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ZURICH YIELDWISE MONEY FUND
PROSPECTUS
NOVEMBER 15, 1997
ZURICH YIELDWISE MONEY FUND
222 SOUTH RIVERSIDE PLAZA,
CHICAGO, ILLINOIS 60606-5808,
1-800-537-6001.
The Fund seeks maximum current income to the extent consistent with stability
of principal. The Fund is designed for investors who are willing to make high
minimum investments and to pay for certain individual transactions in order to
pursue higher yields through lower expenses. The Fund invests exclusively in
high quality money market instruments.
This prospectus contains information about the Fund that a prospective investor
should know before investing and should be retained for future reference. A
Statement of Additional Information dated November 15, 1997, has been filed
with the Securities and Exchange Commission and is incorporated herein by ref-
erence. It is available upon request without charge from the Fund at the ad-
dress above or by calling 1-800-537-6001.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERN-
MENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY, AND IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR EN-
DORSED BY, ANY BANK. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
<TABLE>
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Overview.................................................................... 3
Summary of Expenses......................................................... 4
Financial Highlights........................................................ 5
How the Fund Works.......................................................... 5
Investment Objective, Policies and Risk
Factors................................................................... 6
Determining Share Price..................................................... 10
How To Make a Purchase...................................................... 11
How To Make a Redemption.................................................... 13
Moving to Another Fund...................................................... 17
Special Features............................................................ 18
Dividends and Taxes......................................................... 19
Investment Manager.......................................................... 21
Performance................................................................. 22
Capital Structure........................................................... 24
Account Services Directory.................................................. 25
</TABLE>
2
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OVERVIEW
INVESTMENT OBJECTIVE
Zurich YieldWise Money Fund (the "Fund") is an open-end, diversified,
management investment company designed to provide you with professional
management of your short-term investment dollars; the dollars that you want to
know are in high quality investments.
The Fund seeks maximum current income to the extent consistent with stability
of principal by investing in high-quality short-term money market instruments.
The Fund is designed for investors who are willing to make high minimum
investments and to pay for certain individual transactions in order to pursue
higher yields through lower costs. See "Summary of Expenses" and "How to Make a
Redemption" for a description of the individual account maintenance and
transaction fees.
The Fund may use a variety of investment techniques in seeking its objective
including the purchase of repurchase agreements and variable rate securities.
The Fund seeks to maintain a net asset value of $1.00 per share; however, there
is no assurance that the Fund's objective will be achieved or that the Fund
will be able to maintain a net asset value of $1.00 per share. See "How the
Fund Works" and "Investment Objective, Policies and Risk Factors."
INVESTMENT MANAGER
Zurich Kemper Investments, Inc. ("ZKI") is the investment manager for the
Fund and provides the Fund with continuous professional investment supervision.
ZKI is paid an annual investment management fee, payable monthly, on a
graduated basis ranging from .50% of the first $215 million of average daily
net assets of the Fund to .25% of average daily net assets of the Fund over
$800 million. See "Investment Manager."
BUYING AND SELLING SHARES
You may buy and sell shares of the Fund at net asset value with no sales
charge. The minimum initial investment is $25,000 and the minimum subsequent
investment is $1,000 (or $500 by Automatic Purchase Plan). Accounts may be
opened using the account application available from the Fund. Shares may be
purchased by mailing a check, by wire transfer or in person in downtown Chicago
and Kansas City. Please see "How To Make a Purchase" for more information on
how easy it is to invest. You may sell or redeem your shares by written request
or by using one of the Fund's expedited redemption procedures. See "How To Make
a Redemption" for specific details.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested in additional shares of the Fund, unless you elect to be paid by
check. See "Dividends and Taxes."
3
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SPECIAL FEATURES
A number of features are available to you, including Electronic Funds Trans-
fer Programs. See "Special Features" and "Account Services Directory" for a de-
scription of these and other features.
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES*
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Sales Load on Purchases................................................ None
Sales Load on Reinvested Dividends..................................... None
Deferred Sales Load.................................................... None
Electronic Funds Transfer Fee on Redemption............................ $2 each
Exchange Fee and Transaction Fee on Redemption by Mail or
by Telephone......................................................... $5 each
Wire Transaction Fee on Redemption..................................... $10 each
Checkwriting Fee on Redemption......................................... $2 each
Account Closeout Fee................................................... $5**
</TABLE>
The fees listed above (other than the account closeout fee) are waived if
your account balance is $100,000 or more at the time of the transaction.
The individual transaction fees paid by shareholders will accrue to the Fund.
The fees will be used to offset transfer agency and out-of-pocket expenses of
the Fund, which should benefit all Fund shareholders by helping to reduce the
Fund's expenses.
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*Investment dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their mate-
rials for details. The table does not include the $1.00 monthly small account
fee. See "How to Make a Redemption."
**There is a $10 fee for closing an account within one year of opening the ac-
count. For individual retirement accounts, there is a $5 fee for closing an
account within one year of opening the account, but there is no closeout fee
for accounts closed one year or more after opening the account.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets after management fee and expense reduc-
tion)
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Management Fees........................................................... 0.09%
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12b-1 Fees................................................................ None
Other Expenses............................................................ 0.10%
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Total Operating Expenses.................................................. 0.19%
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</TABLE>
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<CAPTION>
EXAMPLE
<S> <C>
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption by mail at the end of each time period:
</TABLE>
<TABLE>
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After 1 year................................................................ $ 7
After 3 years............................................................... $19
</TABLE>
The purpose of the preceding table is to assist you in understanding the var-
ious costs and expenses that an investor in the Fund will bear directly or in-
directly. As
4
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discussed more fully under "Investment Manager," the Fund's investment manager
has agreed to temporarily reduce its management fee to 0% and temporarily reim-
burse or pay 100% of the Fund's other operating expenses through at least March
1, 1998. In addition, the Fund's investment manager has agreed to waive its
management fee and absorb operating expenses to the extent necessary to main-
tain the Fund's total operating expenses at no more than .45% until January 1,
1999. Without such fee reduction and expense reimbursement, "Management Fees"
would be .50%, "Other Expenses" would be .10%, and "Total Operating Expenses"
would be .60%. "Other Expenses" is an estimate for the current fiscal year. The
Example assumes a 5% annual rate of return pursuant to requirements of the Se-
curities and Exchange Commission. This hypothetical rate of return is not in-
tended to be representative of past or future performance of the Fund. The Ex-
ample should not be considered to be a representation of past or future ex-
penses. Actual expenses may be greater or less than those shown.
FINANCIAL HIGHLIGHTS
The table below shows financial information for the Fund expressed in terms
of one share outstanding throughout the period. The information in the table
for the Fund is covered by the report of the Fund's independent auditors. The
report for the Fund is contained in its Registration Statement and is available
from the Fund. The audited financial statements contained in the Fund's Annual
Report to Shareholders for the period from April 17, 1997 to July 31, 1997 are
incorporated herein by reference and may be obtained by writing or calling the
Fund.
<TABLE>
<CAPTION>
April 17, 1997
(commencement
of operations)
to July 31,
1997
--------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.00
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Net investment income and dividends declared .02
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Net asset value, end of period $1.00
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Total Return (not annualized) 1.69%
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RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses after expense waiver --
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Net investment income 5.66%
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OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .60%
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Net investment income 5.06%
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SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $245,064
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</TABLE>
Note: ZKI has agreed to temporarily waive all operating expenses of the Fund.
The Other Ratios to Average Net Assets are computed without this expense
waiver.
HOW THE FUND WORKS
Zurich YieldWise Money Fund is designed to provide you with professional man-
agement of short-term investment dollars. The Fund seeks maximum current income
consistent with stability of principal. It is designed for investors who are
willing to make high minimum investments and to pay for certain individual
transactions in order to pursue higher yields through lower expenses. With all
other things being equal, the lower a fund's expenses, the higher the return.
Because the Fund combines its shareholders' money, it can buy and sell large
blocks of securities, which
5
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reduces transaction costs and maximizes yields. The Fund is managed by invest-
ment professionals who analyze market trends to take advantage of changing con-
ditions and who seek to minimize risk by diversifying the Fund's investments.
The Fund seeks to maintain a net asset value of $1.00 per share. Thus, the
Fund is designed for investors who want to avoid the fluctuations of principal
commonly associated with equity and long-term bond investments. The fluctua-
tions of these other types of investments are often represented by the movement
of various unmanaged market indexes, such as the Dow Jones Industrial Average.
In addition, there can be no guarantee that the Fund will achieve its objective
or that it will maintain a net asset value of $1.00 per share.
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
THE FUND SEEKS MAXIMUM CURRENT INCOME TO THE EXTENT CONSISTENT WITH STABILITY
OF PRINCIPAL. The Fund pursues its objective by investing exclusively in the
following types of U.S. Dollar denominated money market instruments that mature
in 397 days or less:
1. Obligations of, or guaranteed by, the U.S. or Canadian governments, their
agencies or instrumentalities.
2. Bank certificates of deposit, time deposits or bankers' acceptances of
U.S. banks (including their foreign branches) and Canadian chartered banks hav-
ing total assets in excess of $1 billion.
3. Bank certificates of deposit, time deposits or bankers' acceptances of
foreign banks (including their U.S. and foreign branches) having total assets
in excess of $10 billion.
4. Commercial paper, notes, bonds, debentures, participation certificates or
other debt obligations that (i) have received a high-quality short-term rating
by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P"), Duff & Phelps, Inc. ("Duff"), Fitch Investors Services, Inc.
