI") provides
information and administrative services for shareholders of the Funds pursuant
to administrative services agreements ("administrative agreements"). ZKDI may
enter into related arrangements with various broker-dealer firms and other
service or administrative firms ("firms"), that provide services and facilities
for their customers or clients who are investors of the Funds. Such
administrative services and assistance may include, but are not limited to,
establishing and maintaining shareholder accounts and records, processing
purchase and redemption transactions, answering routine inquiries regarding the
Funds and their special features, and such other services as may be agreed upon
from time to time and permitted by applicable statute, rule or regulation. ZKDI
bears all its expenses of providing services pursuant to the administrative
agreement, including the payment of any service fees. For services under the
administrative agreements, each Fund pays ZKDI a fee, payable monthly, at the
annual rate of up to .25 of 1% of average daily net assets of the Fund.
36
<PAGE> 41
ZKDI then pays each firm a service fee at an annual rate of up to .25 of 1% of
net assets of those accounts in each Fund that it maintains and services, in
accordance with the schedule set forth in Exhibit J. The fees are calculated
monthly and payable quarterly until terminated by ZKDI or the Fund. Firms to
which service fees may be paid include broker-dealers affiliated with ZKDI.
ZKDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreements not paid to firms to compensate
itself for administrative functions performed for the Funds. Currently, however,
the administrative services fee payable to ZKDI is based only upon Fund assets
in accounts for which there is a firm listed on a Fund's records and it is
intended that ZKDI will pay all the administrative services fee that it receives
from each Fund to firms in the form of service fees. The effective
administrative services fee rate to be charged against all assets of the Funds
while this procedure is in effect will depend upon the proportion of Fund assets
in accounts for which there is a firm of record, as well as (for KARGF, KDIF,
KGIF, KGSF, KHYS, KICPF, KNTIS and KSTIS) the date when shares representing such
assets were purchased. The Board of a Fund may, in the future, approve basing
the fee to ZKDI on all Fund assets or increasing the fee to .25 of 1% of average
daily net assets without regard to the date of purchase.
Set forth in Exhibit J are the administrative services fees paid by each Fund to
ZKDI during the most recent fiscal year and the effective rate at which each
Fund paid administrative services fees. It is anticipated that ZKDI will
continue to provide administrative services after consummation of the
Transaction.
PRINCIPAL UNDERWRITER. Pursuant to an underwriting and distribution services
agreement ("distribution agreement") with each Fund, ZKDI is the principal
underwriter and distributor of each Fund's shares and acts as agent of each Fund
in the sale of its shares. ZKDI bears all its expenses of providing services
pursuant to the distribution agreement, including the payment of any
commissions. ZKDI provides for the preparation of sales literature and bears the
cost of printing and mailing prospectuses to persons other than shareholders.
ZKDI bears the cost of qualifying and maintaining the qualification of the Fund
shares for sale under the securities laws of the various states and each Fund
bears the expense of registering its shares with the Securities and Exchange
Commission. ZKDI may enter into related selling group agreements with various
broker-dealers, including affiliates of ZKDI, that provide distribution services
to investors. ZKDI also may provide some of the distribution services.
CLASS A SHARES. ZKDI receives no compensation from the Funds as principal
underwriter for Class A Shares and pays all expenses of distribution of each
Fund's Class A shares not otherwise paid by dealers or other
37
<PAGE> 42
financial services firms. ZKDI retains the sales charge upon the purchase of
shares and pays or allows concessions or discounts to firms for the sale of each
Fund's shares.
Set forth in Exhibit J as to each Fund during its most recent fiscal year are
the commissions retained by ZKDI and allowed by ZKDI as commissions to financial
services firms affiliated with ZKDI.
CLASS B AND C SHARES. See Item 6.--New Rule 12b-1 Distribution Plan.
CLASS I SHARES. Each Fund's Class I Shares are sold at net asset value without a
front-end sales load and are not subject to a CDSC, distribution fee or service
fee. Class I Shares are offered only for purchase by affiliated employee benefit
plans and certain institutional investors.
PORTFOLIO TRANSACTIONS. ZKI and its affiliates furnish investment management
services for the Kemper Funds and other clients including affiliated insurance
companies. Zurich Investment Management Limited ("ZIML") is the sub-adviser for
KTEC, KTRF, KGF, KSCF, KICPF, KDIF, KHYF, KIF, KBCF, KGIF, KVGF, KQEF, KAGF and
KAGGF. ZKI and its affiliates share some common research and trading facilities.
ZIML is the sub-adviser for other Kemper Funds as well. Zurich Kemper Value
Advisors, Inc. ("ZKVA") is the sub-adviser for KVGF. ZKVA is the investment
manager and sub-adviser for other Kemper Funds as well. (Each of ZKI, ZIML and
ZKVA are referred to as an "Adviser.") At times investment decisions may be made
to purchase or sell the same investment securities for a Fund and for one or
more of the other clients managed by an Adviser or its affiliates. When two or
more of such clients are simultaneously engaged in the purchase or sale of the
same security, through the same trading facility, the transactions are allocated
as to amount and price in a manner considered equitable to each.
The Advisers, in effecting purchases and sales of portfolio securities for the
account of a Fund, implement the Fund's policy of seeking best execution of
orders. The Advisers may be permitted to pay higher brokerage commissions for
research services as described below. Consistent with this policy, orders for
portfolio transactions are placed with broker-dealer firms giving consideration
to the quality, quantity and nature of each firm's professional services, which
include execution, financial responsibility, responsiveness, clearance
procedures, wire service quotations and statistical and other research
information provided to a Fund and the Advisers and their affiliates. Subject to
seeking best execution of an order, brokerage is allocated on the basis of all
services provided. Any research benefits derived are available for all clients
of the Advisers and their affiliates. In selecting among firms believed to meet
the criteria for handling a particular transaction, the Advisers may give
consideration to those firms that have sold or are selling shares of the Funds
and of other funds managed by the Advisers and their affiliates, as
38
<PAGE> 43
well as to those firms that provide market, statistical and other research
information to a Fund and the Advisers and their affiliates, although the
Advisers are not authorized to pay higher commissions to firms that provide such
services, except as described below.
The Advisers may in certain instances be permitted to pay higher brokerage
commissions solely for receipt of market, statistical and other research
services as defined in Section 28(e) of the Securities Exchange Act of 1934 and
interpretations thereunder. Such services may include, among other things:
economic, industry or company research reports or investment recommendations;
computerized databases; quotation and execution equipment and software; and
research or analytical computer software and services. Where products or
services have a "mixed use," a good faith effort is made to make a reasonable
allocation of the cost of the products or services in accordance with the
anticipated research and non-research uses, and the cost attributable to
non-research use is paid by the Adviser or one of its affiliates in cash.
Subject to Section 28(e) and procedures adopted by the Board of Trustees of each
Fund, a Fund (except for each of the series of KP) could pay a firm that
provides research services commissions for effecting a securities transaction
for the Fund in excess of the amount other firms would have charged for the
transaction. A Fund could do this if an Adviser determines in good faith that
the greater commission is reasonable in relation to the value of the brokerage
and research services provided by the executing firm viewed in terms either of a
particular transaction or the Adviser's overall responsibilities to the Fund and
other clients. Not all such research services may be useful or of value in
advising a particular Fund. Research benefits will be available for all clients
of the Advisers and their affiliates. The investment management fee paid by a
Fund to an Adviser is not reduced because these research services are received.
SKI. It is expected that SKI (including ZKI under SKI's ownership) will
implement portfolio transaction policies that are substantially similar to those
currently used by the Advisers. In addition, to the maximum extent feasible, it
is expected that SKI will place orders for portfolio transactions through
Scudder Investor Services, Inc., Two International Place, Boston, Massachusetts
02110 ("SIS") (a corporation registered as a broker/dealer and a subsidiary of
Scudder), which will in turn place orders on behalf of the Funds with issuers,
underwriters or other brokers and dealers. SIS will not receive any commission,
fee or other remuneration from a Fund for this service.
Set forth in Exhibit J are the total brokerage commissions paid by each Fund for
its most recently completed fiscal year, as well as the percentage of such
amounts that was allocated to broker-dealer firms on the basis of research
information.
39
<PAGE> 44
SCUDDER. Scudder, Stevens & Clark, Inc. ("Scudder"), 345 Park Avenue, New York,
New York 10154, is one of America's oldest and largest investment management
firms. It manages approximately $125 billion in assets globally, about $50
billion of which are invested in equities and the balance in fixed income and
money market investments. Scudder manages approximately $45 billion in a variety
of open-end and closed-end funds for nearly two million shareholder accounts.
The firm also provides investment services for private and institutional
clients, such as trusts, endowments, and corporate employee benefit plans.
Scudder manages more than $25 billion internationally in both developed and
emerging markets. The firm is one of the world's largest managers of pension
fund assets invested overseas.
Scudder manages two families of pure no-load mutual funds. The Scudder Family of
Funds (approximately $23 billion) comprises 53 money market, bond and equity
mutual funds. The AARP Investment Program from Scudder, a family of 15 funds
(approximately $14 billion), is designed to address the needs of the more than
33 million members of the American Association of Retired Persons. The balance
of the funds under management (approximately $5 billion) comprises, offshore,
variable life insurance and other kinds of funds.
The investment companies to which Scudder renders investment management
services, and the related fees, are identified in Exhibit I.
The names, addresses and principal occupations of the principal executive
officer and the directors of Scudder are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
Daniel Pierce, Director Chairman of the Board and
Two International Place Managing Director, Scudder
Boston, Massachusetts 02110
Edmond D. Villani, Chief Executive President, Chief Executive
Officer and Director Officer and Managing Director,
345 Park Avenue Scudder
New York, New York 10154
Stephen R. Beckwith, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Lynn S. Birdsong, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Nicholas Bratt, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
</TABLE>
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<PAGE> 45
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
E. Michael Brown, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Mark S. Casady, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Linda C. Coughlin, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Margaret D. Hadzima, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Jerard K. Hartman, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Richard A. Holt, Director Managing Director, Scudder
Two Prudential Plaza
180 North Stetson, Suite 5400
Chicago, Illinois 60601
John T. Packard, Director Managing Director, Scudder
101 California Street
San Francisco, California 94111
Kathryn L. Quirk, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Cornelia M. Small, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Stephen A. Wohler, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
</TABLE>
After consummation of the Transaction, it is anticipated that the principal
executive officer and directors of SKI will be as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
Lynn Birdsong, Director Senior Executive Officer--
345 Park Avenue International Operations, SKI
New York, New York 10154
</TABLE>
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<PAGE> 46
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
Lawrence Cheng, Director Member of Corporate Executive
Mythenquai 2 Board and Chief Investment
8002 Zurich, Switzerland Officer for Investments and
International Asset Management,
Zurich
Steven Gluckstern, Director Member of Corporate Executive
Mythenquai 2 Board and responsible for
8002 Zurich, Switzerland Reinsurance, Structured Finance,
Capital Market Products and
Strategic Investments, Zurich
Rolf Hueppi, Director Chairman and Chief Executive
Mythenquai 2 Officer, Zurich; Chairman of
8002 Zurich, Switzerland Board of Directors, SKI
Markus Rohrbasser, Director Chief Financial Officer and
Mythenquai 2 Member of Corporate Executive
8002 Zurich, Switzerland Board, Zurich
Cornelia Small, Director Senior Executive Officer--
345 Park Avenue Investment Management, SKI
New York, New York 10154
Edmond Villani, Chief Executive Chief Executive Officer, SKI
Officer and Director
345 Park Avenue
New York, New York 10154
</TABLE>
MISCELLANEOUS
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by ZKI, including any additional solicitation made by
letter, telephone or telegraph. In addition to solicitation by mail, certain
officers and representatives of the Funds, officers and employees of ZKI and
certain financial services firms and their representatives, who will receive no
extra compensation for their services, may solicit proxies by telephone,
telegram or personally. In addition, ZKI has retained First Data Corp. to
solicit proxies on behalf of each Fund's Board and the boards of the other
Kemper Funds, the fee for which will be borne by ZKI. A COPY OF YOUR FUND'S
ANNUAL REPORT AND ANY MORE RECENT SEMI-ANNUAL REPORT ARE AVAILABLE WITHOUT
CHARGE UPON REQUEST BY WRITING TO THE FUND, 222 SOUTH RIVERSIDE PLAZA, CHICAGO,
ILLINOIS 60606 OR BY CALLING 1-800-621-1048.
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<PAGE> 47
PROPOSALS OF SHAREHOLDERS
As Massachusetts business trusts, the Funds are not required to hold annual
shareholder meetings, but each will hold special meetings as required or deemed
desirable. Since the Funds do not hold regular meetings of shareholders, the
anticipated date of the next special shareholders meeting cannot be provided.
Any shareholder proposal that may properly be included in the proxy solicitation
material for a special shareholder meeting must be received by the applicable
Fund no later than four months prior to the date when proxy statements are
mailed to shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Boards of Trustees of the Funds are not aware of any matters that will be
presented for action at the Meeting other than the matters set forth herein.
Should any other matters requiring a vote of shareholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote the
shares as to any such other matters in accordance with their best judgment in
the interest of the Fund.
VOTING, QUORUM
Each share of a Fund is entitled to one vote on each matter submitted to a vote
of the holders of that class of shares of such Fund at the Meeting; no shares
have cumulative voting rights.
Each valid proxy will be voted in accordance with the instructions on the proxy
and as the persons named in the proxy determine on such other business as may
come before the Meeting. If no instructions are given, the proxy will be voted
FOR the election of the persons who have been nominated as trustees for such
Fund and FOR Items 2, 3, 4 (if applicable), 5 (if applicable), 6 (if Class B and
Class C shares) and 7. Shareholders who execute proxies may revoke them at any
time before they are voted, either by writing to the Fund or in person at the
time of the Meeting. Proxies given by telephone or electronically transmitted
instruments may be counted if obtained pursuant to procedures designed to verify
that such instructions have been authorized.
Item 1 (election of trustees) requires a plurality vote of the shares of each
Fund. This means that the nine nominees receiving the largest number of votes
will be elected. Item 2 (ratification of selection of independent auditors)
requires the affirmative vote of a majority of the shares voting on the matter.
Item 3 (approval of new investment management agreement), Item 4 (approval of
new sub-advisory agreement with ZIML), Item 5 (approval of new sub-advisory
agreement with ZKVA) and Item 6 (approval of new Rule 12b-1 Plan) require the
affirmative vote of a
43
<PAGE> 48
"majority of the outstanding voting securities" of the applicable Fund. The term
"majority of the outstanding voting securities" as defined in the 1940 Act
means: the affirmative vote of the lesser of (1) 67% of the voting securities of
the Fund present at the meeting if more than 50% of the outstanding shares of
the Fund are present in person or by proxy, or (2) more than 50% of the
outstanding shares of the Fund. Item 7 (approval of change in fundamental
investment policies to permit Master Fund/Feeder Fund structure) requires the
affirmative vote of more than 50% of shares of the Fund. If an Item is not
approved, the Board would consider appropriate action.
On Items 1 and 2, each Fund will vote in the aggregate and not by series or
class. On Item 3, 4, 5 and 7, each Fund will vote in the aggregate except, in
the case of KHYS, KNTIS, KSTIS and KP, as applicable, each series will vote
separately. On Item 6, the Class B Shares and the Class C Shares of each Fund
(or in the case of KHYS, KNTIS, KSTIS and KP, of each series) will vote
separately by class.
The Declaration of Trust of each Fund provides that the presence at a
shareholder meeting in person or by proxy of at least 30% of the shares of a
Fund constitutes a quorum for that Fund. Thus, the meeting for a particular Fund
could not take place on its scheduled date if less than 30% of the shares of
that Fund were represented. If, by the time scheduled for the meeting, a quorum
of shareholders of a Fund is not present or if a quorum is present but
sufficient votes in favor of any of the items are not received, the persons
named as proxies may propose one or more adjournments of the meeting for that
Fund to permit further soliciting of proxies from its shareholders. Any such
adjournment will require the affirmative vote of a majority of the shares of the
Fund as to which the meeting is being adjourned present (in person or by proxy)
at the session of the meeting to be adjourned. The persons named as proxies will
vote in favor of any such adjournment if they determine that such adjournment
and additional solicitation are reasonable and in the interest of the respective
Fund's shareholders.
In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Item 1, abstentions and broker non-votes will have no
effect; the nine nominees receiving the largest number of votes will be elected.
On Item 2, abstentions and broker non-votes will not be counted as "votes cast"
and will have no effect on the result of the vote. On Items 3, 4, 5, 6 and 7
abstentions and broker non-votes will be considered to be both present at
44
<PAGE> 49
the Meeting and issued and outstanding and, as a result, will have the effect of
being counted as voted against the Items.