("Fitch"), or any other nationally recognized statistical rating organization
as determined by the Securities and Exchange Commission; or (ii) if unrated,
are determined to be at least equal in quality to one or more of the above rat-
ings in the discretion of the Fund's investment manager. Currently, only obli-
gations in the top two short-term rating categories are considered to be rated
high quality. The two highest short-term rating categories of Moody's, S&P,
Duff and Fitch for commercial paper are Prime-1 and Prime-2; A-1 and A-2; Duff-
1 and Duff-2; and F-1 and F-2, respectively. For a description of these rat-
ings, see "Appendix--Ratings of Investments" in the Statement of Additional In-
formation.
5. Repurchase agreements of obligations that are suitable for investment un-
der the categories set forth above. Repurchase agreements are discussed below.
Investments by the Fund in Eurodollar certificates of deposit issued by Lon-
don branches of U.S. banks, or obligations issued by foreign entities, includ-
ing foreign banks, involve risks that are different from investments in securi-
ties of domestic
6
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Investment Objectives and Policies--continued
branches of U.S. banks. These risks may include future unfavorable political
and economic developments, possible withholding taxes on interest payments,
seizure of foreign deposits, currency controls, interest limitations or other
governmental restrictions that might affect payment of principal or interest.
The market for such obligations may be less liquid and, at times, more vola-
tile than for securities of domestic branches of U.S. banks. Additionally,
there may be less public information available about foreign banks and their
branches. The profitability of the banking industry is dependent largely upon
the availability and cost of funds for the purpose of financing lending opera-
tions under prevailing money market conditions. General economic conditions as
well as exposure to credit losses arising from possible financial difficulties
of borrowers play an important part in banking operations. As a result of fed-
eral and state laws and regulations, domestic banks are, among other things,
required to maintain specified levels of reserves, limited in the amounts they
can loan to a single borrower and subject to other regulations designed to
promote financial soundness. However, not all such laws and regulations apply
to the foreign branches of domestic banks. Foreign branches of foreign banks
are not regulated by U.S. banking authorities, and generally are not bound by
accounting, auditing and financial reporting standards comparable to U.S.
banks. Bank obligations held by the Fund do not benefit materially from insur-
ance from the Federal Deposit Insurance Corporation.
The Fund may invest in commercial paper which is issued by major corpora-
tions without registration under the Securities Act of 1933 in reliance upon
the exemption from registration afforded by Section 3(a)(3) thereof. Such com-
mercial paper may be issued only to finance current transactions and must ma-
ture in nine months or less. Trading of such commercial paper is conducted
primarily by institutional investors through investment dealers, and individ-
ual investor participation in the commercial paper market is very limited.
The Fund may also invest in commercial paper issued in reliance upon the so-
called "private placement" exemption from registration afforded by Section
4(2) of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2) paper
is restricted as to disposition under the federal securities laws, and gener-
ally is sold to institutional investors such as the Fund who agree that they
are purchasing the paper for investment and not with a view to public distri-
bution. Any resale by the purchaser must be in an exempt transaction. Section
4(2) paper normally is resold to other institutional investors like the Fund
through or with the assistance of the issuer or investment dealers who make a
market in the Section 4(2) paper, thus providing liquidity. The Fund's invest-
ment manager considers the legally restricted but readily saleable Section
4(2) paper to be liquid; however, pursuant to procedures approved by the Board
of Trustees of the Fund, if a particular investment in Section 4(2) paper is
not determined to be liquid, that investment will be included within the 10%
limitation on illiquid securities discussed under "The Fund" below. The Fund's
investment manager monitors the liquidity of the Fund's investments in Section
4(2) paper on a continuous basis.
7
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Investment Objectives and Policies--continued
The Fund may invest in high quality participation certificates ("certifi-
cates") representing undivided interests in trusts that hold a portfolio of
receivables from consumer and commercial credit transactions, such as transac-
tions involving consumer revolving credit card accounts or commercial revolv-
ing credit loan facilities. The receivables would include amounts charged for
goods and services, finance charges, late charges and other related fees and
charges. Interest payable on the certificates may be fixed or may be adjusted
periodically or "float" continuously according to a formula based upon an ob-
jective standard such as the 30-day commercial paper rate. See "Additional In-
vestment Information" below for a discussion of "Variable Rate Securities." A
trust may have the benefit of a letter of credit from a bank at a level estab-
lished to satisfy rating agencies as to the credit quality of the assets sup-
porting the payment of principal and interest on the certificates. Payments of
principal and interest on the certificates would be dependent upon the under-
lying receivables in the trust and may be guaranteed under a letter of credit
to the extent of such credit. The quality rating by a rating service of an is-
sue of certificates is based primarily upon the value of the receivables held
by the trust and the credit rating of the issuer of any letter of credit and
of any other guarantor providing credit support to the trust. The Fund's in-
vestment manager considers these factors as well as others, such as any qual-
ity ratings issued by the rating services identified above, in reviewing the
credit risk presented by a certificate and in determining whether the certifi-
cate is appropriate for investment by the Fund. Collection of receivables in
the trust may be affected by various social, legal and economic factors af-
fecting the use of credit and repayment patterns, such as changes in consumer
protection laws, the rate of inflation, unemployment levels and relative in-
terest rates. It is anticipated that for most publicly offered certificates
there will be a liquid secondary market or there may be demand features en-
abling the Fund to readily sell its certificates prior to maturity to the is-
suer or a third party. While the Fund may invest without limit in certifi-
cates, it is currently anticipated that such investments will not exceed 25%
of the Fund's assets.
The Fund may concentrate 25% or more of its assets in bank certificates of
deposit, time deposits or banker's acceptances of United States banks and
their domestic branches in accordance with its investment objective and poli-
cies. Accordingly, the Fund may be more adversely affected by changes in mar-
ket or economic conditions and other circumstances affecting the banking in-
dustry than it would be if the Fund's assets were not so concentrated.
ADDITIONAL INVESTMENT INFORMATION
In addition to the specific investment objective and policies listed above,
the Fund limits its investments to securities that meet the requirements of
Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"). See "De-
termining Share Price."
The Fund may invest in instruments that have interest rates that adjust pe-
riodically or that "float" continuously according to formulae intended to min-
imize fluctu-
8
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Investment Objectives and Policies--continued
ation in values of the instruments ("Variable Rate Securities"). The interest
rate on a Variable Rate Security is ordinarily determined by reference to or is
a percentage of an objective standard such as a bank's prime rate, the 90-day
U.S. Treasury bill rate, or the rate of return on commercial paper or bank cer-
tificates of deposit. Generally, the changes in the interest rate on Variable
Rate Securities reduce the fluctuation in the market value of such securities.
Accordingly, as interest rates decrease or increase, the potential for capital
appreciation or depreciation is less than for fixed-rate obligations. Some
Variable Rate Securities ("Variable Rate Demand Securities") have a demand fea-
ture entitling the purchaser to resell the securities at an amount approxi-
mately equal to amortized cost or the principal amount thereof plus accrued in-
terest. As is the case for other Variable Rate Securities, the interest rate on
Variable Rate Demand Securities varies according to some objective standard in-
tended to minimize fluctuation in the values of the instruments. The Fund de-
termines the maturity of Variable Rate Securities in accordance with Securities
and Exchange Commission rules which allow the Fund to consider certain of such
instruments as having maturities shorter than the maturity date on the face of
the instrument.
The Fund may invest in repurchase agreements, which are instruments under
which the Fund acquires ownership of a security from a broker-dealer or bank
that agrees to repurchase the security at a mutually agreed upon time and price
(which price is higher than the purchase price), thereby determining the yield
during the Fund's holding period. Maturity of the securities subject to repur-
chase may exceed 397 days. In the event of a bankruptcy or other default of a
seller of a repurchase agreement, the Fund might incur expenses in enforcing
its rights, and could experience losses, including a decline in the value of
the underlying securities and loss of income.
The Fund will not purchase illiquid securities if, as a result thereof, more
than 10% of the Fund's net assets valued at the time of the transaction would
be invested in such securities. If the Fund holds a material percentage of its
assets in illiquid securities, there may be a question concerning the ability
of the Fund to make payment within seven days of the date its shares are ten-
dered for redemption. Securities and Exchange Commission guidelines provide
that the usual limit on aggregate holdings by a money market fund of illiquid
assets is 10% of its net assets. The Fund's investment manager monitors hold-
ings of illiquid securities on an ongoing basis and will take such action as it
deems appropriate to help maintain adequate liquidity.
The Fund may not borrow money except as a temporary measure for extraordinary
or emergency purposes, and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without immediately
selling any portfolio securities. Any such borrowings under this provision will
not be collateralized. If for any reason the current value of the Fund's total
assets falls below an amount equal to three times the amount of its indebted-
ness from money borrow-
9
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Investment Objectives and Policies--continued
ed, the Fund will, within three days (not including Sundays and holidays), re-
duce its
indebtedness to the extent necessary. The Fund will not borrow for leverage
purposes.
The Fund has adopted certain investment restrictions that are presented in
the Statement of Additional Information and that, together with the investment
objective of the Fund, cannot be changed without approval by holders of a ma-
jority of its outstanding voting shares. As defined in the 1940 Act, this
means the lesser of the vote of (a) 67% of the shares of the Fund present at a
meeting where more than 50% of the outstanding shares are present in person or
by proxy; or (b) more than 50% of the outstanding shares of the Fund. Policies
of the Fund that are not incorporated into any of the fundamental investment
restrictions referred to above may be changed by the Board of Trustees of the
Fund without shareholder approval.
DETERMINING SHARE PRICE
The price you pay when you buy shares in the Fund and the price you receive
if you redeem is the net asset value computed after we receive your order to
buy or redeem in proper form (as described under "How To Make a Purchase").
The net asset value per share of the Fund is calculated by dividing the total
value of the assets of the Fund, minus its liabilities, by the total number of
its shares outstanding. The Fund seeks to maintain a net asset value of $1.00
per share, although there can be no assurance that it will be able to do so.
The net asset value per share of the Fund is determined on each day the New
York Stock Exchange is open for trading, at 11:00 a.m., 1:00 p.m. and 3:00
p.m. Central time.
The Fund values its portfolio instruments at amortized cost in accordance
with Rule 2a-7 under the 1940 Act, which means that they are valued at their
acquisition cost (as adjusted for amortization of premium or discount) rather
than at current market value. Calculations are made to compare the value of
the Fund's investments valued at amortized cost with market-based value. Mar-
ket-based valuations are obtained by using actual quotations provided by mar-
ket makers, estimates of market value, or values obtained from yield data re-
lating to classes of money market instruments published by reputable sources
at the mean between the bid and asked prices for the instruments. If a devia-
tion of 1/2 of 1% or more were to occur between the Fund's net asset value per
share calculated by reference to market-based values and the Fund's $1.00 per
share net asset value, or if there were any other deviation that the Board of
Trustees believed would result in a material dilution to shareholders or pur-
chasers, the Board of Trustees would promptly consider what action, if any,
should be initiated. In order to value its investments at amortized cost, the
Fund purchases only securities with a maturity of 397 days or less and main-
tains a dollar-weighted average portfolio maturity of 90 days or less. In ad-
dition, the Fund limits its portfolio investments to securities that meet the
quality and diversification requirements of Rule 2a-7.
10
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HOW TO MAKE A PURCHASE
Whether you're opening an account or adding to it, we hope that you'll find
that we've made your shareholder transactions easy. Shares of the Fund are sold
at their net asset value with no sales charge. To open an account you should
use the account application available from the Fund and choose one of the meth-
ods outlined in the table on the following page. Call 1-800-537-6001 if you
have questions or need assistance.
<TABLE>
<CAPTION>
Minimum Investment Amounts
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<S> <C>
INITIAL INVESTMENT $25,000
For Individual Retirement Accounts $10,000
SUBSEQUENT PURCHASE $ 1,000
For Individual Retirement Accounts $ 1,000
Automatic Purchase Plan* $ 500
MINIMUM BALANCE REQUIREMENT** $10,000
</TABLE>
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*See "Special Features" for more information regarding Automatic Purchase Plan.
**There is a $1 per month small account fee for account balances under $10,000.
OTHER INFORMATION
Purchases by check or other negotiable bank draft will be invested as of 3:00
p.m. Central time on the next business day after receipt and such shares will
begin earning dividends the following calendar day. Purchases by check drawn on
a foreign bank will normally be effective after the check clears. See "Purchase
and Redemption of Shares" in the Statement of Additional Information.
Purchases by wire of Federal Funds (i.e., monies credited to a bank's account
with its regional Federal Reserve Bank) will be effected at the next determined
net asset value. Purchases will receive that day's dividend if effected at or
prior to 1:00 p.m. Central time and will receive the dividend for the next cal-
endar day if effected at 3:00 p.m. Central time.
The Fund reserves the right to withdraw all or any part of the offering made
by this prospectus or to reject purchase orders. The Fund also reserves the
right at any time to waive or increase the minimum investment requirements. All
orders to purchase shares are subject to acceptance by the Fund and are not
binding until confirmed or accepted in writing. Any purchase that would result
in total account balances for a single shareholder in excess of $3 million is
subject to prior approval by the Fund. Share certificates are issued only on
request to the Fund and may not be available for certain types of account reg-
istrations. Investments may also be made in the Fund through broker-dealers and
others, who may charge a commission or other fee for their services. A $10
service fee will be charged when a check for the purchase of shares is returned
because of insufficient or uncollected funds or a stop payment order.
If you elect to redeem Fund shares purchased by check or through EZ-Transfer
or Automatic Purchase Plan, the Fund may delay transmittal of redemption pro-
ceeds until it has determined that collected funds have been received for the
purchase of such shares, which could be up to 10 calendar days from receipt by
the Fund of the purchase amount. See also "How to Make a Redemption."
11
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HOW TO MAKE A PURCHASE
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INITIAL INVESTMENT SUBSEQUENT INVESTMENT
($25,000 OR MORE) ($1,000 OR MORE)
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BY MAIL . Complete the Account . Make your check payable
Application and mail it to ZYMF and mail it to:
with your check (payable Zurich Kemper Service
to ZYMF) to: Company
Zurich Kemper Service Transfer Agency
Company Division
Transfer Agency P.O. Box 419154
Division Kansas City, MO 64141-
P.O. Box 419356 6154
Kansas City, MO 64141-
6356
. To exchange by mail,
send your request to:
Zurich YieldWise Money
Fund
P.O. Box 419557
Attention: Exchange
Dept.
Kansas City, MO 64141-
6557
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BY PHONE . Call 1-888-ZURICH-1 . Call 1-888-ZURICH-1
(987-4241) to exchange (987-4241) to exchange
from a Zurich Money from a Zurich Money
Funds account. Funds account.
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IN PERSON . In downtown Chicago, you . In downtown Chicago, you
can make a direct can make a direct
investment at our investment at our
Service Center at 222 Service Center at 222
South Riverside Plaza. South Riverside Plaza.
In Kansas City, you can In Kansas City, you can
make a direct investment make a direct investment
at 811 Main Street, 7th at 811 Main Street, 7th
Floor. Floor.
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BY WIRE . To open an account . Instruct your bank to
TRANSFER through wire transfer of wire your investment,
(Federal Funds) Federal Funds, call together with your name
1-800-537-6001. and account number, to:
. Provide your account Zurich YieldWise Money
registration instruction Fund, United Missouri
to the service Bank
representative. You will of Kansas City, N.A.
be provided with your ABA #1010-0069-5
new account number over Fund Account
the phone. #9870838818
. The Fund accepts wires . The Fund accepts wires
at no charge, although at no charge, although
your bank may charge you your bank may charge you
for this service. for this service.
. Instruct your bank to
wire your investment,
together with your name
and new account number,
to:
Zurich YieldWise Money
Fund:
United Missouri Bank of
Kansas City, N.A.
ABA # 1010-0069-5
Fund Account #9870838818
- --------------------------------------------------------------------------
BY ELECTRONIC FUNDS . Unavailable for opening Please see "Special
TRANSFER an account. Features" for more
information on these
services.
(Automated . EZ-Transfer
Clearing House . Automatic Purchase Plan
funds) ($500 minimum)
All transactions are via
the Automated Clearing
House ("ACH") System.
</TABLE>
12
<PAGE>
HOW TO MAKE A REDEMPTION
You can access all or part of your account by selling your shares. Your
shares will be redeemed at the next determined net asset value after your re-
quest has been received in proper form. If processed at 3:00 p.m. Central time,
you will receive that day's dividend on the shares you sold. If you redeem all
your shares, you will receive the net asset value of such shares and all de-
clared but unpaid dividends on such shares. You may use any of the methods out-
lined in the table on the following page to sell your shares.
If your account balance is less than $100,000, the following fees apply to
individual redemption transactions: $2 for each check you write for $1,000 or
more and $12 for each such check under $1,000, $2 for each electronic funds
transfer, $5 for each exchange, $5 for each telephone redemption and each re-
demption by mail, and $10 for each bank wire. There is a $5 fee for closing an
account; however, there is a $10 fee for closing an account within one year of
opening the account. For individual retirement accounts, there is no fee for
closing an account, but there is a $5 fee for closing an account within one
year of opening the account.
The individual transaction fees paid by shareholders will accrue to the Fund.
The fees will be used to offset transfer agency and out-of-pocket expenses of
the Fund, which should benefit all Fund shareholders by helping to reduce the
Fund's expenses.
SIGNATURE GUARANTEE REQUIREMENTS
If the proceeds of a redemption are $50,000 or less and the proceeds are pay-
able to the shareholder of record at the address of record, normally a tele-
phone request or a written request by any one account holder without a signa-
ture guarantee is sufficient for redemptions by individual or joint account
holders, and trust, executor and guardian account holders (excluding custodial
accounts for gifts and transfers to minors), provided the trustee, executor or
guardian is named in the account registration. Other institutional account
holders and guardian account holders of custodial accounts for gifts and trans-
fers to minors may exercise the special privilege of redeeming shares by tele-
phone request or written request without signature guarantee subject to the
same conditions as individual account holders and subject to the limitations on
liability described under "General" below, provided that the privilege has been
pre-authorized by the institutional account holder or guardian account holder
by written instruction to Zurich Kemper Service Company (the "Shareholder Serv-
ice Agent") with signatures guaranteed. All other redemption requests must in-
clude a signature guaranteed by a commercial bank, trust company, savings and
loan association, federal savings bank, member firm of a national securities
exchange or other eligible financial institution. The privilege of redeeming
shares by telephone request or by written request without a signature guarantee
may not be used to redeem shares held in certificated form and may not be used
if the shareholder's account has had an address change within 30 days of the
redemption request.
13
<PAGE>
How To Make A Redemption--continued
HOW TO MAKE A REDEMPTION
<TABLE>
<C> <S>
BY REDEMPTION CHECK . All Redemption Checks should be for a
($2 fee per check) minimum of $1,000. Redemption Checks
written in an amount less than $1,000
will also be charged a $10 service fee.
. Redemption Checks should not be used to
close your account since the account
normally includes accrued but unpaid
dividends and the account closeout fee
must be deducted from your balance.
- -------------------------------------------------------------------------------
BY PHONE . Telephone requests may be made by
($5 fee--check by mail) calling 1-888-ZURICH-1 (987-4241)
($2 fee--electronic funds transfer) Monday-Friday, 7 a.m. to 6 p.m. CST and
Saturday, 8 a.m. to 3 p.m. CST or use
24-hour Zurich InfoLine (888) 987-8678.
You may receive the proceeds via:
. check by mail to the address to which
your account is registered, or
. electronic funds transfer (minimum
$1,000 and maximum $50,000) to a pre-
authorized bank account.