The Board of Trustees of each Fund recommends an affirmative vote on all items.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards of Trustees,
Philip J. Collora
Secretary
45
<PAGE> 50
EXHIBIT INDEX
<TABLE>
<S> <C>
Shares Issued and Outstanding on September 17,
1997.............................................. Exhibit A
Shareholdings....................................... Exhibit B
(Trustees and Officers)
(Holders of More Than 5% of One Class of a Fund's
Shares)
Form of Investment Management Agreement............. Exhibit C
(Description of Management Fee Schedule for Kemper
Small Capitalization Equity Fund and Kemper
Aggressive Growth Fund)
Form of Sub-Advisory Agreement with Zurich
Investment Management Limited..................... Exhibit D
Form of Sub-Advisory Agreement with Zurich Kemper
Value Advisors, Inc............................... Exhibit E
Form of Underwriting and Distribution Services
Agreement......................................... Exhibit F
Proposed Fundamental Investment Policies............ Exhibit G
Kemper Funds Net Assets and Management Fees......... Exhibit H
Investment Objectives and Advisory Fees for Funds
Advised By Scudder, Stevens & Clark, Inc. ........ Exhibit I
Fees and Expenses................................... Exhibit J
</TABLE>
46
<PAGE> 51
EXHIBIT A
SHARES ISSUED AND OUTSTANDING ON SEPTEMBER 17, 1997
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C CLASS I
---- ------- ------- ------- -------
<S> <C> <C> <C> <C>
KTEC................. 81,280,545 8,228,526 716,307 1,470,473
KTRF................. 183,283,154 101,459,880 1,504,526 1,145,239
KGF.................. 125,237,732 59,188,324 1,218,204 1,764,377
KSCF................. 95,189,994 39,453,529 2,038,539 2,642,816
KICPF................ 59,006,875 9,758,485 996,287 792,426
KNTIS
KMBF............... 302,985,499 5,840,412 523,734 29,614
KIMBF.............. 1,601,700 442,682 72,738 0
KDIF................. 93,257,392 49,403,792 2,369,909 1,210
KHYS
KHYF............... 405,362,120 151,818,375 14,190,295 3,373,677
KGSF................. 409,341,320 8,196,808 1,042,706 640,101
KIF.................. 32,465,989 11,206,806 1,263,885 1,586,795
KSTIS
KCATF.............. 130,337,655 3,598,046 461,061 0
KNYTF.............. 24,895,725 940,289 270,169 0
KFLTF.............. 9,471,203 415,598 54,065 0
KTXTF.............. 1,074,046 95,569 29,579 0
KOHTF.............. 2,910,235 877,522 38,186 0
KMITF.............. 185,731 101,254 11,508 0
KNJTF.............. 192,322 304,832 21,738 0
KPATF.............. 244,714 280,728 92,584 0
KP
KCRF............... 86,445,884 223,000,691 26,102,234 0
KUSMF.............. 253,923,071 103,469,951 385,166 0
KSIGF.............. 5,681,471 15,410,271 714,778 0
KARGF................ 8,795,933 892,214 123,045 0
KBCF................. 16,751,141 6,567,694 532,921 276,294
KGIF................. 8,613,297 3,757,406 137,312 2,643
KVGF................. 3,069,421 2,635,357 170,858 0
KQEF................. 232,276 165,249 93,042 235,020
KAGF................. 309,008 330,223 48,852 0
KAGGF................ 442,367 305,801 93,428 0
</TABLE>
A-1
<PAGE> 52
EXHIBIT B
SHAREHOLDINGS
TRUSTEES AND OFFICERS.
Set forth below is the number of shares of each Fund owned beneficially by each
trustee and nominee as of August 26, 1997. Also shown is the number of shares
owned beneficially by the trustees and officers as a group. In each case, the
amounts shown are less than 1% of the outstanding shares of each class of each
Fund or any series of KHYS, KNTIS, KSTIS or KP unless otherwise noted. All
shares shown are Class A shares unless otherwise noted:
<TABLE>
<CAPTION>
FUND BELIN BURNHAM DUNAWAY HOFFMAN JONES PETERSON PIERCE SOMMERS TIMBERS VILLANI
---- ----- ------- ------- ------- ----- -------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
KTEC................. 2,978 11,390 3,643 777 0 0 0 9,293 30,299 0
KTRF................. 1,389 2,696 6,501 751 0 0 0 559 34,111 0
KGF.................. 1,005 0 8,516 652 0 0 0 7,890 168,992(a) 0
KSCF................. 3,606 7,011 13,737 9,293 36,114 0 0 38,394 225,315(b) 0
KICPF................ 771 0 367 459 26,224 0 0 0 25,799 0
KNTIS
KMBF................ 1,104 4,107 1,930 335 21,260 0 0 4,830 64,097 0
KIMBF............... 0 0 0 0 0 0 0 0 0 0
KDIF................. 3,561 0 417 1,007 0 0 0 0 0 0
KHYS
KHYF................ 2,139 61,066 392 807 32,215 0 0 0 43,496 0
KGSF................. 9,616 0 124 455 0 0 0 0 0 0
KIF.................. 2,944 5,095 2,885 675 10,617 0 0 4,856 98,261(c) 0
KSTIS
KCATF............... 0 0 0 0 0 0 0 5,801 0 0
KNYTF............... 0 0 0 0 0 0 0 0 0 0
KFLTF............... 0 0 0 0 0 0 0 0 0 0
KTXTF............... 0 0 0 0 0 0 0 0 0 0
KOHTF............... 0 0 0 0 0 0 0 0 0 0
KMITF............... 0 0 0 0 0 0 0 0 0 0
KNJTF............... 0 0 0 0 0 0 0 0 0 0
KPATF............... 0 0 0 0 0 0 0 0 0 0
KP
KCRF................ 1,203 0 0 1,203 0 0 0 1,203 0 0
KUSMF............... 0 0 0 0 0 0 0 0 0 0
KSIGF............... 0 0 0 0 0 0 0 0 0 0
KARGF................ 163 0 253 0 0 0 0 163 0 0
KBCF................. 0 0 2,986 0 0 0 0 0 16,129 0
KGIF................. 2,046 0 226 0 0 0 0 600 0 0
KVGF................. 0 0 3,588 0 0 0 0 0 53,301 0
KQEF................. 0 0 1,129 0 0 0 0 0 28,275(d) 0
KAGF................. 0 0 1,292 0 0 0 0 0 0 0
KAGGF................ 0 0 0 0 0 0 0 0 10,516 0
<CAPTION>
TRUSTEES AND
OFFICERS AS A
FUND GROUP
---- -------------
<S> <C>
KTEC................. 216,499(e)
KTRF................. 130,130(f)
KGF.................. 312,131(g)
KSCF................. 502,578(h)
KICPF................ 120,508(i)
KNTIS
KMBF................ 114,467
KIMBF............... 2,218
KDIF................. 12,357
KHYS
KHYF................ 615,354(j)
KGSF................. 23,603(k)
KIF.................. 251,114(l)
KSTIS
KCATF............... 5,801
KNYTF............... 0
KFLTF............... 0
KTXTF............... 0
KOHTF............... 0
KMITF............... 0
KNJTF............... 0
KPATF............... 0
KP
KCRF................ 3,608
KUSMF............... 0
KSIGF............... 0
KARGF................ 8,513
KBCF................. 26,047(m)
KGIF................. 5,697
KVGF................. 105,533(n)
KQEF................. 81,684(o)
KAGF................. 1,292
KAGGF................ 11,486(p)
</TABLE>
- ---------------
(a) Includes 107,709 Class I Shares.
(b) Includes 104,803 Class I Shares.
(c) Includes 58,821 Class I Shares.
(d) Includes 6,328 Class I Shares.
(e) Includes 62,958 Class I Shares which constitute 4.17% of all Class I Shares.
(f) Includes 71,267 Class I Shares which constitute 6.31% of all Class I Shares.
B-1
<PAGE> 53
(g) Includes 218,298 Class I Shares which constitute 12.11% of all Class I
Shares.
(h) Includes 261,833 Class I Shares which constitute 10.22% of all Class I
Shares.
(i) Includes 66,891 Class I Shares which constitute 8.42% of all Class I Shares.
(j) Includes 326,528 Class I Shares which constitute 9.77% of all Class I
Shares.
(k) Includes 10,551 Class I Shares which constitute 1.64% of all Class I Shares.
(l) Includes 119,519 Class I Shares which constitute 8.16% of all Class I
Shares.
(m) Includes 2,989 Class I Shares which constitute 1.15% of all Class I Shares.
(n) The 105,533 Class A Shares constitute 3.60% of all Class A Shares.
(o) Includes 31,047 Class A Shares constitute 13.72% of all Class A Shares and
50,647 Class I Shares which constitute 22.43% of all Class I Shares.
(p) The 11,486 Class A Shares constitute 2.92% of all Class A Shares.
B-2
<PAGE> 54
HOLDERS OF MORE THAN 5% OF ANY CLASS OF A FUND'S SHARES
As of August 26, 1997*, no person is known to the Funds to own beneficially more
than five percent of the Shares of any class of any Fund except as shown below.
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
KTEC (C Shares)....... Edward D. Jones & Co. Cust. 34,566 5.24
FBO Kathleen Schaefer
PO Box 2500
Maryland Hgts., MO 63043
(I Shares)........ Zurich Kemper 1,483,797 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KTRF (I Shares)....... Zurich Kemper 1,125,166 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KGF (I Shares)........ Zurich Kemper 1,787,912 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KSCF (I Shares)....... Zurich Kemper 2,543,799 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KICPF (C Shares)...... Paul K. Christoff TTEE 107,242 11.04
Lindsay Concrete Prod. Inc. PSP
DTD 10-1-89
Paul K. Christoff, Attorney
137 S. Main St., Suite 301
Akron, OH 44308
(I Shares)....... Zurich Kemper 795,284 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KMBF (C Shares)....... Donald Isherwood & 30,960 6.25
Lynn Isherwood JTWROS
5324 Birch Rd.
Plover, WI 54467
(I Shares)....... Salvation Army Federal Tax-Free 29,604 99.96
Trust Pool
30840 Hawthorne Blvd.
Rancho Palos Verdes, CA 90275
</TABLE>
- ---------------
* I Share information is as of August 29, 1997.
B-3
<PAGE> 55
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
KIMBF (A Shares)...... Phillips & Martin Company 103,183 6.46
Attn: David S. Bergman
228 E. Lake St., Ste. 300
Addison, IL 60101
GK Management 101,612 6.37
15700 Lathrop Avenue
Harvey, IL 60426
Woodstock A Partnership 151,403 9.49
C/O Wood County Trust Co.
PO Box 8000
Wisconsin Rapids, WI 54494
Brian L. Johnson & 120,192 7.53
Joan M. Johnson JTWROS
PO Box 400
Spooner, WI 54801
(C Shares)...... Orsolina Gigante 7,912 11.05
232 Thayer St.
River Vale, NJ 07675
Anthony B. Gigante 7,912 11.05
232 Thayer St.
River Vale, NJ 07675
PaineWebber for the Benefit of 3,716 5.19
G. Richard Matteucci and
Linda R. Matteucci JTWROS
4348 Prospect
Western Springs, IL 60558
Suzanne K. Sundquist TTEE 6,930 9.68
FBO Suzanne K. Sundquist Rev.
Liv. Tr.
U/A 04/09/1993
72 N. Candlelight Drive
Green Valley, AZ 85614
KDIF (I Shares)....... Zurich Kemper 1,127 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KHYF (I Shares)....... Patterson & Co. 801,588 23.98
PNB Personal Trust Acctg.
PO Box 7829
Philadelphia, PA 19101
Zurich Kemper 2,329,639 69.01
Retirement Plans
811 Main
Kansas City, MO 64105
State Street Bank & Trust 244,639 7.24
Company..........................
NA agent for Salvation Army
CA Corp
101 California St., Suite 1175
San Francisco, CA 94111
</TABLE>
B-4
<PAGE> 56
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
KGSF (I Shares)....... Zurich Kemper 497,008 76.76
Retirement Plans
811 Main
Kansas City, MO 64105
State Street Bank & Trust 150,470 23.24
Company..........................
NA agent for Salvation Army
CA Corp
101 California St., Suite 1175
San Francisco, CA 94111
KIF (I Shares)........ Zurich Kemper 1,469,818 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KCATF (B Shares)...... Josef Dittrich & 400,746 11.22
Maria Dittrich TTEE
FBO Dittrich Family Tr.
U/A 11/03/1988
11373 Tortuga St.
Cypress, CA 90630
(C Shares)...... Edward D. Jones and Co. F/A/O 21,330 10.62
Elizabeth L. Erlandson TTEE
U/A DTD 3/9/94 for Elizabeth L.
PO Box 2500
Maryland Hts., MO 63043
Thelma O. Linderman TTEE 12,802 6.37
Thelma O. Linderman Survivors Tr.
FBO Linderman Family
U/A 06/17/1986
1057 E. Knollcrest Dr.
Covina, CA 91724
Alexander S. & Georgina Chuck 17,779 8.85
TTEES
FBO Alexander S. & Georgina Chuck
Revocable Tr. DTD 06/23/83
6595 Monterey Rd.
Gilroy, CA 95020
Evan Backs & Donna M. Backs Tr. 16,407 8.17
Backs Family Trust of 1991
U/A Dated 2-22-91
2323 E. Austin
Fresno, CA 93726
Alfred DeFrancesco & 17,891 8.91
Dolores DeFrancesco COM PROP
Attn: Larry Ringwelski
PO Box 605
Gilroy, CA 95021
</TABLE>
B-5
<PAGE> 57
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
KNYTF (C Shares)...... PaineWebber for the Benefit of 23,944 8.80
Mrs. Diana Riklis
1020 Park Ave.
New York, NY 10028
Rosalyn D. Farkas 18,261 6.71
1037 Willowbrook Rd.
Staten Island, NY 10314
Josephine Benfatti & 18,805 6.91
Florence Benfatti JTWROS
2017 Kimball St.
Brooklyn, NY 11234
KFLTF (B Shares)...... Prudential Securities Inc. FBO 38,310 9.31
Mrs. Katherine O. Harrington
3101 NE 57th Ct.
Ft. Lauderdale, FL 33308
(C Shares)...... Susan H. Wallace 6,333 11.61
260 Rafael Blvd. NE
St. Petersburg, FL 33704
Southwest Securities Inc. FBO 20,980 38.47
Patricia G. Kaighin
Box 509002
Dallas, TX 75250
KTXTF (B Shares)...... Marjorie M. Nugent 10,372 11.31
C/O Dr. Rod Nugent
800 So. Avondale
Amarillo, TX 79106
PaineWebber for the Benefit of 5,347 5.83
Jo Lynn Gerhardt
834 Thornvine
Houston, TX 77079
Charles D. Hayes & 9,858 10.75
Gelinda Hayes JTWROS
22503 Holly Creek Trail
Tomball, TX 77375
Marjorie M. Nugent Ind. 78,949 8.66
Exec. for Estate of
R.M. Nugent
C/O Dr. Rod Nugent
800 So. Avondale
Amarillo, TX 79106
(C Shares)...... Don Freeman & 9,745 32.95
Lucille Freeman JTWROS
PO Box 472
Eden, TX 76837
Billy R. Hefley 14,888 50.34
6301 East Loop 335 North
Amarillo, TX 79107
</TABLE>
B-6
<PAGE> 58
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
KOHTF (A Shares)...... John M. Wilson & 190,401 6.49
Patricia W. Wilson TTEE
FBO John M. & Patricia Wilson Tr.
U/A 07/02/1994
PO Box 386
Aurora, OH 44202
(C Shares)..... Elton W. Geist Tr. 2,456 6.43
Elton W. Geist Trust
U/A Dated 2/23/93
12550 Lake Ave., Ste. 205
Lakewood, OH 44107
John R. Bender 2,026 5.31
645 Georgetown Ave.
Elyria, OH 44035
Jay M. Simpson & 5,439 14.26
Valerie Stocklin JTWROS
7825 N. Dixie, Suite A
Dayton, OH 45414
Joseph E. Mahlmeister 2,636 6.91
PO Box 210
Trenton, OH 45067
Marjorie M. Freytag 6,280 16.46
02233 St. Rt. 362
Minster, OH 45865
Spartan Corporation 2,629 6.89
35 Enterprise Drive
Middletown, OH 45044
KMITF (A Shares)...... Jeanne M. Pinardi Trustee 9,875 5.27
Jeanne M. Pinardi Rev. Living
Trust
U/A DTD 2-27-87
11034 Arden
Livonia, MI 48150
Lynda L. Ufer TTEE 11,705 6.24
FBO Lynda L. Ufer Liv. Tr.
U/A 08/27/1993
25712 Graceland Cir.
Dearborn Heights, MI 48125
Prudential Securities FBO 14,593 7.79
Mr. Milton E. Muelder
1133 Southlawn
East Lansing, MI 48823
Lloyd J. McIntyre Inter-Vivos TTE 13,463 7.18
Lloyd J. McIntyre Trustee
U/A DTD 1/6/84, As Amended
1911 North Miller
Saginaw, MI 48609
(B Shares)...... Donald R. Blanchard 5,687 5.43
Betty E. Blanchard JT TEN
300 Grove, Box 185
Crystal, MI 49818
</TABLE>
B-7
<PAGE> 59
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
Melvin E. Potter 7,666 7.33
28311 Franklin Rd., Apt. C-224
Southfield, MI 48034
Jane Broecker & 5,694 5.44
Herbert A. Broecker JTWROS
9616 Alger Drive
Brighton, MI 48114
Dorothy M. Converse Tr. 9,125 8.72
Dorothy M. Converse Trust
UA 11/07/90
201 S. Mall Dr., Apt. #49
Lansing, MI 48917
Karen L. Pearce 9,235 8.82
6484 Stonebrook Lane
Flushing, MI 48433
Clinton P. Hardy Trust 8,263 7.90
Florence M. Hardy &
George L. Morris JT TTEES
UAD 12-8-87
4 Orchard Way North
Rockville, MD 20854
(C Shares)...... Daniel M. Weikel TTEE 1,592 13.82
FBO Daniel M. Weikel Trust
U/A DTD 07/13/93
1221 Ruddiman
Muskegon, MI 49445
PaineWebber for the Benefit of 2,385 20.71
Mary Jane Fauls TTEE
Mary Jane Fauls Rev. Lvg. Trust
UA DTD 7 13 94
22942 Playview St.
St. Clair Shores, MI 48082
James R. Volstromer & 6,458 56.12
Diane C. Volstromer TTEE
FBO James R. & Diane C.