See "Special Features--EZ-Transfer."
. You may exchange to Zurich Money Funds.
See "Moving to Another Fund."
- -------------------------------------------------------------------------------
BY WIRE . You need to have signed up for the wire
($10 fee) transfer privilege and have the forms on
file with the Shareholder Service Agent
before using it. Minimum wire: $1,000
. Telephone requests may be made by
calling 1-888-ZURICH-1 (987-4241).
. Proceeds will be sent only to the bank
or trust company you have designated on
the Account Application.
- -------------------------------------------------------------------------------
BY MAIL . Complete a written request that includes
($5 fee) the following information: each account
owner's name, your account number, the
amount to be redeemed, and the signature
of each owner exactly as it appears on
the account, including any special
capacity of the registered owner. See
"Signature Guarantee Requirements", on
previous page.
. Mail the written request to Zurich
Kemper Service Company, Transfer Agency
Division, P.O. Box 419557, Kansas City,
Missouri 64141-6557.
</TABLE>
14
<PAGE>
How To Make A Redemption--continued
ADDITIONAL INFORMATION
. REDEMPTION BY WIRE. Requests for wire transfer redemptions received by the
Shareholder Service Agent prior to 11:00 a.m. Central time will result in
shares being redeemed that day and normally a wire transfer will be sent to
the designated account that day. Dividends for that day will not be earned.
The Fund is not responsible for the efficiency of the federal wire system or
the account holder's financial services firm or bank. You are responsible for
any charges your firm or bank makes for sending or receiving wire transfers.
To change the designated account to receive wire redemption proceeds, send a
written request to the Shareholder Service Agent with signatures guaranteed as
described above.
. REDEMPTION BY REDEMPTION CHECK. If you select the checkwriting method of re-
demption on your account application, you will normally receive drafts ("Re-
demption Checks") within 2 weeks of opening your account which you may use to
draw on your Fund account, but not to close it. When a Redemption Check is
presented for payment, a sufficient number of full and fractional shares in
your account will be redeemed at the next determined net asset value to cover
the amount of the Redemption Check. This will enable you to continue earning
daily dividends until the Fund receives the Redemption Check.
You may write Redemption Checks payable to the order of any person in any
amount not less than $1,000 but not more than $5 million. Unless one signer is
authorized on the account application, Redemption Checks must be signed by all
account holders. If the Shareholder Service Agent receives written notice by
any owner revoking the authorization to sign individually, all account owners
will be required to sign. Redemption Checks must be signed exactly as the ac-
count is registered. The Fund may refuse to honor Redemption Checks whenever
the right of redemption has been suspended or postponed, or whenever the ac-
count is otherwise impaired. A $10 service fee will be charged when a Redemp-
tion Check is presented to redeem Fund shares in excess of the value of your
Fund account or in an amount less than $1,000; when a Redemption Check is pre-
sented that would require redemption within 10 days of shares that were pur-
chased by check or through EZ-Transfer or Automatic Purchase Plan; or when you
request "stop payment" of a Redemption Check by telephone or in writing. A
"stop payment" request may be made by calling 1-888 ZURICH-1 (987-4241).
15
<PAGE>
How To Make A Redemption--continued
GENERAL
If shares of the Fund to be redeemed were purchased by check or through EZ-
Transfer or Automatic Purchase Plan (see "Special Features--Electronic Funds
Transfer Programs") the Fund may delay transmittal of redemption proceeds un-
til it has determined that collected funds have been received for the purchase
of such shares, which could be up to 10 days from receipt by the Fund of the
purchase amount. Shareholders may not use wire transfer or Redemption Check
features until the shares being redeemed have been owned for at least 10 days.
There is no such delay when the shares being redeemed were originally pur-
chased by wiring Federal Funds. The Fund reserves the right to terminate or
modify the telephone, wire transfer or check redemption privileges at any
time.
If shares being redeemed were acquired from an exchange of shares of a mu-
tual fund that were offered subject to a contingent deferred sales charge as
described in the prospectus for that other fund, the redemption of such shares
may be subject to a contingent deferred sales charge as explained in such pro-
spectus.
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions, ACH transactions and exchange transactions for individ-
ual and institutional accounts and pre-authorized telephone redemption trans-
actions for certain institutional accounts. Shareholders may choose these
privileges on the account application or by contacting the Shareholder Service
Agent for appropriate instructions. Please note that the telephone exchange
privilege is automatic unless the shareholder refuses it on the account appli-
cation. The Fund or its agents may be liable for losses, expenses or costs
arising out of fraudulent or unauthorized telephone requests pursuant to these
privileges, unless the Fund or its agent reasonably believes, based upon rea-
sonable verification procedures, that the telephonic instructions are genuine.
The SHAREHOLDER WILL BEAR THE RISK OF LOSS, including loss resulting from
fraudulent or unauthorized transactions, as long as the reasonable verifica-
tion procedures are followed. The verification procedures include recording
instructions, requiring certain identifying information before acting upon in-
structions and sending written confirmations.
THE FUND MAY ASSESS A MONTHLY FEE OF $1 ON ANY ACCOUNT WITH A BALANCE BELOW
$10,000 FOR 30 CONSECUTIVE DAYS.
16
<PAGE>
MOVING TO ANOTHER FUND
You may exchange your shares of the Fund for shares of Zurich Money Funds.
Exchanges are made based on relative dollar values of the shares involved in
the exchange. If your account balance is less than $100,000, there will be a
$5.00 fee for each exchange out of the Fund. In addition, dealers or other
firms may charge for their services. The exchange minimum is $1,000. To ex-
change shares, call us or contact your financial adviser to obtain a prospectus
for Zurich Money Funds. You may make an exchange by mail or by telephone:
BY TELEPHONE
Once you've completed the authorization section on the account application
and we have it on file, the Shareholder Service Agent will honor requests by
telephone at 1-888-ZURICH-1 (987-4241), subject to the limitations on liability
described under "How To Make a Redemption--General." During periods when it is
difficult to contact the Shareholder Service Agent by telephone, it may be dif-
ficult to use the telephone exchange privilege.
BY MAIL
Send your request to:
Zurich YieldWise Money Fund
P.O. Box 419557
Attention: Exchange Department
Kansas City, Missouri 64141-6557
Exchanges will be effected by redemption of shares of the fund held and pur-
chase of shares of the other fund. For federal income tax purposes, any such
exchange constitutes a sale upon which a gain or loss may be realized, depend-
ing upon whether the value of the shares being exchanged is more or less than
the shareholder's adjusted cost basis. The exchange privilege is not a right
and may be suspended, terminated or modified at any time. Except as otherwise
permitted by applicable regulation, 60 days prior written notice of any termi-
nation or material change will be provided.
AUTOMATIC EXCHANGE PLAN
With an account balance of $10,000 or more, shareholders may authorize the
automatic exchange of a specified amount ($1,000 minimum) of shares of the Fund
for shares of Zurich Money Funds. If selected, exchanges will be made automati-
cally until the privilege is terminated by the shareholder or the Fund. Ex-
changes are subject to the terms and conditions described above except that
there is no minimum investment requirement for the Zurich Money Funds acquired
on exchange. Each automatic exchange out of the Fund is subject to the $5.00
exchange fee.
17
<PAGE>
SPECIAL FEATURES
ELECTRONIC FUNDS TRANSFER PROGRAMS
For your convenience, the Fund has established several investment and re-
demption programs using electronic funds transfer via the ACH System which are
described below. There is currently a $2.00 fee for each redemption using
electronic funds transfer. Shareholders should contact the Shareholder Service
Agent at 1-888-ZURICH-1 (987-4241) for more information.
. EZ-TRANSFER With just one easy phone call, EZ-Transfer allows you to quickly
and conveniently transfer money (minimum $1,000 and maximum $50,000) from your
bank, savings and loan or credit union account to purchase shares in the Fund.
You can also redeem shares (minimum $1,000 and maximum $50,000) from your Fund
account and transfer the proceeds to your bank, savings and loan or credit
union checking account. When you choose to participate in the EZ-Transfer pro-
gram, you designate the bank, savings and loan or credit union account which
will be debited or credited under the program. After you have received a no-
tice confirming that this service has been added to your Fund account, please
allow a minimum of 20 days for bank notification and processing. By choosing
to participate in this program, you authorize the Shareholder Service Agent to
rely upon telephone instructions from any person to transfer the specified
amounts between your Fund account and your predesignated bank, savings and
loan or credit union account, subject to the limitations on liability under
"How To Make a Redemption--General." The Shareholder Service Agent will then
purchase or redeem sufficient full and fractional shares in your account to
satisfy the request. Once you are enrolled in EZ-Transfer, you can initiate a
transaction by simply calling Shareholder Services toll free at 1-888-ZURICH-1
(987-4241) Monday through Friday, 8:00 a.m. to 3:00 p.m. Central time or by
calling the Zurich InfoLine at 1-888-987-8678 24 hours a day. See "How To Make
a Redemption--General" for information on our 10 day hold policy. Any account
holder may terminate this privilege by sending written notice to Zurich
YieldWise Money Fund, P.O. Box 419415, Kansas City, Missouri 64141-6415. Ter-
mination will become effective as soon as the Shareholder Service Agent has
had a reasonable time to act upon the request. EZ-Transfer cannot be used with
passbook savings accounts. This program may not be used for tax-deferred plans
such as Individual Retirement Accounts (IRAs).
. AUTOMATIC PURCHASE PLAN You may establish an automatic investment program
with your Fund account. With Automatic Purchase Plan, monthly investments
(minimum $500 and maximum $50,000) are made automatically from your account at
a bank, savings and loan, or credit union into your Fund account. By signing
up for this privilege, you authorize the Fund and its agents to take money out
of your predesignated bank, savings and loan or credit union account and in-
vest that money in your Fund account. Any account owner may terminate this
privilege simply by sending written notice to Zurich YieldWise Money Fund,
P.O. Box 419415, Kansas City, Missouri 64141-6415. Termination will become ef-
fective as soon as the Share-
18
<PAGE>
Special Features--continued
holder Service Agent has had a reasonable time to act upon the request. This
privilege may not be used with passbook savings accounts.
. DIRECT CHECK DEPOSIT SERVICE You may conveniently invest in the Fund through
Payroll Direct Deposit or Government Direct Deposit. You can arrange to have
all or a portion of your net pay or government check ($500 minimum) automati-
cally invested in your Fund account each payment period. You may terminate
your participation in these programs by giving written notice to your employer
or the government agency, as appropriate. (A reasonable time to act is re-
quired.) The Fund is not responsible for the efficiency of your employer or
the government agency making the payment or any financial institution trans-
mitting payment.
To use these features, the participating financial institution must be af-
filiated with the ACH System. This ACH affiliation permits the Shareholder
Service Agent to electronically transfer money between your bank account or
employer's payroll bank in the case of Payroll Direct Deposit or the U.S. Gov-
ernment in the case of Government Direct Deposit, and your Fund account. Your
financial institution's crediting policies for these transferred funds may
vary. These features may be amended or terminated at any time by the Fund.
OTHER SPECIAL FEATURES
Information about the following special features is contained in the State-
ment of Additional Information. Additional information may also be obtained by
contacting the Shareholder Service Agent at 1-888-ZURICH-1 (987-4241)
--Automatic Withdrawal Plan
--Tax Sheltered Retirement Programs
DIVIDENDS AND TAXES
DIVIDEND PAYMENT
To help keep your account growing, dividends from the Fund are automatically
reinvested in additional shares of the Fund, unless you request payment by
check on your account application or make such a request later. Dividends are
declared daily and paid monthly.
Dividends are normally reinvested on the 25th of each month if a business
day, otherwise on the prior business day. If you've chosen to receive divi-
dends in cash, checks will be mailed monthly to you or any person you desig-
nate. You may request this option by contacting the Shareholder Service Agent
(see "How To Make a Purchase").
The Fund will reinvest dividend checks (and future dividends) in shares of
the Fund if checks are returned as undeliverable. Dividends and other distri-
butions of the Fund in the aggregate amount of $10 or less are automatically
reinvested in
19
<PAGE>
Dividends and Taxes--continued
shares of the Fund unless you request that such policy not be applied to your
account.
THE FUND
The Fund intends to continue to qualify as a regulated investment company un-
der Subchapter M of the Internal Revenue Code (the "Code") and if so qualified
will not be subject to federal income taxes to the extent its earnings are dis-
tributed. Dividends derived from interest and short-term capital gains are tax-
able as ordinary income whether received in cash or reinvested in additional
shares. Dividends from the Fund do not qualify for the dividends received de-
duction available to corporate shareholders.
Dividends declared in October, November or December to shareholders of record
as of a date in one of those months and paid during the following January are
treated as paid on December 31 of the calendar year in which declared for fed-
eral income tax purposes. The Fund may adjust its schedule for dividend rein-
vestment for the month of December to assist it in complying with reporting and
minimum distribution requirements contained in the Code.
The Fund is required by law to withhold 31% of taxable dividends paid to cer-
tain shareholders who do not furnish a correct taxpayer identification number
(in the case of individuals, a social security number) and in certain other
circumstances. Trustees of qualified retirement plans and 403(b)(7) accounts
are required by law to withhold 20% of the taxable portion of any distribution
that is eligible to be "rolled over." The 20% withholding requirement does not
apply to distributions from IRAs or any part of a distribution that is trans-
ferred directly to another qualified retirement plan, 403(b)(7) account, or
IRA. You should consult your tax adviser regarding the 20% withholding require-
ment.
You will receive a monthly statement giving complete details of dividend re-
investment and purchase and redemption transactions during the month. Tax in-
formation will be provided annually. You should retain copies of your monthly
account statements or year-end statement for tax reporting purposes. However,
those who have incomplete records may obtain historical account transaction in-
formation at a reasonable fee.
When more than one shareholder resides at the same address, certain reports
and communications to be delivered to such shareholders may be combined in the
same mailing package, and certain duplicate reports and communications may be
eliminated. Similarly, account statements to be sent to such shareholders may
be combined in the same mailing package or consolidated into a single state-
ment. However, you may request that the foregoing policies not be applied to
your account.
20
<PAGE>
INVESTMENT MANAGER
Zurich Kemper Investments, Inc. ("ZKI"), 222 South Riverside Plaza, Chicago,
Illinois 60606-5808, is the investment manager of the Fund and provides the
Fund with continuous professional investment supervision. ZKI has been engaged
in the management of investment funds for more than forty-nine years and is
one of the largest investment managers in the country. ZKI and its affiliates
provide investment advice and manage investment portfolios for investment com-
panies including Zurich Money Funds, and affiliated insurance companies and
other corporate, pension, profit-sharing and individual accounts representing
approximately $85 billion under management, including $12 billion in money
market fund assets. ZKI acts as investment manager for 32 open-end and seven
closed-end investment companies, with 86 separate investment portfolios, rep-
resenting more than 2.5 million shareholder accounts. ZKI is the investment
manager for Zurich Money Market Fund, which commenced operations in 1974, and
which is one of the oldest money market funds in existence. ZKI is an indirect
subsidiary of Zurich Insurance Company, an internationally recognized provider
of financial services in property/casualty and life insurance, reinsurance and
asset management. The Zurich family of companies manages over $150 billion in
assets worldwide.
Zurich Insurance Company ("Zurich") has entered into a definitive 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
ZKI will be operated either as a subsidiary of SKI or as part of SKI. Consum-
mation of the transaction is subject to a number of contingencies. Because the
transaction would constitute an assignment of the Fund's investment management
agreement with ZKI under the Investment Company Act of 1940, ZKI is seeking
approval of a new agreement. The Fund's board has approved a new agreement
subject to shareholder approval. If the contingencies are timely met, the
transaction is expected to close in the fourth quarter of 1997. Zurich will
own 69.5% of SKI and senior employees of SKI will hold the remaining 30.5%.
SKI will be headquartered in New York City and the chief executive officer of
SKI will be Edmond D. Villani, Scudder's president and chief executive offi-
cer. Mr. Villani will also join Zurich's Corporate Executive Board. A transi-
tion team comprised of representatives from ZKI, Zurich, and Scudder has been
formed to make recommendations regarding combining the operations of Scudder
and ZKI.
Responsibility for overall management of the Fund rests with its Board of
Trustees and officers. Professional investment supervision is provided by ZKI.
The investment management agreement provides that ZKI shall act as the Fund's
investment adviser, manage its investments and provide it with various serv-
ices and facilities.
Frank J. Rachwalski, Jr. is the portfolio manager of the Fund. He has served
in this capacity since the Fund commenced operations in April 1997. Mr.
Rachwalski
21
<PAGE>
Investment Manager--continued
joined ZKI in January, 1973 and is currently a Senior Vice President of ZKI
and a Vice President of the Fund. He received a B.B.A. and an M.B.A. from
Loyola University, Chicago, Illinois.
For the services and facilities furnished, the Fund pays an annual invest-
ment management fee, payable monthly, on a graduated basis ranging from .50%
of the first $215 million of average daily net assets of the Fund, to .25% of
average daily net assets of the Fund over $800 million.
ZKI has agreed to temporarily reduce its management fee to 0% and temporar-
ily reimburse or pay 100% of the Fund's other operating expenses through at
least March 1, 1998. The total operating expenses of the Fund set forth under
"Summary of Expenses" include the effect of this management fee and operating
expense reduction. ZKI reserves the right to terminate its fee reduction and
expense absorption at any time after this period. ZKI has also agreed to waive
its management fee and absorb operating expenses to the extent necessary to
maintain the Fund's total operating expenses at no more than .45% until Janu-
ary 1, 1999, at which time ZKI may terminate such fee waiver and expense ab-
sorption. For purposes of these fee waivers and expense limitations, "operat-
ing expenses" do not include taxes, interest, extraordinary expenses, broker-
age commissions or transaction costs.
Zurich Kemper Distributors, Inc., 222 South Riverside Plaza, Chicago, Illi-
nois 60606-5808, an affiliate of ZKI, is the principal underwriter of the Fund
and acts as agent of the Fund in the sale of its shares.
Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Ave., Kansas
City, Missouri 64105, as custodian, and State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110, as sub-custodian, have cus-
tody of all securities and cash of the Fund. They attend to the collection of
principal and income, and payment for and collection of proceeds of securities
bought and sold by the Fund. IFTC is also the Fund's transfer and dividend-
paying agent. Pursuant to a services agreement with IFTC, Zurich Kemper Serv-
ice Company, 811 Main Street, Kansas City, Missouri 64105, an affiliate of
ZKI, serves as Shareholder Service Agent of the Fund.
PERFORMANCE
The Fund may advertise several types of performance information, including
"yield," "effective yield," "total return," and "average annual total return."
Please remember that performance information is based upon historical earnings
and is not representative of future performance. The yield of the Fund refers
to the net investment income generated by a hypothetical investment in the
Fund over a specific
22
<PAGE>
Performance--continued
seven-day period. This net investment income is then annualized, which means
that the net investment income generated during the seven-day period is assumed
to be generated each week over an annual period and is shown as a percentage of
the investment. The effective yield is calculated similarly, but the net in-
vestment income earned by the investment is assumed to be compounded weekly
when annualized. The effective yield will be slightly higher than the yield due
to this compounding effect. Average annual total return and total return meas-
ure both net investment income and any realized or unrealized appreciation or
depreciation of the Fund's investments, assuming reinvestment of all dividends.