Volstromer Rev. Tr.
U/A 11/01/1991
145 Sunset Dr.
Dowling, MI 49050
KNJTF (A Shares)...... Wheat First FBO 15,710 8.16
T. W. Nelson
827 Highland Ave.
Westfield, NJ 07090
Samuel B. Kardon 10,900 5.66
C/O P. Kardon
PO Box 519
Pine Plains, NY 12567
</TABLE>
B-8
<PAGE> 60
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
Agnes B. Cywinski TTEE 14,350 7.46
UA DTD 1/19/87 and 03-25-94
MB/FBO Agnes B. Cywinski
18 Springfield Ave., Apt. 3B
Cranford, NJ 07016
Philip C. Gustafson & 11,217 5.83
Elaine S. Gustafson JTWRS
108 Meadow View Ave.
Linwood, NJ 08221
Robert L. Vignolo 10,588 5.50
842 Kimball Ave.
Westfield, NJ 07090
(B Shares)...... John R. Rosselli 31,837 10.27
PO Box 3056
Newton, NJ 07860
(C Shares)...... Philip I. Evertz 10,547 50.33
31 Arthur Ter., Apt. 12A
Hackettstown, NJ 07840
Lisa R. Caprioni 1,179 5.62
22 Arlene Dr.
W. Long Branch, NJ 07764
Carol Leick & 2,034 9.70
Albert Leick JTWROS
339 Willow Dr.
Union, NJ 07083
PaineWebber for the Benefit of 2,532 12.08
ESDAEV LLC
228 Johnson Ave., #8
Hackensack, NJ 07601
KPATF (A Shares)...... NFSC FEBO # ALW-296783 91,286 37.37
UHL Construction Co.
PO Box 8
Allison Park, PA 15101
(B Shares)...... Wheat First FBO 26,297 10.73
Olga Y. Hyde
3300 Darby Rd., Apt. 4108
Haverford, PA 19041
KCRF (A Shares)....... Local No. 37 Stamp M/P Plan 15,905,061 16.52
A. Ruggieri & Others TTESS
FBO Local No. 37 Stamp Account
Conve.
845 Waterman Ave.
E. Providence, RI 02914
KUSMF (C Shares)...... Morongo Band of Mission Indians 92,902 24.93
Community Service Reserve Acct.
11581 Potrero Rd.
Banning, CA 92220
</TABLE>
B-9
<PAGE> 61
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
KARGF (A Shares)...... Prudential Securities FBO 639,838 7.20
Standard Savings Bank
Attn: Danny Lau
228 W. Garvey Ave.
Monterey Park, CA 91754
(C Shares)...... William A. Ulrich Pers. Rep. 10,681 8.16
Estate of Arthur A. Ulrich
870 84th Ln. NW
Minneapolis, MN 55433
Junior Junction Inc. 11,278 8.62
1400 Noyes @ York
Utica, NY 13502
KBCF (C Shares)....... Lawrence E. Steckline TTEE 30,932 6.07
FBO Lawrence E. Steckline Rev.
Tr.
U/A 05/25/1994
3405 S. 279th St. W.
Garden Plain, KS 67050
(I Shares)....... Zurich Kemper 258,946 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KGIF (C Shares)....... WLN 14,092 10.45
Attn: Mary Schroeder
PO Box 3888
Lacey, WA 98509
(I Shares)........ Zurich Kemper 2,614 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KVGF (C Shares)....... R & V Properties Ltd. 8,097 5.14
37 South 350 East
Clearfield, UT 84015
KQEF (A Shares)....... Zurich Kemper Investments 72,406 32.00
Attn: Julius Gapuz
Accounting Control, 31st Fl.
222 S. Riverside Plaza
Chicago, IL 60606
CLC Foundation 12,336 5.45
19351 W. Washington
Grayslake, IL 60030
(B Shares)....... Kemper Financial Services 72,582 44.16
Attn: Accounting Control
120 S. LaSalle St., 20th Fl.
Chicago, IL 60603
(C Shares)....... Zurich Kemper Investments 72,566 78.72
Attn: Julius Gapuz
Accounting Control, 31st Fl.
222 S. Riverside Plaza
Chicago, IL 60606
</TABLE>
B-10
<PAGE> 62
<TABLE>
<CAPTION>
NUMBER
FUND NAME AND ADDRESS OF SHARES % OF CLASS
---- ---------------- --------- ----------
<S> <C> <C> <C>
John E. Susong 8,171 8.86
C/O Pension Consulting Svcs.
7181 Chagrin Rd.
Chagrin Falls, OH 44023
James C. Reid & 4,691 5.08
Susan J. Reid JTWROS
10960 S. Tropical Trl.
Merritt Is., FL 32952
(I Shares)....... Zurich Kemper 219,344 100.00
Retirement Plans
811 Main
Kansas City, MO 64105
KAGF (A Shares)....... Zurich Kemper Investments 17,544 5.63
Attn: Julius Gapuz
Accounting Control, 31st Fl.
222 S. Riverside Plaza
Chicago, IL 60606
(B Shares)....... Zurich Kemper Investments 17,544 5.23
Attn: Julius Gapuz
Accounting Control, 31st Fl.
222 S. Riverside Plaza
Chicago, IL 60606
(C Shares)....... Accurate Automatic Parts Inc. 11,707 24.89
Weiss Stanwick Tobin TTEES
401K FBO Glenn Stanwick
1325 Valley Ridge Dr.
Brookfield, WI 53005
Zurich Kemper Investments 17,544 37.30
Attn: Julius Gapuz
Accounting Control, 31st Fl.
222 S. Riverside Plaza
Chicago, IL 60606
KAGGF (C Shares)...... PaineWebber for the Benefit of 10,483 10.89
Michael Seavall
13835 North 107th Street
Longmont, CO 80501
Wolf C. Neumann, MD 6,180 6.42
3400 Gottingen
Karl-Grueneklee-STR 4C
Germany
</TABLE>
B-11
<PAGE> 63
EXHIBIT C
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF TRUST]
222 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
, 199
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF SERIES]
Ladies and Gentlemen:
[Name of Trust] (the "Trust") has been established as a Massachusetts business
Trust to engage in the business of an investment company. Pursuant to the
Trust's Declaration of Trust, as amended from time-to-time (the "Declaration"),
the Board of Trustees is authorized to issue the Trust's shares of beneficial
interest, par value $ per share, (the "Shares") in separate series, or funds.
The Board of Trustees has authorized [name of series] (the "Fund"). Series may
be abolished and dissolved, and additional series established, from time to time
by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the investment
manager of the Fund and to provide certain other services, as more fully set
forth below, and you have indicated that you are willing to act as such
investment manager and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Trust on behalf of the Fund agrees with
you as follows:
1. DELIVERY OF DOCUMENTS. The Trust engages in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Trust's Registration Statement
on Form N-1A, as amended from time to time, (the "Registration Statement") filed
by the Trust under the Investment Company Act of 1940, as amended, (the "1940
Act") and the Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you by the Trust.
The Trust has also
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furnished you with copies properly certified or authenticated of each of the
following additional documents related to the Trust and the Fund:
(a) The Declaration dated , 19 , as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders of the Fund
selecting you as investment manager and approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial Interest
dated , 19 relating to the Fund.
The Trust will furnish you from time to time with copies, properly certified or
authenticated, of all amendments of or supplements, if any, to the foregoing,
including the Prospectus, the SAI and the Registration Statement.
2. PORTFOLIO MANAGEMENT SERVICES. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 2, you shall
be entitled to receive and act upon advice of counsel to the Trust. You shall
also make available to the Trust promptly upon request all of the Fund's
investment records and ledgers as are necessary to assist the Trust in complying
with the requirements of the 1940 Act and other applicable laws. To the extent
required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Trust are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
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<PAGE> 65
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
3. ADMINISTRATIVE SERVICES. In addition to the portfolio management services
specified above in section 2, you shall furnish at your expense for the use of
the Fund such office space and facilities in the United States as the Fund may
require for its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative services on behalf
of the Fund necessary for operating as an open end investment company and not
provided by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Fund
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Fund's transfer agent; assisting in the preparation
and filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Fund all books, records and reports and any other information required under
the 1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of the
Fund; assisting in establishing the accounting policies of the Fund; assisting
in the resolution of accounting issues that
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<PAGE> 66
may arise with respect to the Fund's operations and consulting with the Fund's
independent accountants, legal counsel and the Fund's other agents as necessary
in connection therewith; establishing and monitoring the Fund's operating
expense budgets; reviewing the Fund's bills; processing the payment of bills
that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Trust as it may reasonably request in the conduct of
the Fund's business, subject to the direction and control of the Trust's Board
of Trustees. Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
4. ALLOCATION OF CHARGES AND EXPENSES. Except as otherwise specifically provided
in this section 4, you shall pay the compensation and expenses of all Trustees,
officers and executive employees of the Trust (including the Fund's share of
payroll taxes) who are affiliated persons of you, and you shall make available,
without expense to the Fund, the services of such of your directors, officers
and employees as may duly be elected officers of the Trust, subject to their
individual consent to serve and to any limitations imposed by law. You shall
provide at your expense the portfolio management services described in section 2
hereof and the administrative services described in section 3 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 4. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent for which the
Trust is responsible pursuant to the terms of the Fund Accounting Services
Agreement, custodians, subcustodians, transfer agents, dividend
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<PAGE> 67
disbursing agents and registrars; payment for portfolio pricing or valuation
services to pricing agents, accountants, bankers and other specialists, if any;
expenses of preparing share certificates and, except as provided below in this
section 4, other expenses in connection with the issuance, offering,
distribution, sale, redemption or repurchase of securities issued by the Fund;
expenses relating to investor and public relations; expenses and fees of
registering or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; the
compensation and all expenses (specifically including travel expenses relating
to Trust business) of Trustees, officers and employees of the Trust who are not
affiliated persons of you; brokerage commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; expenses of printing and
distributing reports, notices and dividends to shareholders; expenses of
printing and mailing Prospectuses and SAIs of the Fund and supplements thereto;
costs of stationery; any litigation expenses; indemnification of Trustees and
officers of the Trust; and costs of shareholders' and other meetings.
You shall not be required to pay expenses of any activity which is primarily
intended to result in sales of Shares of the Fund if and to the extent that (i)
such expenses are required to be borne by a principal underwriter which acts as
the distributor of the Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such expenses, or (ii)
the Trust on behalf of the Fund shall have adopted a plan in conformity with
Rule 12b-1 under the 1940 Act providing that the Fund (or some other party)
shall assume some or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by the principal
underwriter pursuant to the underwriting agreement or are not permitted to be
paid by the Fund (or some other party) pursuant to such a plan.
5. MANAGEMENT FEE. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3, and 4 hereof, the Trust
on behalf of the Fund shall pay you in United States Dollars on the last day of
each month the unpaid balance of a fee equal to the excess of (a) 1/12 of
of 1 percent of the average daily net assets as defined below of the Fund for
such month; [provided that, for any calendar month during which the average of
such values exceeds $ , the fee payable for that month based on the
portion of the average of such values in excess of $ shall be 1/12 of
of 1 percent of such portion;] [and provided that, for any calendar month during
which the average of such values exceeds $ , the fee payable for that
month based on the portion of the average of such values in excess of $
shall be 1/12 of of 1 percent of such portion;] [SEE PAGE 16 OF PROXY
STATEMENT FOR EACH FUND'S MANAGEMENT FEE AND PAGE C-11 FOR A DESCRIPTION
C-5
<PAGE> 68
of the computation of the fee for KSCF and KAGGF] over [(b) the greater of (i)
the amount by which the Fund's expenses exceed % of average daily net assets
or (ii)] any compensation waived by you from time to time (as more fully
described below). You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided that no such
payment shall exceed 75 percent of the amount of your fee then accrued on the
books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of the values
placed on the Fund's net assets as of 4:00 p.m. (New York time) on each day on
which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 5.
[You agree that your gross compensation for any fiscal year shall not be greater
than an amount which, when added to other expenses of the Fund, shall cause the
aggregate expenses of the Fund to equal % of average daily net assets. [KMBF
and KGSF: 1% of average daily net assets; KCATF: 1.5% of average daily net
assets up to $30 million and 1% of average daily net assets over $30 million.]
Except to the extent that such amount has been reflected in reduced payments to
you, you shall refund to the Fund the amount of any payment received in excess
of the limitation pursuant to this section 5 as promptly as practicable after
the end of such fiscal year, provided that you shall not be required to pay the
Fund an amount greater than the fee paid to you in respect of such year pursuant
to this Agreement. As used in this section 5, "expenses" shall mean those
expenses included in the applicable expense limitation having the broadest
specifications thereof, and "expense limitation" means a limit on the maximum
annual expenses which may be incurred by an investment company determined (i) by
multiplying a fixed percentage by the average, or by multiplying more than one
such percentage by different specified amounts of the average, of the values of
an investment company's
C-6
<PAGE> 69
net assets for a fiscal year or (ii) by multiplying a fixed percentage by an
investment company's net investment income for a fiscal year.]
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
6. AVOIDANCE OF INCONSISTENT POSITION; SERVICES NOT EXCLUSIVE. In connection
with purchases or sales of portfolio securities and other investments for the
account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and services to others. In acting under this Agreement, you shall be an
independent contractor and not an agent of the Trust. Whenever the Fund and one
or more other accounts or investment companies advised by you have available
funds for investment, investments suitable and appropriate for each shall be
allocated in accordance with procedures believed by you to be equitable to each
entity. Similarly, opportunities to sell securities shall be allocated in a
manner believed by you to be equitable. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund.
7. LIMITATION OF LIABILITY OF MANAGER. As an inducement to your undertaking to
render services pursuant to this Agreement, the Trust agrees that you shall not
be liable under this Agreement for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect you against any liability to the Trust, the Fund
or its shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties hereunder.
8. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until , 19 , and continue in force from year to year
thereafter, but only so long as such continuance is specifically
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<PAGE> 70
approved at least annually (a) by the vote of a majority of the Trustees who are
not parties to this Agreement or interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust, or by the vote of a majority of
the outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time, without
the payment of any penalty, by the vote of a majority of the outstanding voting
securities of the Fund or by the Trust's Board of Trustees on 60 days' written
notice to you, or by you on 60 days' written notice to the Trust. This Agreement
shall terminate automatically in the event of its assignment.
This Agreement may be terminated with respect to the Fund at any time without
the payment of any penalty by the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund in the event that it shall have
been established by a court of competent jurisdiction that you or any of your
officers or directors has taken any action which results in a breach of your
covenants set forth herein.
9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
10. LIMITATION OF LIABILITY FOR CLAIMS. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that the name "[Name of Trust]"
refers to the Trustees under the Declaration collectively as Trustees and not as
individuals or personally, and that no shareholder of the Fund, or Trustee,
officer, employee or agent of the Trust, shall be subject to claims against or
obligations of the Trust or of the Fund to any extent whatsoever, but that the
Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability as set
forth in the Declaration and you agree that the obligations assumed by the Trust
on behalf of the Fund pursuant to this Agreement shall be limited in all cases
to the Fund and its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund or any other
series of the Trust, or from any Trustee, officer, employee or
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<PAGE> 71
agent of the Trust. You understand that the rights and obligations of each Fund,
or series, under the Declaration are separate and distinct from those of any and
all other series.
11. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
In interpreting the provisions of this Agreement, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return
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<PAGE> 72
such counterpart to the Trust, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
[Name of Trust], on behalf of
Kemper Fund
By:
--------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
--------------------------
President
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<PAGE> 73
DESCRIPTION OF MANAGEMENT FEE SCHEDULE FOR
KEMPER SMALL CAPITALIZATION EQUITY FUND
AND KEMPER AGGRESSIVE GROWTH FUND
KSCF pays a base annual investment management fee, payable monthly, at the rate
of .65 of 1% of the average daily net assets of the Fund. This base fee is
subject to upward or downward adjustment on the basis of the investment
performance of the Class A shares of the Fund as compared with the performance
of the Standard & Poor's 500 Stock Index (the "Index"). KSCF will pay an
additional monthly fee at an annual rate of .05% of such average daily net
assets for each percentage point (fractions to be prorated) by which the
performance of the Class A shares of the Fund exceeds that of the Index for the
immediately preceding twelve months; provided that such additional monthly fee
shall not exceed 1/12 of .30% of the average daily net assets. Conversely, the
compensation payable by KSCF will be reduced by an annual rate of .05% of such
average daily net assets for each percentage point (fractions to be prorated) by
which the performance of the Class A shares of the Fund falls below that of the
Index, provided that such reduction in the monthly fee shall not exceed 1/12 of
.30% of the average net assets. The total fee on an annual basis can range from
.35% to .95% of average daily net assets. KSCF's investment performance during
any twelve month period is measured by the percentage difference between (a) the
opening net asset value of one Class A share of the Fund and (b) the sum of the
closing net asset value of one Class A share of the Fund plus the value of any
income and capital gain dividends on such share during the period treated as if
reinvested in Class A shares of the Fund at the time of distribution. The
performance of the Index is measured by the percentage change in the Index
between the beginning and the end of the twelve month period with cash
distributions on the securities which comprise the Index being treated as
reinvested in the Index at the end of each month following the payment of the
dividend. Each monthly calculation of the incentive portion of the fee may be
illustrated as follows: if over the preceding twelve month period KSCF's
adjusted net asset value applicable to one Class A share went from $10.00 to
$11.00 (10% appreciation), and the Index, after adjustment, went from 100 to 104
(or only 4%), the entire incentive compensation would have been earned by ZKI.