Average annual total return represents the average annual percentage change
over the period and total return represents the aggregate percentage or dollar
value change over the period.
The performance of the Fund may be compared to that of other money market mu-
tual funds or mutual fund indexes as reported by independent mutual fund re-
porting services such as Lipper Analytical Services, Inc. ("Lipper"). The
Fund's performance, expenses and its relative size may be compared to other
money market mutual funds as reported by IBC Financial Data, Inc.'s Money Fund
Report(R) or Money Market Insight(R), reporting services on money market funds.
Investors may want to compare the Fund's performance to that of various bank
products as reported by BANK RATE MONITOR(TM), a financial reporting service
that weekly publishes average rates of bank and thrift institution money market
deposit accounts and interest bearing checking accounts or various certificate
of deposit indexes. The performance of the Fund also may be compared to that of
U.S. Treasury bills and notes. Certain of these alternative investments may of-
fer fixed rates of return and guaranteed principal and may be insured. In addi-
tion, investors may want to compare the Fund's performance to the Consumer
Price Index either directly or by calculating its "real rate of return," which
adjusts its return for the effects of inflation.
Information may be quoted from publications such as Morningstar, Inc., The
Wall Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago
Tribune, USA Today, Institutional Investor and Registered Representative. The
Fund may depict the historical performance of the securities in which the Fund
may invest over periods reflecting a variety of market or economic conditions
either alone or in comparison with alternative investments, performance indexes
of those investments or economic indicators. The Fund may also describe its
portfolio holdings and depict its size or relative size compared to other mu-
tual funds, the number and make-up of its shareholder base and other descrip-
tive factors concerning the Fund.
The Fund's returns will fluctuate. Shares of the Fund are not insured. Addi-
tional information concerning the Fund's performance appears in the Statement
of Additional Information.
23
<PAGE>
Capital Structure--continued
CAPITAL STRUCTURE
The Fund is an open-end, diversified, management investment company, orga-
nized as a business trust under the laws of Massachusetts on June 12, 1995. The
Fund may issue an unlimited number of shares of beneficial interest, all having
no par value, which may be divided by the Board of Trustees into classes of
shares, subject to compliance with the Securities and Exchange Commission regu-
lations permitting the creation of separate classes of shares. The Fund's
shares are not currently divided into classes. While only shares of a single
series are presently being offered, the Board of Trustees may authorize the is-
suance of additional series if deemed desirable, each with its own investment
objective, policies and restrictions. Since the Fund may offer multiple series,
it is known as a "series company." Shares of a series have equal noncumulative
voting rights and equal rights with respect to dividends, assets and liquida-
tion of such series subject to any preferences, rights or privileges of any
classes of shares within the series. Generally, each class of shares issued by
a particular series would differ as to the allocation of certain expenses of
the series, such as distribution and administrative expenses, permitting, among
other things, different levels of services or methods of distribution among
various classes. Shares are fully paid and nonassessable when issued, are
transferable without restriction and have no preemptive or conversion rights.
The Fund is not required to hold annual shareholders' meetings and does not in-
tend to do so. However, it will hold special meetings as required or deemed de-
sirable for such purposes as electing trustees, changing fundamental policies
or approving an investment management agreement. Subject to the Agreement and
Declaration of Trust of the Fund, shareholders may remove trustees. If shares
of more than one series are outstanding, shareholders will vote by series and
not in the aggregate or by class except when voting in the aggregate is re-
quired under the 1940 Act, such as for the election of trustees or when the
Board of Trustees determines that voting by portfolio or by class is appropri-
ate.
24
<PAGE>
Account Services Diretory--continued
ACCOUNT SERVICES DIRECTORY
TO OPEN A NEW ACCOUNT
The minimum to open an account is $25,000 (or $10,000 for an IRA). Call a
Zurich Money Fund Specialist at 1-800-537-6001 Monday through Friday between
8 a.m. and 6 p.m. Central time to:
. learn the current yield
. get answers about fund features, benefits, services, and fees
. request an application
. receive assistance completing an application
. set up a wire transfer initial purchase.
FOR CURRENT ACCOUNT ASSISTANCE
Call a Zurich Shareholder Services representative at
1-888-ZURICH-1 (987-4241) Monday through Friday between 7 a.m. and 6 p.m. Cen-
tral time and on Saturday between 8 a.m. and 3 p.m. to:
. establish new account services
. inquire about current statement or tax forms
. request duplicate statements or tax forms
. change the frequency or amount of automated transactions
. initiate a redemption or exchange
. follow-up on correspondence
. learn how to use the Zurich InfoLine automated phone system.
24-HOUR ACCOUNT INFORMATION
Call Zurich InfoLine at 1-888-987-8678 to make automated account inquiries and
transactions 24 hours a day from a touch-tone phone, including:
. account balance
. current yield
. transaction confirmation
. last dividend paid
. checkbook and investment slip reorders
. duplicate statement request
. pre-authorized transfers to and from a bank account
. fund redemption requests.
25
<PAGE>
Account Services Diretory--continued
TO START AN AUTOMATIC PURCHASE PLAN
Call 1-888-ZURICH-1 (987-4241) for the proper forms to add $500 or more to your
account automatically with direct deposit:
. all or part of your paycheck
. all or part of your government check
. an amount you specify directly from your designated bank account.
TO MAKE A WIRE TRANSFER PURCHASE
Both methods require $1,000 minimum investment:
. Wire with Federal Funds (same day credit if received before 3 p.m. Central
time)
. EZ-Transfer with ACH Funds (same day credit if received before 3 p.m. Cen-
tral time)
Send to: United Missouri Bank (ABA # 1010-0069-5), 10th and Grand, Kansas City,
MO for credit to Zurich YieldWise Money Fund (Fund bank account
# 9870838818) and further credit to your account number.
TO MAKE A WIRE TRANSFER REDEMPTION
Both methods require $1,000 minimum and a call to Shareholder Services at 1-
888-ZURICH-1 (987-4241):
. Federal Funds (same day if received before 11 a.m. Central time; $10 fee per
transfer)
. EZ-Transfer with ACH Funds (generally within two business days; $2 fee per
transfer).
The financial institution receiving your transfer may also charge a fee.
For additional information on account transactions, see tables on pages 12 and
14.
26
<PAGE>
[Zurich logo]
Zurich
Zurich Kemper Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606-5808
Telephone: 1-800-537-6001
[recycle symbol] printed on recycled paper ZMF-1 (11/97)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 15, 1997
ZURICH YIELDWISE MONEY FUND
222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606-5808
(888) ZURICH-1 (987-4241)
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the prospectus of Zurich YieldWise Money Fund (the
"Fund") dated November 15, 1997. The prospectus may be obtained without charge
by calling or writing the Fund.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Restrictions............................................. B-1
Investment Manager.................................................. B-2
Portfolio Transactions.............................................. B-3
Purchase and Redemption of Shares................................... B-4
Dividends and Net Asset Value....................................... B-4
Performance......................................................... B-5
Officers and Trustees............................................... B-8
Special Features.................................................... B-9
Shareholder Rights.................................................. B-10
Appendix--Ratings of Investments.................................... B-12
</TABLE>
The financial statements appearing in the Fund's Annual Report to Shareholders
are incorporated herein by reference.
[RECYCLING LOGO]
printed on recycled paper
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions which, together with the
investment objective of the Fund, cannot be changed without approval by
holders of a majority of the Fund's outstanding voting shares. As defined in
the Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Fund present at a meeting where more than 50% of the
outstanding shares of the Fund are present in person or by proxy; or (b) more
than 50% of the outstanding shares of the Fund.
The Fund may not:
(1) Purchase more than 10% of any class of voting securities of any issuer.
(2) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and
policies).
(3) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
money market instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its
indebtedness from money borrowed, the Fund will, within three days (not
including Sundays and holidays), reduce its indebtedness to the extent
necessary. The Fund will not borrow for leverage purposes and will not
purchase securities or make investments while borrowings in excess of 5% of
the Fund's total assets are outstanding.
(4) Make short sales of securities, or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the clearance
of transactions.
(5) Invest in commodities or commodity futures contracts or in real estate (or
real estate limited partnerships), although it may invest in securities which
are secured by real estate and securities of issuers which invest or deal in
real estate.
(6) 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.
(7) Issue senior securities except as permitted under the Investment Company
Act of 1940.
(8) Concentrate 25% or more of the Fund's total assets in any one industry;
provided, however, that the Fund reserves freedom of action to (a) invest up
to 100% of its assets in obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities, and (b) invest 25% or more of
its assets in bank certificates of deposit, time deposits or banker's
acceptances of United States banks and their domestic branches, in accordance
with its investment objective and policies.
If the Fund adheres to a percentage restriction at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values or net assets will not be considered a violation. The
Fund has adopted the following non-fundamental restrictions, which may be
changed by the Board of Trustees without shareholder approval. The Fund may
not:
(i) Invest more than 10% of its net assets in illiquid securities.
(ii) Write, purchase or sell puts, calls or combinations thereof.
(iii) Invest for the purpose of exercising control or management of another
issuer.
B-1
<PAGE>
INVESTMENT MANAGER
INVESTMENT MANAGER. Zurich Kemper Investments, Inc. ("ZKI") is the Fund's
investment manager. ZKI is wholly owned by ZKI Holding Corp. ZKI Holding Corp.
is a more than 90% owned subsidiary of Zurich Holding Company of America,
Inc., which is a wholly owned subsidiary of Zurich Insurance Company, an
internationally recognized company providing services in life and non-life
insurance, reinsurance and asset management. Pursuant to an investment
management agreement, ZKI acts as the Fund's investment adviser, manages its
investments, administers its business affairs, furnishes office 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 elected to such positions. The Fund pays the expenses of its operations,
including the fees and expenses of independent auditors, counsel, custodian
and transfer agent and the cost of share certificates, reports and notices to
shareholders, costs of calculating net asset value, brokerage commissions or
transaction costs, taxes, registration fees, the fees and expenses of
qualifying the Fund and its shares for distribution under federal and state
securities laws and membership dues in the Investment Company Institute or any
similar organization.