On the other hand, if the Index rose from 100 to 110 (10%), no incentive fee
would have been payable. A rise in the Index from 100 to 116 (16%) would have
resulted in the minimum monthly fee of 1/12 of .35%. Since the computation is
not cumulative from year to year, an additional management fee may be payable
with respect to a particular year, although KSCF's performance over some longer
period of time may be less favorable than that of the Index. Conversely, a lower
management fee may be payable in a year in which the performance of the Fund's
Class A shares' is less favorable than that of the Index, although the
performance
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<PAGE> 74
of the Fund's Class A shares over a longer period of time might be better than
that of the Index.
KAGGF pays a base annual investment management fee, payable monthly, at the rate
of .65 of 1% of the average daily net assets of the Fund. This base fee is
subject to upward or downward adjustment on the basis of the investment
performance of the Class A shares of the Fund as compared with the performance
of the Standard & Poor's 500 Stock Index (the "Index"). KAGGF will pay an
additional monthly fee at an annual rate of .02% of such average daily net
assets for each percentage point (fractions to be prorated) by which the
performance of the Class A shares of the Fund exceeds that of the Index for the
immediately preceding twelve months; provided that such additional monthly fee
shall not exceed 1/12 of .20% of the average daily net assets. Conversely, the
compensation payable by KAGGF will be reduced by an annual rate of .02% of such
average daily net assets for each percentage point (fractions to be prorated) by
which the performance of the Class A shares of the Fund falls below that of the
Index, provided that such reduction in the monthly fee shall not exceed 1/12 of
.20% of the average net assets. The total fee on an annual basis can range from
.45% to .85% of average daily net assets. KAGGF's investment performance during
any twelve month period is measured by the percentage difference between (a) the
opening net asset value of one Class A share of the Fund and (b) the sum of the
closing net asset value of one Class A share of the Fund plus the value of any
income and capital gain dividends on such share during the period treated as if
reinvested in Class A shares of the Fund at the time of distribution. The
performance of the Index is measured by the percentage change in the Index
between the beginning and the end of the twelve month period with cash
distributions on the securities which comprise the Index being treated as
reinvested in the Index at the end of each month following the payment of the
dividend. Each monthly calculation of the incentive portion of the fee may be
illustrated as follows: if over the preceding twelve month period KAGGF's
adjusted net asset value applicable to one Class A share went from $10.00 to
$11.50 (15% appreciation), and the Index, after adjustment, went from 100 to 104
(or only 4%), the entire incentive compensation would have been earned by ZKI.
On the other hand, if the Index rose from 100 to 115 (15%), no incentive fee
would have been payable. A rise in the Index from 100 to 125 (25%) would have
resulted in the minimum monthly fee of 1/12 of .45%. Since the computation is
not cumulative from year to year, an additional management fee may be payable
with respect to a particular year, although KAGGF's performance over some longer
period of time may be less favorable than that of the Index. Conversely, a lower
management fee may be payable in a year in which the performance of the Fund's
Class A shares is less favorable than that of the Index, although the
performance
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<PAGE> 75
of the Fund's Class A shares over a longer period of time might be better than
that of the Index.
For the first year after commencement of operations, KAGGF will pay to ZKI an
annual management fee computed by applying the annual base fee described above
to the average daily net assets of the Fund for the year subject to upward or
downward adjustment (at the annual rate described above) on the basis of the
investment performance of the Fund's Class A Shares in relation to the
investment record of the Index for such year. During the first such year, the
Fund will pay ZKI on a monthly basis 1/12 of the minimum annual fee that would
be payable with any balance due for such year to be payable at the end of such
year.
C-13
<PAGE> 76
EXHIBIT D
FORM OF SUB-ADVISORY AGREEMENT
WITH ZURICH INVESTMENT MANAGEMENT LIMITED
AGREEMENT made this day of , 199 , by and between SCUDDER
KEMPER INVESTMENTS, INC., a Delaware corporation (the "Adviser") and ZURICH
INVESTMENT MANAGEMENT LIMITED, an English corporation (the "Sub-Adviser").
WHEREAS, [Name of Fund], a Massachusetts business trust (the "Fund") is a
management investment company registered under the Investment Company Act of
1940;
WHEREAS, the Fund has retained the Adviser to render to it investment advisory
and management services with regard to the Fund's sole series (the "initial
series") pursuant to an Investment Management Agreement (the "Management
Agreement"); and
WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to render
investment advisory and management services with respect to that portion of the
portfolio of the Fund's initial series allocated to the Sub-Adviser by the
Adviser for management, including services related to foreign securities,
foreign currency transactions and related investments, and the Sub-Adviser is
willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:
1. The Adviser hereby employs the Sub-Adviser to manage the investment and
reinvestment of the assets of the initial series of the Fund allocated by the
Adviser in its sole discretion to the Sub-Adviser for management, including
services related to foreign securities, foreign currency transactions and
related investments, in accordance with the applicable investment objectives,
policies and limitations and subject to the supervision of the Adviser and the
Board of Trustees of the Fund for the period and upon the terms herein set
forth, and to place orders for the purchase or sale of portfolio securities for
the Fund's account with brokers or dealers selected by the Sub-Adviser; and, in
connection therewith, the Sub-Adviser is authorized as the agent of the Fund to
give instructions to the Custodian of the Fund as to the deliveries of
securities and payments of cash for the account of the Fund. In connection with
the selection of such brokers or dealers and the placing of such orders, the
Sub-Adviser is directed to seek for the Fund best execution of orders. Subject
to such policies as the Board of Trustees of the Fund determines and subject to
satisfying the requirements of Section 28(e) of the Securities Exchange Act of
1934, the Sub-Adviser shall not be deemed to
D-1
<PAGE> 77
have acted unlawfully or to have breached any duty, created by this Agreement or
otherwise, solely by reason of its having caused the Fund to pay a broker or
dealer an amount of commission for effecting a securities transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion. The Adviser recognizes that all
research services and research that the Sub-Adviser receives are available for
all clients of the Sub-Adviser, and that the Fund and other clients of the
Sub-Adviser may benefit thereby. The investment of funds shall be subject to all
applicable restrictions of the Agreement and Declaration of Trust and By-Laws of
the Fund as may from time to time be in force.
The Sub-Adviser accepts such employment and agrees during such period to render
such investment management services, to furnish related office facilities and
equipment and clerical, bookkeeping and administrative services for the Fund, to
permit any of its officers or employees to serve without compensation as
trustees or officers of the Fund if elected to such positions and to assume the
obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund or the Adviser in any
way or otherwise be deemed an agent of the Fund or the Adviser. It is understood
and agreed that the Sub-Adviser, by separate agreements with the Fund, may also
serve the Fund in other capacities.
The Sub-Adviser will keep the Fund and the Adviser informed of developments
materially affecting the Fund and shall, on the Sub-Adviser's own initiative and
as reasonably requested by the Adviser or the Fund, furnish to the Fund and the
Adviser from time to time whatever information the Adviser reasonably believes
appropriate for this purpose.
The Sub-Adviser agrees that, in the performance of the duties required of it by
this Agreement, it will comply with the Investment Advisers Act of 1940 and the
Investment Company Act of 1940, and all rules and regulations thereunder, and
all applicable laws and regulations and with any applicable procedures adopted
by the Fund's Board of Trustees and identified in writing to the Sub-Adviser.
The Sub-Adviser shall provide the Adviser with such investment portfolio
accounting and shall maintain and provide such detailed records and reports as
the Adviser may from time to time reasonably request, including without
limitation, daily processing of investment transactions and
D-2
<PAGE> 78
cash positions, periodic valuations of investment portfolio positions as
required by the Adviser, monthly reports of the investment portfolio and all
investment transactions and the preparation of such reports and compilation of
such data as may be required by the Adviser to comply with the obligations
imposed upon it under Management Agreement.
The Sub-Adviser shall provide adequate security with respect to all materials,
records, documents and data relating to any of its responsibilities pursuant to
this Agreement including any means for the effecting of securities transactions.
The Sub-Adviser agrees that it will make available to the Adviser and the Fund
promptly upon their request copies of all of its investment records and ledgers
with respect to the Fund to assist the Adviser and the Fund in monitoring
compliance with the Investment Company Act of 1940 and the Investment Advisers
Act of 1940, as well as other applicable laws. The Sub-Adviser will furnish the
Fund's Board of Trustees such periodic and special reports with respect to the
Fund's portfolio as the Adviser or the Board of Trustees may reasonably request.
In compliance with the requirements of Rule 31a-3 under the Investment Company
Act of 1940, the Sub-Adviser hereby agrees that any records that it maintains
for the Fund are the property of the Fund and further agrees to surrender
promptly to the Fund copies of any such records upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the Investment Company Act of 1940 any records with respect to the
Sub-Adviser's duties hereunder required to be maintained by Rule 31a-1 under
such Act to the extent that the Sub-Adviser prepares and maintains such records
pursuant to this Agreement and to preserve the records required by Rule 204-2
under the Investment Advisers Act of 1940 for the period specified in that Rule.
The Sub-Adviser agrees that it will immediately notify the Adviser and the Fund
in the event that the Sub-Adviser: (i) becomes subject to a statutory
disqualification that prevents the Sub-Adviser from serving as an investment
adviser pursuant to this Agreement; or (ii) is or expects to become the subject
of an administrative proceeding or enforcement action by the United States
Securities and Exchange Commission, the Investment Management Regulatory
Organization ("IMRO") or other regulatory authority.
The Sub-Adviser represents that it is an investment adviser registered under the
Investment Advisers Act of 1940 and other applicable laws and it is regulated by
IMRO and will treat the Fund as a Non-Private Customer as defined by IMRO. The
Sub-Adviser agrees to maintain the completeness and accuracy of its registration
on Form ADV in accordance with all legal requirements relating to that Form. The
Sub-Adviser acknowledges that it is an "investment adviser" to the Fund within
the
D-3
<PAGE> 79
meaning of the Investment Company Act of 1940 and the Investment Advisers Act of
1940.
The Sub-Adviser shall be responsible for maintaining an appropriate compliance
program to ensure that the services provided by it under this Agreement are
performed in a manner consistent with applicable laws and the terms of this
Agreement. Furthermore, the Sub-Adviser shall maintain and enforce a Code of
Ethics that is in form and substance satisfactory to the Adviser. Sub-Adviser
agrees to provide such reports and certifications regarding its compliance
program as the Adviser or the Fund shall reasonably request from time to time.
2. In the event that there are, from time to time, one or more additional series
of the Fund with respect to which the Adviser desires to retain the Sub-Adviser
to render investment advisory and management services hereunder, the Adviser
shall notify the Sub-Adviser in writing. If the Sub-Adviser is willing to render
such services, it shall notify the Adviser in writing whereupon such additional
series shall become subject to this Agreement.
3. For the services and facilities described in Section 1, the Adviser will pay
to the Sub-Adviser, at the end of each calendar month, a sub-advisory fee
computed at an annual rate of [see page 19 of the proxy statement for each
Fund's sub-advisory fee] of that portion of the average daily net assets of the
initial series of the Fund that is allocated by the Adviser to the Sub-Adviser
for management.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively.
4. The services of the Sub-Adviser under this Agreement are not to be deemed
exclusive, and the Sub-Adviser shall be free to render similar services or other
services to others so long as its services hereunder are not impaired thereby.
5. The Sub-Adviser shall arrange, if desired by the Fund, for officers or
employees of the Sub-Adviser to serve, without compensation from the Fund, as
trustees, officers or agents of the Fund if duly elected or appointed to such
positions and subject to their individual consent and to any limitations imposed
by law.
6. The net asset value for each series of the Fund subject to this Agreement
shall be calculated as the Board of Trustees of the Fund may determine from time
to time in accordance with the provisions of the Investment Company Act of 1940.
On each day when net asset value is not calculated, the net asset value of a
series shall be deemed to be the net asset value of such series as of the close
of business on the last day on
D-4
<PAGE> 80
which such calculation was made for the purpose of the foregoing computations.
7. Subject to applicable statutes and regulations, it is understood that certain
trustees, officers or agents of the Fund are or may be interested in the
Sub-Adviser as officers, directors, agents, shareholders or otherwise, and that
the officers, directors, shareholders and agents of the Sub-Adviser may be
interested in the Fund otherwise than as a trustee, officer or agent.
8. The Sub-Adviser shall not be liable for any error of judgment or of law or
for any loss suffered by the Fund or the Adviser in connection with the matters
to which this Agreement relates, except loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Sub-Adviser in the performance
of its obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
9. This Agreement shall become effective with respect to the initial series of
the Fund on the date hereof and shall remain in full force until
, 199 , unless sooner terminated as hereinafter provided. This
Agreement shall continue in force from year to year thereafter with respect to
each such series, but only as long as such continuance is specifically approved
for each series at least annually in the manner required by the Investment
Company Act of 1940 and the rules and regulations thereunder; provided, however,
that if the continuation of this Agreement is not approved for a series, the
Sub-Adviser may continue to serve in such capacity for such series in the manner
and to the extent permitted by the Investment Company Act of 1940 and the rules
and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment or
in the event of the termination of the Management Agreement and may be
terminated at any time with respect to any series subject to this Agreement
without the payment of any penalty by the Adviser or by the Sub-Adviser on sixty
(60) days written notice to the other party. The Fund may effect termination
with respect to any such series without payment of any penalty by action of the
Board of Trustees or by vote of a majority of the outstanding voting securities
of such series on sixty (60) days written notice to the Adviser and the
Sub-Adviser.
This Agreement may be terminated with respect to any series at any time without
the payment of any penalty by the Board of Trustees of the Fund, by vote of a
majority of the outstanding voting securities of such series or by the Adviser
in the event that it shall have been established by a court of competent
jurisdiction that the Sub-Adviser or any officer or director of the Sub-Adviser
has taken any action which results in a breach of the covenants of the
Sub-Adviser set forth herein.
D-5
<PAGE> 81
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Sub-Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
10. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
11. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
12. This Agreement shall be construed in accordance with applicable federal law
and the laws of the Commonwealth of Massachusetts.
13. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.
SCUDDER KEMPER INVESTMENTS, INC.
By:
----------------------------
Title:
-------------------------
ZURICH INVESTMENT MANAGEMENT LIMITED
By:
----------------------------
Title:
-------------------------
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<PAGE> 82
EXHIBIT E
FORM OF SUB-ADVISORY AGREEMENT
WITH ZURICH KEMPER VALUE ADVISORS, INC.
AGREEMENT made this day of , 199 , by and between SCUDDER KEMPER
INVESTMENTS, INC., a Delaware corporation (the "Adviser") and ZURICH KEMPER
VALUE ADVISORS, INC., a Delaware corporation (the "Sub-Adviser").
WHEREAS, KEMPER VALUE PLUS GROWTH FUND, a Massachusetts business trust (the
"Fund") is an open-end management investment company registered under the
Investment Company Act of 1940, the shares of beneficial interest ("Shares") of
the initial series of which are registered under the Securities Act of 1933;
WHEREAS, the Fund has retained the Adviser to render to it investment advisory
and management services pursuant to an Investment Management Agreement, dated
, 199 (the "Management Agreement"); and
WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to render
investment advisory and management services with respect to that portion of the
Fund's portfolio allocated to the Sub-Adviser by the Adviser for management and
the Sub-Adviser is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:
1. The Adviser hereby employs the Sub-Adviser to manage the investment and
reinvestment of the assets of the Fund allocated by the Adviser in its sole
discretion to the Sub-Adviser for management in accordance with the applicable
investment objectives and policies and limitations and subject to the
supervision of the Adviser and the Board of Trustees of the Fund for the period
and upon the terms herein set forth, and to place orders for the purchase or
sale of portfolio securities for the Fund's account with brokers or dealers
selected by the Sub-Adviser and, in connection therewith, the Sub-Adviser; is
authorized as the agent of the Fund to give instructions to the Custodian of the
Fund as to the deliveries of securities and payments of cash for the account of
the Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, the Sub-Adviser is directed to seek for the Fund best
execution of orders. Subject to such policies as the Board of Trustees of the
Fund determines, the Sub-Adviser shall not be deemed to have acted unlawfully or
to have breached any duty, created by this Agreement or otherwise, solely by
reason of its having caused the Fund to pay a broker
E-1
<PAGE> 83
or dealer an amount of commission for effecting a securities transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Sub-Adviser determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion. The Adviser recognizes that all
research services and research that the Sub-Adviser receives or generates are
available for all clients of the Sub-Adviser, and that the Fund and other
clients of the Sub-Adviser may benefit thereby. The investment of funds shall be
subject to all applicable restrictions of the Agreement and Declaration of Trust
and By-Laws of the Fund as may from time to time be in force.
The Sub-Adviser accepts such employment and agrees during such period to render
such investment management services, to furnish related office facilities and
equipment and clerical, bookkeeping and administrative services for the Fund, to
permit any of its officers or employees to serve without compensation as
trustees or officers of the Fund if elected to such positions and to assume the
obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund or the Adviser in any
way or otherwise be deemed an agent of the Fund or the Adviser. It is understood
and agreed that the Sub-Adviser, by separate agreements with the Fund, may also
serve the Fund in other capacities.
2. In the event that the Fund establishes one or more additional series with
respect to which the Adviser desires to retain the Sub-Adviser to render
investment advisory and management services hereunder, the Adviser shall notify
the Sub-Adviser in writing. If the Sub-Adviser is willing to render such
services, it shall notify the Adviser in writing whereupon such series shall
become subject to this agreement.