The Fund's investment management agreement has an initial term ending December
1, 1998 and it 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
of the Fund or the Board of Trustees. The agreement may be terminated at any
time upon 60 days' notice by either party, or by a majority vote of the
outstanding shares of the Fund, and will terminate automatically upon
assignment. If additional series become subject to the investment management
agreement, the provisions concerning continuation, amendment and termination
shall be on a series by series basis. Additional series may be subject to a
different agreement. The agreement provides that ZKI 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 agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part
of ZKI in the performance of its obligations and duties, or by reason of its
reckless disregard of its obligations and duties under the agreement.
For the services and facilities furnished, the Fund pays an annual investment
management fee, payable monthly, on a graduated basis of .50% of the first
$215 million of average daily net assets of the Fund, .375% on the next $335
million, .30% on the next $250 million and .25% of average daily net assets of
the Fund over $800 million. As a result of the fee waiver described in the
prospectus (see "Investment Manager"), for the period April 17, 1997
(commencement of operations) to July 31, 1997, the Fund paid no investment
management fee.
PRINCIPAL UNDERWRITER. Zurich Kemper Distributors, Inc. ("ZKDI"), an affiliate
of ZKI, is the principal underwriter for shares of the Fund and acts as agent
of the Fund in the sale of its shares. The Fund pays the cost for the
prospectus and shareholder reports to be set in type and printed for existing
shareholders, and ZKDI pays for the printing and distribution of copies
thereof used in connection with the offering of shares to prospective
investors. ZKDI also pays for supplementary sales literature and advertising
costs. Terms of continuation, termination and assignment under the
underwriting agreement are identical to those described above with regard to
the investment management agreement, except that termination other than upon
assignment requires six months notice.
Certain officers or trustees of the Fund are also directors or officers of ZKI
and ZKDI as indicated under "Officers and Trustees."
B-2
<PAGE>
CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary
Trust Company ("IFTC"), 801 Pennsylvania Ave. Kansas City, Missouri 64105, as
custodian, and State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, as sub-custodian, have custody of all securities
and cash of the Fund. They attend to the collection of principal and income,
and payment for and collection of proceeds of securities bought and sold by
the Fund. IFTC is also the Fund's transfer and dividend-paying agent. Pursuant
to a services agreement with IFTC, Zurich Kemper Service Company ("ZKSvC"), an
affiliate of ZKI, serves as "Shareholder Service Agent" of the Fund and, as
such, performs all of IFTC's duties as transfer agent and dividend paying
agent. IFTC receives, as transfer agent, and pays to ZKSvC, annual account
fees of a maximum of $8 per account plus account set-up, transaction,
maintenance and out-of-pocket expense reimbursement. For the period April 17,
1997 (commencement of operations) to July 31, 1997, IFTC remitted no
shareholder service fees to ZKSvC as Shareholder Service Agent for the Fund.
INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS. The Fund's independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Fund's annual financial statements, review certain
regulatory reports and the Fund's federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to
do so by the Fund. Shareholders will receive annual audited financial
statements and semi-annual unaudited financial statements.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken principally to pursue the objective of
the Fund in relation to movements in the general level of interest rates, to
invest money obtained from the sale of Fund shares, to reinvest proceeds from
maturing portfolio securities and to meet redemptions of Fund shares. This may
increase or decrease the yield of the Fund depending upon management's ability
to correctly time and execute such transactions. Since the Fund's assets are
invested in securities with short maturities, its portfolio will turn over
several times a year. Securities with maturities of less than one year are
excluded from required portfolio turnover rate calculations, so the Fund's
portfolio turnover rate for reporting purposes is zero.
ZKI and its affiliates furnish investment management services for Zurich Money
Funds, the Kemper Funds and other clients including affiliated insurance
companies. These entities may share some common research and trading
facilities. At times investment decisions may be made to purchase or sell the
same investment security for the Fund and for one or more of the other clients
of ZKI 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.
ZKI, in effecting purchases and sales of portfolio securities for the account
of the Fund, will implement the Fund's policy of seeking the best execution of
orders. Consistent with this policy, orders for portfolio transactions are
placed with broker-dealer firms giving consideration to the quality, quantity
and nature of the firm's professional services which include execution,
financial responsibility, responsiveness, clearance procedures, wire service
quotations and statistical and other research information provided to the Fund
and ZKI and its 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, including clients of ZKI and
its affiliates. The Fund expects that purchases and sales of portfolio
securities usually will be principal transactions. Portfolio securities will
normally be purchased directly from the issuer or from an underwriter or
market maker for the securities. There are normally no brokerage commissions
paid by the Fund for such purchases. Purchases from underwriters include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and
asked prices.
B-3
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund are sold at their net asset value next determined after an
order and payment are received in the form described in the Fund's prospectus.
There is no sales charge. The minimum initial investment is $25,000 ($10,000
for IRAs) and the minimum subsequent investment is $1,000 but such minimum
amounts may be changed at any time. See the prospectus for certain exceptions
to these minimums. An investor wishing to open an account should use the
account application form available from the Fund and choose one of the methods
of purchase described in the Fund's prospectus. An order for the purchase of
shares that is accompanied by a check drawn on a foreign bank (other than a
check drawn on a Canadian bank in U.S. Dollars) will not be considered in
proper form and will not be processed unless and until the Fund determines
that it has received payment of the proceeds of the check. The time required
for such a determination will vary and cannot be determined in advance.
Upon receipt by the Shareholder Service Agent, of a request for redemption in
proper form, shares will be redeemed by the Fund at the applicable net asset
value as described in the Fund's prospectus. A shareholder may elect to use
either the regular or expedited redemption procedures.
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange ("Exchange") is
closed other than customary weekend and holiday closings or during any period
in which trading on the Exchange is restricted, (b) during any period when an
emergency exists as a result of which (i) disposal of the Fund's investments
is not reasonably practicable, or (ii) it is not reasonably practicable for
the Fund to determine the value of its net assets, or (c) for such other
periods as the Securities and Exchange Commission may by order permit for the
protection of the Fund's shareholders.
Although it is the Fund's present policy to redeem in cash, if the Board of
Trustees determines that a material adverse effect would be experienced by the
remaining shareholders if payment were made wholly in cash, the Fund will pay
the redemption price in whole or in part by a distribution of portfolio
securities in lieu of cash, in conformity with the applicable rules of the
Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees may deem fair and equitable. If such a distribution
occurs, shareholders receiving securities and selling them could receive less
than the redemption value of such securities and in addition could incur
certain transaction costs. Such a redemption would not be as liquid as a
redemption entirely in cash. The Fund has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940 pursuant to which the Fund is
obligated to redeem shares of the Fund solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder of record.
DIVIDENDS AND NET ASSET VALUE
DIVIDENDS. Dividends are declared daily and paid monthly. Shareholders will
receive dividends in additional shares of the Fund unless they elect to
receive cash. Dividends will be reinvested monthly at the net asset value
normally on the 25th of each month if a business day, otherwise on the prior
business day. The Fund will pay shareholders who redeem their entire accounts
all unpaid dividends at the time of redemption not later than the next
dividend payment date.
The Fund calculates its dividends based on its daily net investment income.
For this purpose, the net investment income of the Fund consists of (a)
accrued interest income plus or minus amortized discount or premium, (b) plus
or minus all short-term realized gains and losses on portfolio assets and (c)
minus accrued expenses. Expenses of the Fund are accrued each day. While the
Fund's investments are valued at amortized cost, there will be no
B-4
<PAGE>
unrealized gains or losses on portfolio securities. However, should the net
asset value of the Fund deviate significantly from market value, the Board of
Trustees could decide to value the portfolio securities at market value and
then unrealized gains and losses would be included in net investment income
above.
NET ASSET VALUE. As described in the prospectus, the Fund values its portfolio
instruments at amortized cost, which does not take into account unrealized
capital gains or losses. This involves initially valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument. Calculations are made to compare the value of the Fund's
investments valued at amortized cost with market values. Market valuations are
obtained by using actual quotations provided by market makers, estimates of
market value, or values obtained from yield data relating to classes of money
market instruments published by reputable sources at the mean between the bid
and asked prices for the instruments. If a deviation of 1/2 of 1% or more were
to occur between the net asset value per share calculated by reference to
market values and the Fund's $1.00 per share net asset value, or if there were
any other deviation that the Board of Trustees of the Fund believed would
result in a material dilution to shareholders or purchasers, the Board of
Trustees would promptly consider what action, if any, should be initiated. If
the Fund's net asset value per share (computed using market values) declined,
or were expected to decline, below $1.00 (computed using amortized cost), the
Board of Trustees of the Fund might temporarily reduce or suspend dividend
payments in an effort to maintain the net asset value at $1.00 per share. As a
result of such reduction or suspension of dividends or other action by the
Board of Trustees, an investor would receive less income during a given period
than if such a reduction or suspension had not taken place. Such action could
result in investors receiving no dividends for the period during which they
held shares and receiving, upon redemption, a price per share lower than that
which they paid. On the other hand, if the Fund's net asset value per share
(computed using market values) were to increase, or were anticipated to
increase, above $1.00 (computed using amortized cost), the Board of Trustees
of the Fund might supplement dividends in an effort to maintain the net asset
value at $1.00 per share.
PERFORMANCE
As reflected in the prospectus, the historical performance calculation for the
Fund may be shown in the form of "yield," "effective yield," "total return,"
and "average annual total return." These various measures of performance are
described below. ZKI has agreed to temporarily reduce its management fee to 0%
and absorb other operating expenses of the Fund to the extent specified in the
prospectus. See "Investment Manager." This fee reduction and expense
absorption will improve the performance results of the Fund.