3. For the services and facilities described in Section 1, the Adviser will pay
to the Sub-Adviser at the end of each calendar month, a sub-advisory fee
computed at an annual rate of .25 of 1% of the Fund's average daily net assets.
The fee as computed above shall be computed separately for, and charged as an
expense of, each series of the Fund based upon the average daily net assets of
such series. For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
E-2
<PAGE> 84
4. The services of the Sub-Adviser under this Agreement are not to be deemed
exclusive, and the Sub-Adviser shall be free to render similar services or other
services to others so long as its services hereunder are not impaired thereby.
5. The Sub-Adviser shall arrange, if desired by the Fund, for officers or
employees of the Sub-Adviser to serve, without compensation from the Fund, as
trustees, officers or agents of the Fund if duly elected or appointed to such
positions and subject to their individual consent and to any limitations imposed
by law.
6. The net asset value for each series of the Fund shall be calculated in
accordance with the provisions of the Fund's prospectus or as the trustees may
determine in accordance with the provisions of the Investment Company Act of
1940. On each day when net asset value is not calculated, the net asset value of
a series shall be deemed to be the net asset value of such series as of the
close of business on the last day on which such calculation was made for the
purpose of the foregoing computations.
7. Subject to applicable statutes and regulations, it is understood that certain
trustees, officers or agents of the Fund are or may be interested in the
Sub-Adviser as officers, directors, agents, shareholders or otherwise, and that
the officers, directors, shareholders and agents of the Sub-Adviser may be
interested in the Fund otherwise than as a trustee, officer or agent.
8. The Sub-Adviser shall not be liable for any error of judgment or of law or
for any loss suffered by the Fund or the Adviser in connection with the matters
to which this Agreement relates, except loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Sub-Adviser in the performance
of its obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
9. This Agreement shall become effective with respect to the initial series of
the Fund on the date hereof and shall remain in full force until ,
199 , unless sooner terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter with respect to each series, but
only as long as such continuance is specifically approved for each series at
least annually in the manner required by the Investment Company Act of 1940 and
the rules and regulations thereunder; provided, however, that if the
continuation of this Agreement is not approved for a series, the Sub-Adviser may
continue to serve in such capacity for such Portfolio in the manner and to the
extent permitted by the Investment Company Act of 1940 and the rules and
regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment or
in the event of the termination of the Management Agreement
E-3
<PAGE> 85
and may be terminated at any time with respect to any series without the payment
of any penalty by the Adviser or by the Sub-Adviser on sixty (60) days written
notice to the other party. The Fund may effect termination with respect to any
series without payment of any penalty by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of such series on sixty
(60) days written notice to the Adviser and the Sub-Adviser.
This Agreement may be terminated with respect to any series at any time without
the payment of any penalty by the Board of Trustees of the Fund, by vote of a
majority of the outstanding voting securities of such series or by the Adviser
in the event that it shall have been established by a court of competent
jurisdiction that the Sub-Adviser or any officer or director of the Sub-Adviser
has taken any action which results in a breach of the covenants of the
Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Sub-Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
10. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
11. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepared, to the other party at such address as such other
party may designate for the receipt of such notice.
12. This Agreement shall be construed in accordance with applicable federal law
and the laws of the Commonwealth of Massachusetts.
13. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
E-4
<PAGE> 86
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.
SCUDDER KEMPER
INVESTMENTS, INC.
By:
--------------------------
Title:
-----------------------
ATTEST:
- -------------------------------
Title:
- -------------------------------
ZURICH KEMPER VALUE
ADVISORS, INC.
By:
--------------------------
Title:
-----------------------
ATTEST:
- -------------------------------
Title:
- -------------------------------
E-5
<PAGE> 87
EXHIBIT F
FORM OF
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this day of , 199 , between KEMPER
, a Massachusetts business trust (the "Fund"), and ZURICH
KEMPER DISTRIBUTORS, INC., a Delaware corporation ("ZKDI").
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby appoints ZKDI to act as agent for the distribution of shares
of beneficial interest (hereinafter called "shares") of the Fund in
jurisdictions wherein shares of the Fund may legally be offered for sale;
provided, however, that the Fund in its absolute discretion may (a) issue or
sell shares directly to holders of shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; or (b) issue or
sell shares at net asset value to the shareholders of any other investment
company, for which ZKDI shall act as exclusive distributor, who wish to exchange
all or a portion of their investment in shares of such other investment company
for shares of the Fund. ZKDI shall appoint various financial service firms
("Firms") to provide distribution services to investors. The Firms shall provide
such office space and equipment, telephone facilities, personnel, literature
distribution, advertising and promotion as is necessary or beneficial for
providing information and distribution services to existing and potential
clients of the Firms. ZKDI may also provide some of the above services for the
Fund.
ZKDI accepts such appointment as distributor and principal underwriter and
agrees to render such services and to assume the obligations herein set forth
for the compensation herein provided. ZKDI shall for all purposes herein
provided be deemed to be an independent contractor and, unless expressly
provided herein or otherwise authorized, shall have no authority to act for or
represent the Fund in any way. ZKDI, by separate agreement with the Fund, may
also serve the Fund in other capacities. The services of ZKDI to the Fund under
this Agreement are not to be deemed exclusive, and ZKDI shall be free to render
similar services or other services to others so long as its services hereunder
are not impaired thereby.
In carrying out its duties and responsibilities hereunder, ZKDI will, pursuant
to separate written contracts, appoint various Firms to provide advertising,
promotion and other distribution services contemplated hereunder directly to or
for the benefit of existing and potential shareholders
F-1
<PAGE> 88
who may be clients of such Firms. Such Firms shall at all times be deemed to be
independent contractors retained by ZKDI and not the Fund.
ZKDI shall use its best efforts with reasonable promptness to sell such part of
the authorized shares of the Fund remaining unissued as from time to time shall
be effectively registered under the Securities Act of 1933 ("Securities Act"),
at prices determined as hereinafter provided and on terms hereinafter set forth,
all subject to applicable federal and state laws and regulations and to the
Agreement and Declaration of Trust of the Fund.
2. ZKDI shall sell shares of the Fund to or through qualified Firms in such
manner, not inconsistent with the provisions hereof and the then effective
registration statement (and related prospectus) of the Fund under the Securities
Act, as ZKDI may determine from time to time, provided that no Firm or other
person shall be appointed or authorized to act as agent of the Fund without the
prior consent of the Fund. In addition to sales made by it as agent of the Fund,
ZKDI may, in its discretion, also sell shares of the Fund as principal to
persons with whom it does not have selling group agreements.
Shares of any class of any series of the Fund offered for sale or sold by ZKDI
shall be so offered or sold at a price per share determined in accordance with
the then current prospectus. The price the Fund shall receive for all shares
purchased from it shall be the net asset value used in determining the public
offering price applicable to the sale of such shares. Any excess of the sales
price over the net asset value of the shares of the Fund sold by ZKDI as agent
shall be retained by ZKDI as a commission for its services hereunder. ZKDI may
compensate Firms for sales of shares at the commission levels provided in the
Fund's prospectus from time to time. ZKDI may pay other commissions, fees or
concessions to Firms, and may pay them to others in its discretion, in such
amounts as ZKDI shall determine from time to time. ZKDI shall be entitled to
receive and retain any applicable contingent deferred sales charge as described
in the Fund's prospectus. ZKDI shall also receive any distribution services fee
payable by the Fund as provided in Section 8 hereof.
ZKDI will require each Firm to conform to the provisions hereof and the
Registration Statement (and related prospectus) at the time in effect under the
Securities Act with respect to the public offering price or net asset value, as
applicable, of the Fund's shares, and neither ZKDI nor any such Firms shall
withhold the placing of purchase orders so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively registered under the
Securities Act for sale as herein contemplated such shares as ZKDI shall
reasonably request and as the Securities and Exchange Commission shall permit to
be so registered. Notwithstanding any other provision
F-2
<PAGE> 89
hereof, the Fund may terminate, suspend or withdraw the offering of shares
whenever, in its sole discretion, it deems such action to be desirable.
4. The Fund will execute any and all documents and furnish any and all
information that may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund as
a dealer where necessary or advisable) in such states as ZKDI may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to ZKDI from time to time such information
with respect to the Fund and its shares as ZKDI may reasonably request for use
in connection with the sale of shares of the Fund.
5. ZKDI shall issue and deliver or shall arrange for various Firms to issue and
deliver on behalf of the Fund such confirmations of sales made by it pursuant to
this agreement as may be required. At or prior to the time of issuance of
shares, ZKDI will pay or cause to be paid to the Fund the amount due the Fund
for the sale of such shares. Certificates shall be issued or shares registered
on the transfer books of the Fund in such names and denominations as ZKDI may
specify.
6. ZKDI shall order shares of the Fund from the Fund only to the extent that it
shall have received purchase orders therefor. ZKDI will not make, or authorize
Firms or others to make (a) any short sales of shares of the Fund; or (b) any
sales of such shares to any trustee or officer of the Fund or to any officer or
director of ZKDI or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Fund, or to any corporation
or association, unless such sales are made in accordance with the then current
prospectus relating to the sale of such shares. ZKDI, as agent of and for the
account of the Fund, may repurchase the shares of the Fund at such prices and
upon such terms and conditions as shall be specified in the current prospectus
of the Fund. In selling or reacquiring shares of the Fund for the account of the
Fund, ZKDI will in all respects conform to the requirements of all state and
federal laws and the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., relating to such sale or reacquisition, as the case
may be, and will indemnify and save harmless the Fund from any damage or expense
on account of any wrongful act by ZKDI or any employee, representative or agent
of ZKDI. ZKDI will observe and be bound by all the provisions of the Agreement
and Declaration of Trust of the Fund (and of any fundamental policies adopted by
the Fund pursuant to the Investment Company Act of 1940, notice of which shall
have been given to ZKDI) which at the time in any way require, limit, restrict,
prohibit or otherwise regulate any action on the part of ZKDI hereunder.
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<PAGE> 90
7. The Fund shall assume and pay all charges and expenses of its operations not
specifically assumed or otherwise to be provided by ZKDI under this Agreement.
The Fund will pay or cause to be paid expenses (including the fees and
disbursements of its own counsel) of any registration of the Fund and its shares
under the United States securities laws and expenses incident to the issuance of
shares of beneficial interest, such as the cost of share certificates, issue
taxes, and fees of the transfer agent. ZKDI will pay all expenses (other than
expenses which one or more Firms may bear pursuant to any agreement with ZKDI)
incident to the sale and distribution of the shares issued or sold hereunder,
including, without limiting the generality of the foregoing, all (a) expenses of
printing and distributing any prospectus and of preparing, printing and
distributing or disseminating any other literature, advertising and selling aids
in connection with the offering of the shares for sale (except that such
expenses need not include expenses incurred by the Fund in connection with the
preparation, typesetting, printing and distribution of any registration
statement or prospectus, report or other communication to shareholders in their
capacity as such), (b) expenses of advertising in connection with such offering
and (c) expenses (other than the Fund's auditing expenses) of qualifying or
continuing the qualification of the shares for sale and, in connection
therewith, of qualifying or continuing the qualification of the Fund as a dealer
or broker under the laws of such states as may be designated by ZKDI under the
conditions herein specified. No transfer taxes, if any, which may be payable in
connection with the issue or delivery of shares sold as herein contemplated or
of the certificates for such shares shall be borne by the Fund, and ZKDI will
indemnify and hold harmless the Fund against liability for all such transfer
taxes.
8. For the services and facilities described herein in connection with Class B
shares and Class C shares of each series of the Fund, the Fund will pay to ZKDI
at the end of each calendar month a distribution services fee computed at the
annual rate of .75% of average daily net assets attributable to the Class B
shares and Class C shares of each such series. For the month and year in which
this Agreement becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement is in effect
during the month and year, respectively. The foregoing fee shall be in addition
to and shall not be reduced or offset by the amount of any contingent deferred
sales charge received by ZKDI under Section 2 hereof.
The net asset value shall be calculated in accordance with the provisions of the
Fund's current prospectus. On each day when net asset value is not calculated,
the net asset value of a share of any class of any series of the Fund shall be
deemed to be the net asset value of such a share as of the close of business on
the last previous day on which such calculation was
F-4
<PAGE> 91
made. The distribution services fee for any class of a series of the Fund shall
be based upon average daily net assets of the series attributable to the class
and such fee shall be charged only to such class.
9. ZKDI shall prepare reports for the Board of Trustees of the Fund on a
quarterly basis in connection with the Fund's distribution plan for Class B
shares and Class C shares showing amounts paid to the various Firms and such
other information as from time to time shall be reasonably requested by the
Board of Trustees.
10. To the extent applicable, this Agreement constitutes the plan for the Class
B shares and Class C shares of each series of the Fund pursuant to Rule 12b-1
under the Investment Company Act of 1940; and this Agreement and plan shall be
approved and renewed in accordance with Rule 12b-1 for such Class B shares and
Class C shares separately.
This Agreement shall become effective on the date hereof and shall continue
until , 199 ; and shall continue from year to year thereafter only so
long as such continuance is approved in the manner required by the Investment
Company Act of 1940.
This Agreement shall automatically terminate in the event of its assignment and
may be terminated at any time without the payment of any penalty by the Fund or
by ZKDI on sixty (60) days written notice to the other party. The Fund may
effect termination with respect to any class of any series of the Fund by a vote
of (i) a majority of the Board of Trustees, (ii) a majority of the trustees who
are not interested persons of the Fund and who have no direct or indirect
financial interest in this Agreement or in any agreement related to this
Agreement, or (iii) a majority of the outstanding voting securities of the
class. Without prejudice to any other remedies of the Fund, the Fund may
terminate this Agreement at any time immediately upon ZKDI's failure to fulfill
any of its obligations hereunder.
This Agreement may not be amended to increase the amount to be paid to ZKDI by
the Fund for services hereunder with respect to a class of any series of the
Fund without the vote of a majority of the outstanding voting securities of such
class. All material amendments to this Agreement must in any event be approved
by a vote of the Board of Trustees of the Fund including the trustees who are
not interested persons of the Fund and who have no direct or indirect financial
interest in this Agreement or in any agreement related to this Agreement, cast
in person at a meeting called for such purpose.
The terms "assignment", "interested" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment Company
Act of 1940 and the rules and regulations thereunder.
F-5
<PAGE> 92
Termination of this Agreement shall not affect the right of ZKDI to receive
payments on any unpaid balance of the compensation described in Section 8 earned
prior to such termination.
11. ZKDI will not use or distribute, or authorize the use, distribution or
dissemination by Firms or others in connection with the sale of Fund shares any
statements other than those contained in the Fund's current prospectus, except
such supplemental literature or advertising as shall be lawful under federal and
state securities laws and regulations. ZKDI will furnish the Fund with copies of
all such material.
12. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
13. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
14. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust, and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the Trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund. With
respect to any claim by ZKDI for recovery of any liability of the Fund arising
hereunder allocated to a particular series or class, whether in accordance with
the express terms hereof or otherwise, ZKDI shall have recourse solely against
the assets of that series or class to satisfy such claim and shall have no
recourse against the assets of any other series or class for such purpose.
15. This Agreement shall be construed in accordance with applicable federal law
and the laws of the Commonwealth of Massachusetts.
16. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
F-6
<PAGE> 93
IN WITNESS WHEREOF, the Fund and ZKDI have caused this Agreement to be executed
as of the day and year first above written.
[FUND]
By:
------------------------
Title:
---------------------
ATTEST:
- --------------------------------
Title:
- --------------------------------
ZURICH KEMPER
DISTRIBUTORS, INC.
By:
------------------------
Title:
---------------------
ATTEST:
- --------------------------------
Title:
- --------------------------------
F-7
<PAGE> 94
EXHIBIT G
PROPOSED FUNDAMENTAL INVESTMENT POLICIES
The following policies are proposed to be changed with respect to each Series,
Portfolio or Fund. The proposed additions are underlined.
The Series, Portfolio, or Fund may not:
KTEC, KQEF, KGF, KVGF, KSCF, KTRF, KGSF, KNTIS:
"Purchase securities of any issuer (other than obligations of, or guaranteed by,
the United States Government, its agencies or instrumentalities) if, as a
result, more than 5% of the Fund's total assets would be invested in securities
of that issuer, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND
MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KBCF, KARGF:
"Purchase securities of any issuer (other than obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities) if, as a result, more
than 5% of the total value of the Fund's assets would be invested in securities
of that issuer, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND
MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KP:
"Purchase securities of any issuer (other than obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities) if, as a result, more
than 5% of the value of the Fund's net assets would be invested in securities of
that issuer, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY
BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT
OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KICPF:
"Purchase securities of any issuer (other than obligations of, or guaranteed by,
the United States or Canadian governments, their agencies or instrumentalities)
if, as a result, more than 5% of the Fund's total assets would be invested in
securities of that issuer, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
THE FUND MAY BE INVESTED IN ANOTHER REGISTERED
G-1
<PAGE> 95
INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY
SIMILAR INVESTMENT POLICIES AS THE FUND."
KGIF:
"Purchase securities of any issuer (other than obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities) if, as a result, more
than 5% of the total value of the Fund's assets would be invested in securities
of that issuer except that, with respect to 50% of the Fund's total assets, the
Fund may invest up to 25% of its total assets in securities of any one issuer,
AND EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE
INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT
OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KAGGF:
"With respect to 50% of its total assets, purchase securities of any issuer
(other than obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities) if, as a result, more than 5% of the total value of the
Fund's assets would be invested in securities of that issuer, EXCEPT THAT ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KSTIS:
"Purchase securities of any issuer (other than obligations of, or guaranteed by,
the United States Government, its agencies or instrumentalities) if, as a
result, more than 5% of the total value of the Fund's assets would be invested
in securities of that issuer, except that, with respect to 50% of the Fund's
total assets, the Fund may invest up to 25% of its total assets in securities of
any one issuer, AND EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE
FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KIF:
"Purchase securities of any issuer (other than obligations of, or guaranteed by,
the United States or any foreign government or their agencies or
instrumentalities) if, as a result, more than 5% of the Fund's total assets
would be invested in securities of that issuer, EXCEPT THAT ALL OR SUBSTANTIALLY
ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT
COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR
INVESTMENT POLICIES AS THE FUND. With respect to 75% of its
G-2
<PAGE> 96
assets, the Fund will limit its investments in the securities of any one foreign
government issuer to 5% of the Fund's total assets."
KAGF:
"With respect to 75% of the Fund's total assets, purchase securities of any
issuer (other than securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities) if, as a result, more than 5% of the
Fund's total assets would be invested in securities of that issuer, EXCEPT THAT
ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KDIF, KHYS:
"With respect to 75% of the Fund's total assets, purchase securities of any
issuer (other than securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in securities of that issuer, or (b) the
Fund would hold more than 10% of the outstanding voting securities of that
issuer, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE
INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT
OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KTEC, KQEF, KGF, KVGF, KSCF, KTRF, KP, KICPF:
"Purchase more than 10% of any class of securities of any issuer, EXCEPT THAT
ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND. All debt securities and
all preferred stocks are each considered as one class."
KAGGF, KBCF, KGIF, KARGF, KAGF:
"Purchase more than 10% of any class of voting securities of any issuer, EXCEPT
THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN
ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KIF:
"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, AND EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE
G-3
<PAGE> 97
ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY
HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT
POLICIES AS THE FUND. All debt securities and all preferred stocks are each
considered as one class."
KAGGF:
"Invest more than 25% of its total assets in a single issuer (other than
obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities), EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE
FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KSTIS (EXCEPT KCATF):
"Purchase securities (other than securities of the United States Government, its
agencies or instrumentalities, or of a state or its political subdivisions) if
as a result of such purchase 25% or more of its total assets would be invested
in any industry, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND
MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KTEC, KQEF, KGF, KVGF, KSCF, KTRF:
"Invest 25% or more of its total assets in any one industry, EXCEPT THAT ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND. Water, communications,
electric and gas utilities shall each be considered a separate industry."
KGIF:
"Purchase securities (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if as a result of such purchase
25% or more of the Fund's total assets would be invested in any one industry,
EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED
IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE
AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KAGGF, KBCF:
"Purchase securities (other than securities of the U.S. Government, its agencies
or instrumentalities) if as a result of such purchase 25% or more
G-4
<PAGE> 98
of the Fund's total assets would be invested in any one industry, EXCEPT THAT
ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KARGF:
"Purchase securities (other than securities of the U.S. Government, its agencies
or instrumentalities including collateralized obligations thereof) if as a
result of such purchase 25% or more of the Fund's total assets would be invested
in any one industry, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE
FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KCRF:
"Concentrate more than 25% of the Fund's net assets in any one industry;
provided, however, that the Fund intends, under normal conditions, to invest
more than 25% of its net assets in instruments issued by banks in accordance
with its investment objective and policies, AND EXCEPT THAT ALL OR SUBSTANTIALLY
ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT
COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR
INVESTMENT POLICIES AS THE FUND."
KIF:
"Concentrate more than 25% of the value of its assets in any one industry,
EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED
IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE
AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND. Water,
communications, electric and gas utilities shall each be considered a separate
industry. This limitation shall not apply to obligations issued by the United
States or any foreign government or their agencies or instrumentalities."
KDIF, KHYS, KICPF:
"Concentrate more than 25% of the value of its assets in any one industry,
EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED
IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE
AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND. Water,
communications, electric and gas utilities shall each be considered a separate
industry."
G-5
<PAGE> 99
KUSMF:
"Concentrate more than 25% of the Fund's net assets in any one industry, EXCEPT
THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN
ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KNTIS:
"With respect to temporary investments, purchase securities (other than
securities of the United States Government, its agencies or instrumentalities)
if as a result of such purchase more than 25% of the Fund's total assets would
be invested in any industry, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS
OF THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE
SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE
FUND."
KCATF:
"Purchase securities (other than securities of the United States Government, its
agencies or instrumentalities, or the State of California or its political
subdivisions) if as a result of such purchase more than 25% of the Fund's total
assets would be invested in any one industry, EXCEPT THAT ALL OR SUBSTANTIALLY
ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT
COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR
INVESTMENT POLICIES AS THE FUND."
KAGF:
"Concentrate 25% or more of the Fund's total assets in any one industry, EXCEPT
THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN
ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND. Water, communications,
electric and gas utilities shall each be considered a separate industry. This
limitation shall not apply to obligations issued by the U.S. Government or its
agencies or instrumentalities."
KSIGF:
"Concentrate more than 10% of the Fund's net assets in any one industry, EXCEPT
THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN
ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
G-6
<PAGE> 100
KGSF:
"Purchase any securities other than obligations issued or guaranteed by the
United States Government or its agencies, some of which may be subject to
repurchase agreements, except that the Fund may engage in options and financial
futures transactions, and EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE
SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE
FUND."
KTEC, KQEF, KAGGF, KBCF, KGF, KVGF, KSCF, KTRF, KGIF, KARGF, KDIF, KHYS, KICPF,
KP, KNTIS, KSTIS:
"Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities, AND EXCEPT THAT ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KIF, KAGF:
"Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities, AND EXCEPT THAT ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND. The Fund may buy and sell
securities outside the United States which are not registered with the
Securities and Exchange Commission or marketable in the United States."
KGSF:
"Act as an underwriter of securities, except to the extent the Fund may be
deemed to be an underwriter in connection with the disposition of portfolio
securities, AND EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND
MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KP, KCATF:
"Purchase securities or make investments other than in accordance with its
investment objective and policies, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT
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<PAGE> 101
COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR
INVESTMENT POLICIES AS THE FUND."
KNTIS, KSTIS (EXCEPT KCATF):
"Make investments other than in accordance with its investment objective and
policies, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE
INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT
OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
KICPF:
"Invest in securities other than those specified under "Investment Objectives,
Policies, and Risk Factors" in the prospectus, EXCEPT THAT ALL OR SUBSTANTIALLY
ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT
COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR
INVESTMENT POLICIES AS THE FUND. This restriction does not prevent the Fund from
holding common stocks or other corporate securities not qualifying as debt
obligations if such securities are acquired through conversion provisions of
debt securities or from corporate reorganizations. Nor does it prevent the
holding of debt securities whose quality rating is reduced by the rating
services below those specified under "Investment Objectives, Policies and Risk
Factors" after purchase by the Fund."
KCRF, KUSMF:
"Invest more than 5% of the Fund's total assets in securities of issuers (other
than obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities) which with their predecessors have a record of less than
three years continuous operation, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY
HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT
POLICIES AS THE FUND."
KCRF, KUSMF:
"Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of Kemper Portfolios or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and together
they own more than 5% of the securities of such issuer, EXCEPT THAT ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
G-8
<PAGE> 102
KCRF, KUSMF:
"Invest more than 5% of the Fund's total assets in securities restricted as to
disposition under the federal securities laws (except commercial paper issued
under Section 4(2) of the Securities Act of 1933) and no more than 10% of its
assets will be invested in securities which are considered illiquid, EXCEPT THAT
ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND. [Repurchase agreements
maturing in more than 7 days are considered illiquid for purposes of this
restriction.]"
KCRF, KUSMF:
"Purchase securities of other investment companies, except in connection with a
merger, consolidation, reorganization or acquisition of assets, AND EXCEPT THAT
ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE FUND MAY BE INVESTED IN ANOTHER
REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE FUND."
G-9
<PAGE> 103
EXHIBIT H
KEMPER FUNDS NET ASSETS AND MANAGEMENT FEES
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Kemper Technology Fund................ $1,063 A
Kemper Total Return Fund.............. 3,021 A
Kemper Growth Fund.................... 2,738 A
Kemper Small Capitalization Equity
Fund................................ 934 F
Kemper Income and Capital Preservation
Fund................................ 573 B
Kemper National Tax-Free Income Series
1. Kemper Municipal Bond Fund....... 3,322 C
2. Kemper Intermediate Municipal
Bond Fund........................ 22 B
Kemper Diversified Income Fund........ 779 A
Kemper High Yield Series
1. Kemper High Yield Fund........... 4,097 A
2. Kemper High Yield Opportunity
Fund............................. -- L
Kemper U.S. Government Securities
Fund................................ 4,163 C
Kemper International Fund............. 472 D
Kemper International Bond Fund........ 26 D
Kemper State Tax-Free Income Series
1. Kemper California Tax-Free Income
Fund............................. 1,008 B
2. Kemper New York Tax-Free Income
Fund............................. 286 B
3. Kemper Florida Tax-Free Income
Fund............................. 104 B
4. Kemper Texas Tax-Free Income
Fund............................. 12 B
5. Kemper Ohio Tax-Free Income
Fund............................. 39 B
6. Kemper Michigan Tax-Free Income
Fund............................. 3 B
7. Kemper New Jersey Tax-Free Income
Fund............................. 5 B
8. Kemper Pennsylvania Tax-Free
Income Fund...................... 6 B
</TABLE>
H-1
<PAGE> 104
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Kemper Portfolios
1. Kemper Cash Reserves Fund........ $ 208 E
2. Kemper U.S. Mortgage Fund........ 2,960 B
3. Kemper Short-Intermediate
Government Fund.................. 204 B
Kemper Value Fund, Inc.
1. Kemper Contrarian Fund........... 78 D
2. Kemper-Dreman High Return Equity
Fund............................. 738 D
3. Kemper Small Cap Value Fund...... 273 D
Kemper Adjustable Rate U.S. Government
Fund................................ 82 B
Kemper Blue Chip Fund................. 256 A
Kemper Global Income Fund............. 132 D
Kemper Value Plus Growth Fund......... 39 I
Kemper Quantitative Equity Fund....... 5 A
Kemper Asian Growth Fund.............. 2 J
Kemper Europe Fund.................... 4 D
Kemper Aggressive Growth Fund......... -- F
Zurich Money Funds
1. Zurich Money Market Fund......... 4,362 G
2. Zurich Government Money Fund..... 671 G
3. Zurich Tax-Free Money Fund....... 771 G
Zurich YieldWise Money Fund........... 245 G
Cash Equivalent Fund
1. Money Market Portfolio........... 971 H
2. Government Securities
Portfolio........................ 404 H
3. Tax-Exempt Portfolio............. 445 H
Tax-Exempt California Money Market
Fund................................ 119 H
Cash Account Trust
1. Money Market Portfolio........... 585 H
2. Government Securities
Portfolio........................ 545 H
3. Tax-Exempt Portfolio............. 221 H
Investors Cash Trust
1. Government Securities
Portfolio........................ 169 K
2. Treasury Portfolio............... 63 K
</TABLE>
H-2
<PAGE> 105
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Investors Municipal Cash Fund
1. Investors Florida Municipal Cash
Fund............................ -- H
2. Investors New Jersey Municipal
Cash Fund....................... -- H
3. Investors Pennsylvania Municipal
Cash Fund....................... -- H
4. Tax-Exempt New York Money Market
Fund............................ 61 H
Kemper High Income Trust.............. 215 0.85%
Kemper Intermediate Government
Trust............................... 269 0.80%
Kemper Municipal Income Trust......... 466 0.55%
Kemper Multi-Market Income Trust...... 220 0.85%
Kemper Strategic Municipal Income
Trust............................... 128 0.60%
The Growth Fund of Spain, Inc......... 264 1.00%
Kemper Strategic Income Fund.......... 53 0.85%
Kemper Horizon Fund
1. Kemper Horizon 20+ Portfolio.... 63 A
2. Kemper Horizon 10+ Portfolio.... 63 A
3. Kemper Horizon 5 Portfolio...... 31 A
Investors Fund Series
1. Kemper Money Market Portfolio... 71 0.50%
2. Kemper Total Return Portfolio... 697 0.55%
3. Kemper High Yield Portfolio..... 289 0.60%
4. Kemper Growth Portfolio......... 487 0.60%
5. Kemper Government Securities
Portfolio....................... 84 0.55%
6. Kemper International
Portfolio....................... 163 0.75%
7. Kemper Small Cap Growth
Portfolio....................... 69 0.65%
8. Kemper Investment Grade Bond
Portfolio....................... 2 0.60%
9. Kemper Value Portfolio.......... 21 0.75%
10. Kemper Small Cap Value
Portfolio....................... 13 0.75%
11. Kemper Value+Growth Portfolio... 10 0.75%
12. Kemper Horizon 20+ Portfolio.... 4 0.60%
13. Kemper Horizon 10+ Portfolio.... 6 0.60%
14. Kemper Horizon 5 Portfolio...... 3 0.60%
15. Kemper Blue Chip Portfolio...... -- 0.65%
16. Kemper Global Income
Portfolio....................... -- 0.75%
</TABLE>
H-3
<PAGE> 106
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Kemper Target Equity Fund
1. Kemper Retirement Fund Series
I................................ 117 0.50%
2. Kemper Retirement Fund Series
II............................... 173 0.50%
3. Kemper Retirement Fund Series
III.............................. 127 0.50%
4. Kemper Retirement Fund Series
IV............................... 136 0.50%
5. Kemper Retirement Fund Series
V................................ 137 0.50%
6. Kemper Retirement Fund Series
VI............................... 73 0.50%
7. Kemper Retirement Fund Series
VII.............................. 5 0.50%
8. Kemper Worldwide 2004 Fund....... 36 0.60%
</TABLE>
- ---------------
* Total Net Assets, in millions, as of the most recent fiscal year end.
** Scheduled annual management fees payable to ZKI or its affiliates as a
percentage of average daily net assets.
(A) .58 of 1% of the first $250 million, .55 of 1% of the next $750 million, .53
of 1% of the next $1.5 billion, .51 of 1% of the next $2.5 billion, .48 of
1% of the next $2.5 billion, .46 of 1% of the next $2.5 billion, .44 of 1%
of the next $2.5 billion and .42 of 1% thereafter.
(B) .55 of 1% of the first $250 million, .52 of 1% of the next $750 million,
.50 of 1% of the next $1.5 billion, .48 of 1% of the next $2.5 billion, .45
of 1% of the next $2.5 billion, .43 of 1% of the next $2.5 billion, .41 of
1% of the next $2.5 billion and .40 of 1% thereafter. ZKI has agreed to
temporarily reduce its management fee and reimburse or pay certain
operating expenses of the Intermediate Municipal, Michigan, New Jersey and
Pennsylvania Funds.
(C) .45 of 1% of the first $250 million, .43 of 1% of the next $750 million, .41
of 1% of the next $1.5 billion, .40 of 1% of the next $2.5 billion, .38 of
1% of the next $2.5 billion, .36 of 1% of the next $2.5 billion, .34 of 1%
of the next $2.5 billion and .32 of 1% thereafter.
(D) .75 of 1% of the first $250 million, .72 of 1% of the next $750 million, .70
of 1% of the next $1.5 billion, .68 of 1% of the next $2.5 billion, .65 of
1% of the next $2.5 billion, .64 of 1% of the next $2.5 billion, .63 of 1%
of the next $2.5 billion and .62 of 1% thereafter.
(E) .40 of 1% of the first $250 million, .38 of 1% of the next $750 million,
.35 of 1% of the next $1.5 billion, .32 of 1% of the next $2.5 billion, .30
of 1% of the next $2.5 billion, .28 of 1% of the next $2.5 billion, .26 of
1% of the next $2.5 billion and .25 of 1% thereafter.
H-4
<PAGE> 107
(F) Base investment management fee of .65 of 1% of average daily net assets
plus or minus an incentive fee based upon the investment performance of the
fund as compared with the performance of the Standard & Poor's 500 Stock
Index, which may result in a total fee ranging from .35 of 1% to .95 of 1%
for the Small Capitalization Equity Fund, or .45 of 1% to .85 of 1% for the
Aggressive Growth Fund.
(G) .50% of the first $215 million; .375% of the next $335 million; .30% of the
next $250 million; .25% thereafter (on all of the series of Zurich Money
Funds in the aggregate). ZKI has agreed to temporarily reduce its management
fee to 0% for the Zurich YieldWise Money Fund and reimburse or pay 100% of
the Fund's other operating expenses for a period of at least six months from
April 17, 1997.
(H) .22% of the first $500 million; .20% of the next $500 million; .175% of the
next $1 billion; .16% of the next $1 billion; .15% thereafter (in the case
of Cash Equivalent Fund, on the Money Market and Government Securities
Portfolios in the aggregate and on the Tax-Exempt Portfolio individually,
and, in the case of Cash Account Trust, on all of the series in the
aggregate). ZKI has agreed to temporarily absorb operating expenses of the
Cash Account Trust portfolios to the extent, if any, that such expenses
exceed the following percentages of average daily net assets: Money Market
Portfolio (1.00%), Government Securities Portfolio (1.00%) and Tax-Exempt
Portfolio (0.95%). In addition, from time to time, ZKI may voluntarily
absorb certain additional expenses of the Cash Account Trust portfolios.
Also, ZKI has agreed to temporarily waive its management fee and reimburse
or pay operating expenses for the current fiscal year to the extent, if any,
that total operating expenses exceed .80% of average daily net assets of the
New York Fund and .90% of each of the Florida, New Jersey and Pennsylvania
Funds.
(I) .72 of 1% of the first $250 million, .69 of 1% of the next $750 million,
.66 of 1% of the next $1.5 billion, .64 of 1% of the next $2.5 billion, .60
of 1% of the next $2.5 billion, .58 of 1% of the next $2.5 billion, .56 of
1% of the next $2.5 billion, and .54 of 1% thereafter.
(J) .85 of 1% of the first $250 million, .82 of 1% of the next $750 million,
.80 of 1% of the next $1.5 billion, .78 of 1% of the next $2.5 billion, .75
of 1% of the next $2.5 billion, .74 of 1% of the next $2.5 billion, .73 of
1% of the next $2.5 billion, and .72 of 1% thereafter. ZKI has agreed to a
reduction of its management fee by .25% until the earlier of May 1, 1997 or
the date the Fund's net assets reach $100 million.
H-5
<PAGE> 108
(K) .15% of average daily net assets. ZKI has agreed to temporarily waive its
management fee and reimburse or pay operating expenses of each portfolio to
the extent that such expense exceeds .25% of average daily net assets of the
portfolio.
(L) .65 of 1% of the first $250 million, .62 of 1% of the next $750 million,
.60 of 1% of the next $1.5 billion, .58 of 1% of the next $2.5 billion, .55
of 1% of the next $2.5 billion, .53 of 1% of the next $2.5 billion, .51 of
1% of the next $2.5 billion and .49 of 1% thereafter.
H-6
<PAGE> 109
EXHIBIT I
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
MONEY MARKET
Scudder U.S. Treasury Safety, liquidity, and 0.500% of $ 398,597,054
Money Fund stability of capital net assets+
and, consistent
therewith, current
income.
Scudder Cash Investment Stability of capital 0.500% to $1,430,623,516
Trust while maintaining $250 million
liquidity of capital 0.450% next
and providing current $250 million
income from money 0.400% next
market securities. $500 million
0.350%
thereafter+
Scudder Money Market High level of current 0.250% of $ 384,509,425**
Series income consistent with net assets
preservation of
capital and liquidity
by investing in a
broad range of
short-term money
market instruments.
Scudder Government Money High level of current 0.250% of $ 36,794,563**
Market Series income consistent with net assets
preservation of
capital and liquidity
by investing
exclusively in
obligations issued or
guaranteed by the U.S.
Government or its
agencies or
instrumentalities and
in certain repurchase
agreements.
TAX FREE MONEY MARKET
Scudder Tax Free Money Income exempt from 0.500% to $ 220,245,241
Fund regular federal income $500 million
taxes and stability of 0.480%
principal through thereafter+
investments in
municipal securities.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-1
<PAGE> 110
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
High level of current 0.250% of $ 79,695,218**
Scudder Tax Free Money income, consistent net assets
Market Series with preservation of
capital and liquidity,
exempt from federal
income tax by
investing primarily in
high quality municipal
obligations.
Scudder California Tax Stability of capital 0.500% of $ 68,695,680
Free Money Fund and the maintenance of net assets+
a constant net asset
value of $1.00 per
share while providing
California tax payers
income exempt from
both California state
personal and regular
federal income tax
through investment in
high quality, short-
term tax-exempt
California municipal
securities.
Scudder New York Tax Stability of capital 0.500% of $ 59,538,652
Free Money Fund and income exempt from net assets+
New York state and New
York City personal
income taxes and
regular federal income
tax through investment
in high quality,
short-term municipal
securities in New
York.
TAX FREE
Scudder Limited Term Tax High level of income 0.600% of $ 123,660,431
Free Fund exempt from regular net assets+
federal income tax
consistent with a high
degree of principal
stability.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program asset as of 7/31/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-2
<PAGE> 111
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
High level of income 0.600% to $ 650,504,081
Scudder Medium Term Tax exempt from regular $500 million
Free Fund federal income tax and 0.500% thereafter
limited principal
fluctuation through
investment primarily
in high grade
intermediate term
municipal securities.
Scudder Managed Income exempt from 0.550% to $ 737,422,861
Municipal Bonds regular federal income $200 million
tax primarily through 0.500% next
investments in high- $500 million
grade long-term 0.475% thereafter
municipal securities.
Scudder High Yield Tax High level of income, 0.650% to $ 293,101,021
Free Fund exempt from regular $300 million
federal income tax, 0.600% thereafter
from an actively
managed portfolio
consisting primarily
of investment grade
municipal securities.
Scudder California Tax Income exempt from 0.625% to $ 288,576,041
Free Fund both California state $200 million
personal income tax 0.600% thereafter
and regular federal
income tax primarily
through investment
grade municipal
securities.
Scudder Massachusetts A high level of income 0.600% of $ 65,505,088
Limited Term Tax Free exempt from both net assets+
Fund Massachusetts personal
income tax and regular
federal income tax as
is consistent with a
high degree of price
stability.
Scudder Massachusetts A high level of income 0.600% of $ 329,842,169
Tax Free Fund exempt from both net assets
Massachusetts personal
income tax and regular
federal income tax
through investment
primarily in long-term
investment-grade
municipal securities
in Massachusetts.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-3
<PAGE> 112
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Income exempt from New 0.625% to $ 180,647,157
Scudder New York Tax York state and New $200 million
Free Fund York City personal 0.600% thereafter
income taxes and
regular federal income
tax through investment
primarily in long-term
investment-grade
municipal securities
in New York.
Scudder Ohio Tax Free Income exempt from 0.600% of $ 84,109,009
Fund Ohio personal income net assets+
tax and regular
federal income tax
through investment
primarily in
investment-grade
municipal securities
in Ohio.
Scudder Pennsylvania Tax Income exempt from 0.600% of $ 74,177,997
Free Fund Pennsylvania personal net assets+
income tax and regular
federal income tax
through investment
primarily in
investment-grade
municipal securities
in Pennsylvania.
U.S. INCOME
Scudder Short Term Bond High level of income 0.600% to $1,468,170,885
Fund consistent with a high $500 million
degree of principal 0.500% next
stability through $500 million
investments primarily 0.450% next
in high quality $500 million
short-term bonds. 0.400% next
$500 million
0.375% next
$1 billion
0.350% thereafter
Scudder Zero Coupon 2000 High investment 0.600% of $ 25,440,414
Fund returns over a net assets+
selected period as is
consistent with
investment in U.S.
Government securities
and the minimization
of reinvestment risk.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-4
<PAGE> 113
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
High current income 0.650% to $ 383,008,164
Scudder GNMA Fund and safety of $200 million
principal primarily 0.600% next
from investment in $300 million
U.S. Government 0.550% thereafter
guaranteed
mortgage-backed GNMA
securities.
Scudder Income Fund A high level of 0.650% to $ 578,519,502
income, consistent $200 million
with the prudent 0.600% next
investment of capital, $300 million
through a flexible 0.550% thereafter
investment program
emphasizing high-grade
bonds.
Scudder High Yield Bond A high level of 0.700% of $ 73,523,094
Fund current income and net assets
capital appreciation
through investment
primarily in below
investment-grade
domestic debt
securities.
GLOBAL INCOME
Scudder Global Bond Fund Total return with an 0.750% to $ 217,403,907
emphasis on current $1 billion
income by investing 0.700%
primarily in thereafter+
high-grade bonds
denominated in foreign
currencies and the
U.S. dollar.
Scudder International Income primarily by 0.850% to $ 235,993,183
Bond Fund investing in $1 billion
high-grade 0.800% thereafter
international bonds
and protection and
possible enhancement
of principal value by
actively managing
currency, bond market
and maturity exposure
and by security
selection.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-5
<PAGE> 114
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
High current income 1.000% of $ 304,607,984
Scudder Emerging Markets and, secondarily, net assets
Income Fund long-term capital
appreciation by
investing primarily in
high-yielding debt
securities issued in
emerging markets.
ASSET ALLOCATION
Scudder Pathway Current income and, There will be no $ 13,928,759***
Conservative Portfolio secondarily, long-term fee as the Manager
growth of capital by will receive a fee
investing from the
substantially in underlying funds.
Scudder bond mutual
funds, but will have
some exposure to
Scudder equity mutual
funds.
Scudder Pathway Balanced Balance of growth and There will be no $ 167,721,722***
Portfolio income by investing in fee as the Manager
a mix of Scudder money will receive a fee
market, bond and from the
equity mutual funds. underlying funds.
Scudder Pathway Growth Long-term growth of There will be no $ 42,234,535***
Portfolio capital by investing fee as the Manager
predominantly in will receive a fee
Scudder equity mutual from the
funds designed to underlying funds.
provide long-term
growth.
Scudder Pathway Maximize total return There will be no $ 8,983,598***
International by investing in a fee as the Manager
Portfolio select mix of will receive a fee
established from the
international and underlying funds.
global Scudder Funds.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
*** Program assets as of 6/30/97.
</TABLE>
I-6
<PAGE> 115
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
U.S. GROWTH AND INCOME
Scudder Balanced Fund A balance of growth 0.700% of $ 109,541,542
and income from a net assets+
diversified portfolio
of equity and fixed
income securities and
long-term preservation
of capital through a
quality oriented
investment approach
designed to reduce
risk.
Scudder Growth and Long-term growth of 0.600% to $4,186,481,205
Income Fund capital, current $500 million
income and growth of 0.550% next
income primarily from $500 million
common stocks, 0.500% next
preferred stocks and $500 million
securities convertible 0.475% next
into common stocks. $500 million
0.450% next
$1 billion
0.425% next
$1.5 billion
0.405% thereafter
U.S. GROWTH
Scudder Large Company Maximize long-term 0.750% to $1,651,459,797
Value Fund (formerly capital appreciation $500 million
Scudder Capital Growth through a value driven 0.650% next
Fund) investment program $500 million
emphasizing common 0.600% next
stocks and preferred $500 million
stocks. 0.550% thereafter
Scudder Value Fund Long-term growth of 0.700% of $ 88,874,292
capital through net assets
investment in
undervalued equity
securities.
Scudder Small Company Long-term growth of 0.750% of $ 41,187,186
Value Fund capital by investing net assets+
primarily in
undervalued equity
securities of small
U.S. companies.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-7
<PAGE> 116
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Long-term growth of 0.750% of $ 72,048,339***
Scudder Micro Cap Fund capital by investing net assets+
primarily in a
diversified portfolio
of U.S. micro-cap
common stocks.
Scudder Classic Growth Long-term growth of 0.700% of $ 33,867,066
Fund capital while keeping net assets+
the value of its
shares more stable
than other growth
mutual funds.
Scudder Large Company Long-term growth of 0.700% of $ 221,253,633
Growth Fund (formerly capital through net assets
Scudder Quality Growth investment primarily
Fund) in the equity
securities of
seasoned, financially
strong U.S. growth
companies.
Scudder Development Fund Long-term growth of 1.000% to $ 861,564,138
capital by investing $500 million
primarily in equity 0.950% next
securities of emerging $500 million
growth companies. 0.900% thereafter
Scudder 21st Century Long-term growth of 1.000% of $ 20,942,531***
Growth Fund capital by investing net assets+
primarily in the
securities of emerging
growth companies
poised to be leaders
in the 21st century.
GLOBAL GROWTH
Scudder Global Fund Long-term growth of 1.000% to $1,604,465,769
capital through $500 million
investment in a 0.950% next
diversified portfolio $500 million
of marketable foreign 0.900% thereafter
and domestic
securities, primarily
equity securities.
Institutional Long-term growth of 0.900% of $ 17,897,508
International Equity capital primarily net assets+
Portfolio through a diversified
portfolio of
marketable foreign
equity securities.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-8
<PAGE> 117
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Long-term growth of 1.000% of $ 25,631,898***
Scudder International capital and current net assets+
Growth and Income Fund income primarily from
foreign equity
securities
Scudder International Long-term growth of 0.900% to $2,583,030,686
Fund capital primarily $500 million
through a diversified 0.850% next
portfolio of $500 million
marketable foreign 0.800% next
equity securities. $1 billion
0.750% next
$1 billion
0.700% thereafter
Scudder Global Discovery Above-average capital 1.100% of $ 350,829,980
Fund appreciation over the net assets
long-term by investing
primarily in the
equity securities of
small companies
located throughout the
world.
Scudder Emerging Markets Long-term growth of 1.25% of $ 75,793,693
Growth Fund capital primarily net assets+
through equity
investments in
emerging markets
around the globe.
Scudder Gold Fund Maximum return 1.000% of $ 163,932,814
consistent with net assets
investing in a
portfolio of gold-
related equity
securities and gold.
Scudder Greater Europe Long-term growth of 1.000% of $ 120,300,058
Growth Fund capital through net assets
investment primarily
in the equity
securities of European
companies.
Scudder Pacific Long-term growth of 1.100% of $ 329,391,540
Opportunities Fund capital primarily net assets
through investment in
the equity securities
of Pacific Basin
companies, excluding
Japan.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-9
<PAGE> 118
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Long-term capital Effective 9/11/97: $ 621,914,690
Scudder Latin America appreciation through 1.250% to
Fund investment primarily $1 billion
in the securities of 1.150% thereafter
Latin American
issuers.
The Japan Fund, Inc. Long-term capital 0.850% to $ 385,963,962
appreciation through $100 million
investment primarily 0.750% next
in equity securities $200 million
of Japanese companies. 0.700% next
$300 million
0.650% thereafter
CLOSED-END FUNDS
The Argentina Fund, Inc. Long-term capital Adviser: $ 117,596,046
appreciation through Effective 11/1/97:
investment primarily 1.100% of
in equity securities net assets
of Argentine issuers. Sub-Adviser:
Paid by Adviser.
0.160% of
net assets
The Brazil Fund, Inc. Long-term capital 1.200% to $ 417,981,869
appreciation through $150 million
investment primarily 1.050% next
in equity securities $150 million
of Brazilian issuers. 1.000% thereafter
Effective
10/29/97:
1.200% to
$150 million
1.050% next
$150 million
1.000% next
$200 million
0.900% thereafter
Administrator:
Receives an annual
fee of $50,000
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
</TABLE>
I-10
<PAGE> 119
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Long-term capital Advisor: $ 661,690,073
The Korea Fund, Inc. appreciation through 1.150% to
investment primarily $50 million
in equity securities 1.100% next
of Korean companies. $50 million
1.000% next
$250 million
0.950% next
$400 million
0.900% thereafter
Sub-Adviser -
Daewoo:
Paid by Adviser.
0.2875% to
$50 million
0.275% next
$50 million
0.250% next
$250 million
0.2375% next
$400 million
0.225% thereafter
The Latin America Dollar High level of current 1.200% of $ 94,748,606
Income Fund, Inc. income and, net assets
secondarily, capital
appreciation through
investment principally
in dollar-denominated
Latin American debt
instruments.
Montgomery Street Income High level of current 0.500% to $ 198,465,822
Securities, Inc. income consistent with $150 million
prudent investment 0.450% next
risks through a $50 million
diversified portfolio 0.400% thereafter
primarily of debt
securities.
Scudder New Asia Fund, Long-term capital 1.250% to $ 133,363,686
Inc. appreciation through $75 million
investment primarily 1.150% next
in equity securities $125 million
of Asian companies. 1.100% thereafter
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
</TABLE>
I-11
<PAGE> 120
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Long-term capital 1.250% to $ 266,418,730
Scudder New Europe Fund, appreciation through $75 million
Inc. investment primarily 1.150% next
in equity securities $125 million
of companies traded on 1.100% thereafter
smaller or emerging
European markets and
companies that are
viewed as likely to
benefit from changes
and developments
throughout Europe.
Scudder Spain and Long-term capital Adviser: $ 75,127,194
Portugal Fund, Inc. appreciation through 1.000% of
investment primarily net assets
in equity securities Administrator:
of Spanish & 0.200% of
Portuguese issuers. net assets
Scudder World Income High income and, 1.200% of $ 54,488,637
Opportunities Fund, consistent therewith, net assets
Inc. capital appreciation.
INSURANCE PRODUCTS
Balanced Portfolio Balance of growth and 0.475% of $ 88,342,837
income consistent with net assets
long-term preservation
of capital through a
diversified portfolio
of equity and fixed
income securities.
Bond Portfolio High level of income 0.475% of $ 65,769,421
consistent with a high net assets
quality portfolio of
debt securities.
Capital Growth Portfolio Long-term capital 0.475% to $ 440,481,308
growth from a $500 million
portfolio consisting 0.450% thereafter
primarily of equity
securities.
Global Discovery Above-average capital 0.975% of $ 16,757,264
Portfolio appreciation over the net assets+
long-term by investing
primarily in the
equity securities of
small companies
located throughout the
world.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-12
<PAGE> 121
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Long-term growth of 0.475% of $ 91,091,547
Growth and Income capital, current net assets
Portfolio income and growth of
income.
International Portfolio Long-term growth of 0.875% to $ 726,038,527
capital primarily $500 million
through diversified 0.775% thereafter
holdings of marketable
foreign equity
investments.
Money Market Portfolio Stability of capital 0.370% of $ 97,785,626
and current income net assets
from a portfolio of
money market
instruments.
AARP FUNDS
AARP High Quality Money Current income and 0.350% to $ 412,126,193
Fund liquidity, consistent $2 billion
with maintaining 0.330% next
stability and safety $2 billion
of principal, through 0.300% next
investment in high $2 billion
quality securities. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.100% of
net assets
AARP Balanced Stock and Long-term growth of 0.350% to $ 403,179,939
Bond Fund capital and income, $2 billion
consistent with a 0.330% next
stable share price, $2 billion
through investment in 0.300% next
a combination of $2 billion
stocks, bonds and cash 0.280% next
reserves. $2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.190% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
</TABLE>
I-13
<PAGE> 122
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Long-term capital 0.350% to $ 826,136,713
AARP Capital Growth Fund growth, consistent $2 billion
with a share price 0.330% next
more stable than other $2 billion
capital growth funds, 0.300% next
through investment $2 billion
primarily in common 0.280% next
stocks and securities $2 billion
convertible into 0.260% next
common stocks. $3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.320% of
net assets
AARP Global Growth Fund Long-term growth of 0.350% to $ 77,651,978
capital, consistent $2 billion
with a share price 0.330% next
more stable than other $2 billion
global equity funds, 0.300% next
through investment $2 billion
primarily in a 0.280% next
diversified portfolio $2 billion
of equity securities 0.260% next
of corporations $3 billion
worldwide. 0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND
FEE
0.550% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-14
<PAGE> 123
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Long-term growth of 0.350% to $4,218,983,398
AARP Growth and Income capital and income, $2 billion
Fund consistent with a 0.330% next
stable share price, $2 billion
through investment 0.300% next
primarily in common $2 billion
stocks and securities 0.280% next
convertible into $2 billion
common stocks. 0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.190% of
net assets
AARP International Stock Long-term growth of 0.350% to $ 12,699,109***
Fund capital, consistent $2 billion
with a share price 0.330% next
more stable than other $2 billion
international equity 0.300% next
funds, through $2 billion
investment primarily 0.280% next
in a diversified $2 billion
portfolio of foreign 0.260% next
equity securities. $3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND
FEE
0.600% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-15
<PAGE> 124
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
AARP Small Company Stock Long-term growth of 0.350% to $ 25,425,137***
Fund capital, consistent $2 billion
with a share price 0.330% next
more stable than other $2 billion
small company stock 0.300% next
funds, through $2 billion
investment primarily 0.280% next
in stocks of small $2 billion
U.S. companies. 0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND
FEE
0.550% of
net assets
AARP U.S. Stock Index Long-term capital 0.350% to $ 23,917,674***
Fund growth and income, $2 billion
consistent with 0.330% next
greater share price $2 billion
stability than a S&P 0.300% next
500 index fund, by $2 billion
taking an indexing 0.280% next
approach to investing $2 billion
in common stocks, 0.260% next
emphasizing higher $3 billion
dividend stocks while 0.250% next
maintaining investment $3 billion
characteristics 0.240%
otherwise similar to thereafter+
the S&P 500 index. INDIVIDUAL FUND
FEE
0.000% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-16
<PAGE> 125
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
High level of current 0.350% to $ 34,951,973***
AARP Bond Fund for income, consistent $2 billion
Income with greater share 0.330% next
price stability than a $2 billion
long term bond, 0.300% next
through investment $2 billion
primarily in 0.280% next
investment-grade debt $2 billion
securities. 0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND
FEE
0.280% of
net assets
AARP GNMA and U.S. High level of current 0.350% to $4,904,439,844
Treasury Fund income, consistent $2 billion
with greater share 0.330% next
price stability than a $2 billion
long-term bond, 0.300% next
through investment $2 billion
principally in U.S. 0.280% next
Government-guaranteed $2 billion
GNMA securities and 0.260% next
U.S. Treasury $3 billion
obligations. 0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.120% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
I-17
<PAGE> 126
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
High level of income, 0.350% to $ 511,905,166
AARP High Quality Bond consistent with $2 billion
Fund greater share price 0.330% next
stability than a $2 billion
long-term bond, 0.300% next
through investment $2 billion
primarily in a 0.280% next
portfolio of high $2 billion
quality securities 0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.190% of
net assets
AARP Diversified Growth Long-term growth of There will be no $ 36,411,938***
Portfolio capital through fee as the manager
investment primarily will receive a fee
in AARP stock mutual from the
funds. underlying funds.
AARP Diversified Income Current income with There will be no $ 34,230,023***
Portfolio modest long-term fee as the manager
appreciation through will receive a fee
investment primarily from the
in AARP bond mutual underlying funds.
funds.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
*** Program assets as of 6/30/97.
</TABLE>
I-18
<PAGE> 127
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Current income free 0.350% to $ 111,264,728
AARP High Quality Tax from federal income $2 billion
Free Money Fund taxes and liquidity, 0.330% next
consistent with $2 billion
maintaining stability 0.300% next
and safety of $2 billion
principal, through 0.280% next
investment in $2 billion
high-quality municipal 0.260% next
securities. $3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.100% of
net assets
AARP Insured Tax Free High level of income 0.350% to $1,755,412,222
General Bond Fund free from federal $2 billion
income taxes, 0.330% next
consistent with $2 billion
greater share price 0.300% next
stability than a long- $2 billion
term municipal bond, 0.280% next
through investment $2 billion
primarily in municipal 0.260% next
securities covered by $3 billion
insurance. 0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.190% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
</TABLE>
I-19
<PAGE> 128
EXHIBIT J
FEES AND EXPENSES
<TABLE>
<CAPTION>
KTEC KTRF KGF KSCF KICPF KDIF KHYF
---- ---- --- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year End.................... 10/31/96 10/31/96 09/30/96 09/30/96 10/31/96 10/31/96 09/30/96
Management Fees Paid to ZKI........ $5,582,000 15,825,000 13,994,000 4,418,000 3,194,000 4,239,000 19,436,000
Effective Management Fee Rate...... 0.56% 0.54 0.54 0.52 0.53 0.56 0.53
Shareholder Service Fees Paid by
IFTC to ZKSC...................... $ 984,000 7,481,000 7,394,000 2,840,000 924,000 1,519,000 4,142,000
Administrative Service Fees Paid by
Fund to ZKDI...................... $1,605,000 7,044,000 5,964,000 1,907,000 1,145,000 1,655,000 7,627,000
Maximum Administrative Service Fee
Rate Payable Based on Assets
Acquired Prior to 10/01/93........ 0.25% 0.25 0.25 0.25 0.15 0.15 0.15
Maximum Administrative Service Fee
Rate Payable Based on Assets
Acquired On or After 10/01/93..... 0.25% 0.25 0.25 0.25 0.25 0.25 0.25
Effective Administrative Service
Fee Rate.......................... 0.16% 0.24 0.23 0.22 0.19 0.22 0.21
Commissions Retained by ZKDI....... $ 198,000 225,000 327,000 130,000 115,000 129,000 857,000
Commissions Allowed to Affiliates
of ZKDI........................... $ 37,000 79,000 57,000 16,000 74,000 69,000 226,000
Brokerage Commissions Paid by
Fund.............................. $4,438,000 6,335,000 9,535,000 6,362,000 1,624,000 2,927,000 46,280,000
Percent of Brokerage Commissions
Paid by Fund Allocated on Basis of
Research.......................... 74% 72 91 70 0 0 0
<CAPTION>
KGSF
----
<S> <C>
Fiscal Year End.................... 10/31/96
Management Fees Paid to ZKI........ 18,159,000
Effective Management Fee Rate...... 0.41
Shareholder Service Fees Paid by
IFTC to ZKSC...................... 4,139,000
Administrative Service Fees Paid by
Fund to ZKDI...................... 7,716,000
Maximum Administrative Service Fee
Rate Payable Based on Assets
Acquired Prior to 10/01/93........ 0.15
Maximum Administrative Service Fee
Rate Payable Based on Assets
Acquired On or After 10/01/93..... 0.25
Effective Administrative Service
Fee Rate.......................... 0.17
Commissions Retained by ZKDI....... 330,000
Commissions Allowed to Affiliates
of ZKDI........................... 91,000
Brokerage Commissions Paid by
Fund.............................. 806,000
Percent of Brokerage Commissions
Paid by Fund Allocated on Basis of
Research.......................... 0
</TABLE>
J-1
<PAGE> 129
EXHIBIT J -- (CONTINUED)
FEES AND EXPENSES -- (CONTINUED)
<TABLE>
<CAPTION>
KIF KARGF KBCF KGIF KVGF KQEF* KAGF**
--- ----- ---- ---- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year End............................ 10/31/96 08/31/97 10/31/96 12/31/96 11/30/96 11/30/96 11/30/96
Management Fees Paid to ZKI................ $3,177,000 493,000 1,198,000 1,050,000 131,000(a) 11,000 1,000
Effective Management Fee Rate.............. 0.74% 0.55 0.58 0.75 0.60 0.58 0.60
Shareholder Service Fees Paid by IFTC to
ZKSC...................................... $1,512,000 249,000 633,000 264,000 52,000 1,000 0
Administrative Service Fees Paid by Fund to
ZKDI...................................... $ 962,000 189,000 497,000 287,000 49,000 3,000 0
Maximum Administrative Service Fee Rate
Payable Based on Assets Acquired Prior to
10/01/93.................................. 0.25% 0.15 0.25 0.15 0 0 0
Maximum Administrative Service Fee Rate
Payable Based on Assets Acquired On or
After 10/01/93............................ 0.25% 0.25 0.25 0.25 0.25 0.25 0.25
Effective Administrative Service Fee
Rate...................................... 0.23% 0.21 0.24 0.20 0.22 0.15 0
Commissions Retained by ZKDI............... $ 95,000 8,000 72,000 31,000 33,000 1,000 1,000
Commissions Allowed to Affiliates of
ZKDI...................................... $ 26,000 0 11,000 1,000 15,000 0 0
Brokerage Commissions Paid by Fund......... $2,982,000 8,000 1,661,000 0 66,000 9,000 15,000
Percent of Brokerage Commissions Paid by
Fund Allocated on Basis of Research....... 46% 0 63 0 78 97 90
</TABLE>
- ---------------
* For the period from February 15, 1996 to November 30, 1996.
** For the period from October 21, 1996 to November 30, 1996.
(a) ZKI waived management fees of $26,000.
J-2
<PAGE> 130
<TABLE>
<CAPTION>
KNTIS KSTIS
--------------------- -------------------------------------------------------------
KMBF KIMBF KCATF KNYTF KFLTF KTXTF KOHTF KMITF
---- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year End..................... 9/30/96 9/30/96 8/31/97 8/31/97 8/31/97 8/31/97 8/31/97 8/31/97
Management Fees Paid to ZKI......... $14,261,000 104,000 5,417,000 1,604,000 587,000 72,000 212,000 18,000
Effective Management Fee Rate....... 0.41% 0.43 0.53 0.55 0.55 0.55 0.55 0.55
Shareholder Service Fees Paid by
IFTC to ZKSC....................... $ 1,759,000 9,000 1,718,000 144,000 44,000 7,000 21,000 2,000
Administrative Service Fees Paid by
Fund to ZKDI....................... $ 5,279,000 41,000 1,718,000 519,000 189,000 24,000 82,000 5,000(a)
Maximum Administrative Service Fee
Rate Payable Based on Assets
Acquired Prior to 10/01/93......... 0.10% N/A 0.10 0.10 0.10 0.10 0.10 N/A
Maximum Administrative Service Fee
Rate Payable Based on Assets
Acquired On or After 10/01/93...... 0.25% 0.25 0.25 0.25 0.25 0.25 0.25 0.25
Effective Administrative Service
Fee Rate........................... 0.15% 0.22 0.17 0.18 0.18 0.19 0.21 0.14
Commissions Retained by ZKDI........ $ 351,000 9,000 129,000 42,000 22,000 3,000 11,000 1,000
Commissions Allowed to Affiliates of
ZKDI............................... $ 142,000 2,000 0 2,000 0 0 0 0
Brokerage Commissions Paid by
Fund............................... $ 4,987,000 37,000 1,464,000 594,000 204,000 10,000 48,000 3,000
Percent of Brokerage Commissions
Paid by Fund Allocated on Basis of
Research........................... 0% 0 0 0 0 0 0 0
<CAPTION>
KSTIS KP
----------------- ----------------------------------
KNJIF KPATF KCRF KUSMF KSIGF
----- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C>
Fiscal Year End..................... 8/31/97 8/31/97 9/30/96 9/30/96 9/30/96
Management Fees Paid to ZKI......... 25,000 28,000 922,000 16,340,000 1,230,000
Effective Management Fee Rate....... 0.55 0.55 0.53 0.50 0.55
Shareholder Service Fees Paid by
IFTC to ZKSC....................... 3,000 3,000 1,122,000 4,709,000 630,000
Administrative Service Fees Paid by
Fund to ZKDI....................... 10,000(b) 8,000(c) 554,000 7,733,000 541,000
Maximum Administrative Service Fee
Rate Payable Based on Assets
Acquired Prior to 10/01/93......... N/A N/A 0.25 0.25 0.25
Maximum Administrative Service Fee
Rate Payable Based on Assets
Acquired On or After 10/01/93...... 0.25 0.25 0.25 0.25 0.25
Effective Administrative Service
Fee Rate........................... 0.22 0.17 0.24 0.24 0.24
Commissions Retained by ZKDI........ 1,000 1,000 0 38,000 9,000
Commissions Allowed to Affiliates of
ZKDI............................... 0 0 0 11,000 1,000
Brokerage Commissions Paid by
Fund............................... 8,000 15,000 0 545,000 44,000
Percent of Brokerage Commissions
Paid by Fund Allocated on Basis of
Research........................... 0 0 0 0 0
</TABLE>
- ---------------
(a) Does not include waived fees in the amount of $3,000.
(b) Does not include waived fees in the amount of $1,000.
(c) Does not include waived fees in the amount of $4,000.
J-3
<PAGE> 131
Thank you
for mailing your proxy card promptly!
================================================================================
WE APPRECIATE YOUR
CONTINUING SUPPORT AND
LOOK FORWARD TO SERVING
YOUR FUTURE INVESTMENT NEEDS.
<PAGE> 132
KEMPER FUNDS
================================================================================
KEMPER EQUITY
FUNDS/GROWTH STYLE
- - Kemper Aggressive Growth Fund
- - Kemper Blue Chip Fund
- - Kemper Growth Fund
- - Kemper Quantitative Equity Fund
- - Kemper Small Capitalization Equity Fund
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- - Kemper Asian Growth Fund
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- Kemper New Jersey Tax-Free Income Fund
- Kemper New York Tax-Free Income Fund
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KEMPER INCOME FUNDS
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- - Kemper U.S. Government Securities Fund
- - Kemper U.S. Mortgage Fund
KEMPER MONEY FUNDS
- - Kemper Cash Reserves Fund
Group A
[LOGO]Printed on recycled paper
<PAGE> 3
[KEMPER FUNDS LOGO]
PLEASE VOTE PROMPTLY!
Your vote is needed! Please vote on the reverse side of this form and sign in
the space provided below. Return your completed proxy in the enclosed envelope
today.
You may receive additional proxies for your other accounts. These are not
duplicates; you should sign and return each proxy card in order for your votes
to be counted. Please return them as soon as possible to help save the cost of
additional mailings.
Please fold and detach card at perforation before mailing.
KEMPER AGGRESSIVE GROWTH FUND
FOR THE JOINT SPECIAL
MEETING OF SHAREHOLDERS
DECEMBER 3, 1997
THE SIGNERS OF THIS PROXY HEREBY APPOINT DONALD L. DUNAWAY AND STEPHEN B.
TIMBERS AND EACH OF THEM, ATTORNEYS AND PROXIES, WITH POWER OF SUBSTITUTION IN
EACH, TO VOTE ALL SHARES FOR THE SIGNERS AT THE JOINT SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD DECEMBER 3, 1997, AND AT ANY ADJOURNMENTS THEREOF, AS
SPECIFIED HEREIN, AND IN ACCORDANCE WITH THEIR BEST JUDGMENT, ON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THIS MEETING.
Dated ___________________________________, 1997
Signature(s) (All registered owners of
accounts shown to the left must sign. If
signing for a corporation, estate or trust,
please indicate your capacity or title.)
_______________________________________________
Signature(s)
- --------------------------------------------------------------------------------
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE PROXY CARD BELOW. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
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Please fold and detach card at perforation before mailing.
IF NO SPECIFICATION IS MADE HEREIN, ALL SHARES WILL BE VOTED "FOR" THE
PROPOSALS SET FORTH ON THIS PROXY.
THE PROXY IS SOLICITED BY THE BOARD OF THE FUND WHICH RECOMMENDS A VOTE "FOR"
ALL ITEMS.
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
<TABLE>
<S><C>
1. To elect the following as trustees: For Withhold For All
All All Except
/ / / / / /
01) David W. Belin, 02) Lewis A. Burnham, 03) Donald L. Dunaway,
04) Robert B. Hoffman, 05) Donald R. Jones, 06) Shirley D. Peterson,
07) Daniel Pierce, 08) William P. Sommers, 09) Edmond D. Villani
-----------------------------------------------------------------------------------------
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), PLEASE WRITE THAT NOMINEE'S
NAME ON THE LINE ABOVE.
2. To ratify the selection of Ernst & Young LLP
as independent auditors for the For Against Abstain
current fiscal year. / / / / / /
3. To approve a new investment management
agreement with Scudder Kemper Investments,
Inc. ("SKI") (or with Zurich Kemper
Investments, Inc. transferable to SKI). For Against Abstain
/ / / / / /
6. For Class B and Class C shareholders
only, to approve a new Rule 12b-1
distribution plan with Zurich For Against Abstain
Kemper Distributors, Inc. / / / / / /
7. To approve changes in the Fund's fundamental
investment policies to permit a master/feeder For Against Abstain
fund structure. / / / / / /
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" ALL ITEMS.
</TABLE>
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