The Fund's yield is computed in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission. Under that
method, the current yield quotation is based on a seven-day period and is
computed as follows. The first calculation is net investment income per share,
which is accrued interest on portfolio securities, plus or minus amortized
discount or premium, less accrued expenses. This number is then divided by the
price per share (expected to remain constant at $1.00) at the beginning of the
period ("base period return"). The result is then divided by 7 and multiplied
by 365 and the resulting yield figure is carried to the nearest one-hundredth
of one percent. Realized capital gains or losses and unrealized appreciation
or depreciation of investments are not included in the calculation.
The Fund's effective yield is determined by taking the base period return
(computed as described above) and calculating the effect of assumed
compounding. The formula for the effective yield is: (base period return +
1)/365/7/ - 1.
B-5
<PAGE>
Average annual total return ("AATR") is found for a specific period by first
taking a hypothetical $1,000 investment ("initial investment") on the first
day of the period and computing the "redeemable value" of that investment at
the end of the period. The redeemable value is then divided by the initial
investment, and this quotient is taken to the Nth root (N representing the
number of years in the period) and 1 is subtracted from the result, which is
then expressed as a percentage. The calculation assumes that all dividends
have been reinvested at net asset value on the reinvestment dates.
Total return is not calculated according to a standard formula, except when
calculated for the "Financial Highlights" table in the financial statements.
Total return is calculated similarly to AATR but is not annualized. It may be
shown as a percentage or the increased dollar value of the hypothetical
investment over the period.
For the period ended July 31, 1997, the Fund's 7-day yield and 7-day effective
yield was 5.74% and 5.90%, respectively. Without the effect of the fee waiver
and expense absorption, these yields would have been 5.14% and 5.27%,
respectively.
The Fund's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in the Fund will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
which the investment in the Fund is held, but also on such matters as Fund
expenses.
As indicated in the prospectus (see "Performance"), the performance of the
Fund may be compared to that of other mutual funds tracked by Lipper
Analytical Services, Inc. ("Lipper"). Lipper performance calculations include
the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. The Fund's performance also may be compared to
other money market funds reported by IBC Financial Data, Inc.'s Money Fund
Report(R) or Money Market Insight(R), reporting services on money market
funds. As reported by IBC, all investment results represent total return
(annualized results for the period net of management fees and expenses) and
one year investment results are effective annual yields assuming reinvestment
of dividends.
Lipper and IBC reported the following results for the Fund.
<TABLE>
<CAPTION>
LIPPER ANALYTICAL SERVICES, INC. IBC
AVERAGE YIELD
FUND'S RANKING VS. FUND'S ALL TAXABLE
PERIOD ENDED 9/30/97 GENERAL MONEY FUNDS PERIOD ENDED 9/30/97 YIELD MONEY FUNDS
- -------------------- ------------------- -------------------- ------ -------------
<S> <C> <C> <C> <C>
3 months 1 of 310 1 month 5.72% 5.02%
1 month 1 of 314 7 days 5.73 5.04
</TABLE>
As indicated in the prospectus, the Fund's performance also may be compared to
various bank products, including the average rate of bank and thrift
institution money market deposit accounts, interest bearing checking accounts
and certificates of deposit as reported in the BANK RATE MONITOR National
Index(TM) of 100 leading bank and thrift institutions as published by the BANK
RATE MONITOR(TM), N. Palm Beach, Florida 33408. The rates published by the
BANK RATE MONITOR National Index(TM) are averages of the personal account
rates offered on the Wednesday prior to the date of publication by 100 large
banks and thrifts in the top ten Consolidated Standard Metropolitan
Statistical Areas.
With respect to money market deposit accounts and interest bearing checking
accounts, account minimums range upward from $2,000 in each institution and
compounding methods vary. Interest bearing checking accounts generally offer
unlimited check writing while money market deposit accounts generally restrict
the number of checks that may be written. If more than one rate is offered,
the lowest rate is used. Rates are determined by the
B-6
<PAGE>
financial institution and are subject to change at any time specified by the
institution. Generally, the rates offered for these products take market
conditions and competitive product yields into consideration when set. Bank
products represent a taxable alternative income producing product. Bank and
thrift institution deposit accounts may be insured. Shareholder accounts in
the Fund are not insured. Bank passbook savings accounts compete with money
market mutual fund products with respect to certain liquidity features but may
not offer all of the features available from a money market mutual fund, such
as check writing. Bank passbook savings accounts normally offer a fixed rate
of interest while the yield of the Fund fluctuates. Bank checking accounts
normally do not pay interest but compete with money market mutual fund
products with respect to certain liquidity features (e.g., the ability to
write checks against the account). Bank certificates of deposit may offer
fixed or variable rates for a set term. (Normally, a variety of terms are
available.) Withdrawal of these deposits prior to maturity will normally be
subject to a penalty. In contrast, shares of the Fund are redeemable at the
net asset value (normally, $1.00 per share) next determined after a request is
received.
The table below compares the seven day annualized yields of the Fund at
October 1, 1997 with the rates for money market deposit accounts, interest
bearing checking accounts and 6-month maturity certificates of deposit
reported for October 1, 1997 for the BANK RATE MONITOR National Index(TM) for
each of the ten Consolidated Standard Metropolitan Statistical Areas that are
covered by that index and for all areas combined. The information provided
below is historical and is not representative of future performance of any
type of bank product or of any Fund. The rates reported by the BANK RATE
MONITOR(TM) are not necessarily representative of the rates offered by banks
outside of the scope of report. Furthermore, rate information for one area of
the country is not necessarily representative of rates in other areas. The
rates provided for the bank accounts assume no compounding and are for the
lowest minimum deposit required to open an account. Higher rates may be
available for large deposits.
<TABLE>
<CAPTION>
MONEY MARKET INTEREST 6-MONTH
DEPOSIT ACCOUNTS CHECKING CERTIFICATES OF ZURICH YIELDWISE
AREA STATED RATE STATED RATE DEPOSIT RATE MONEY FUND YIELD
---- ---------------- ----------- --------------- ----------------
<S> <C> <C> <C> <C>
New York................ 2.50% 1.45% 4.40% 5.72%
Los Angeles............. 2.25 1.00 5.01 5.72
Chicago................. 2.98 1.60 5.23 5.72
San Francisco........... 2.25 1.00 4.98 5.72
Philadelphia............ 2.30 1.10 4.24 5.72
Detroit................. 2.84 1.51 4.96 5.72
Boston.................. 2.65 1.21 4.95 5.72
Houston................. 2.78 1.41 4.86 5.72
Dallas.................. 2.65 1.18 4.73 5.72
Washington.............. 2.93 1.81 4.63 5.72
NATIONAL INDEX.......... 2.61 1.33 4.80 5.72
</TABLE>
Investors may also want to compare the Fund's performance to that of U.S.
Treasury bills or notes because such instruments represent alternative income
producing products. Treasury obligations are issued in selected denominations.
Rates of U.S. Treasury obligations are fixed at the time of issuance and
payment of principal and interest is backed by the full faith and credit of
the U.S. Treasury. The market value of such instruments will generally
fluctuate inversely with interest rates prior to maturity and will equal par
value at maturity. Generally, the values of obligations with shorter
maturities will fluctuate less than those with longer maturities. The Fund's
yield will fluctuate. Also, while the Fund seeks to maintain a net asset value
per share of $1.00, there is no assurance that it will be able to do so.
B-7
<PAGE>
OFFICERS AND TRUSTEES
The officers and trustees of the Fund, their birthdates, their principal
occupations and their affiliations, if any, with ZKI, the Fund's investment
manager, and ZKDI, the principal underwriter, or their affiliates, are as
follows (the number following each person's title is the number of investment
companies managed by ZKI and its affiliates for which he or she holds similar
positions):
DAVID W. BELIN (6/20/28), Trustee, (26), 2000 Financial center, 7th and
Walnut, Des Moines, Iowa; Member, Belin Lamson McCormick Zumbach Flynn, P.C.
(attorneys).
LEWIS A. BURNHAM (1/8/33), Trustee, (26), 16410 Avila Boulevard, Tampa,
Florida; Director, Management Consulting Services, McNulty & Company;
formerly, Executive Vice President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY (3/8/37), Trustee, (26), 7515 Pelican Bay Boulevard, Naples,
Florida; Retired; formerly, Executive Vice President, A. O. Smith Corporation
(diversified manufacturer).
ROBERT B. HOFFMAN (12/11/36), Trustee, (26), 800 North Lindbergh Boulevard,
St. Louis, Missouri; Senior Vice President and Chief Financial Officer,
Monsanto Company (chemical products); prior thereto, Vice President, FMC
Corporation (manufacturer of machinery and chemicals); prior thereto,
Director, Executive Vice President and Chief Financial Officer, Staley
Continental, Inc. (food products).
DONALD R. JONES (1/17/30), Trustee, (26), 182 Old Wick Ln., Inverness,
Illinois, Retired; Director, Motorola, Inc. (manufacturer of electronic
equipment and components); formerly, Executive Vice President and Chief
Financial Officer, Motorola, Inc.
SHIRLEY D. PETERSON (9/3/41), Trustee (26), 401 Rosemont Avenue, Frederick,
Maryland; President, Hood College, Maryland; prior thereto, Partner, Steptoe &
Johnson (attorneys); prior thereto, Commissioner of Internal Revenue Service;
prior thereto, Assistant Attorney General, U.S. Department of Justice;
Director, Bethlehem Steel Corp.
WILLIAM P. SOMMERS (7/22/33), Trustee, (26), 333 Ravenswood Avenue, Menlo
park, California; President and Chief Executive Officer, SRI International
(research and development); prior thereto, Executive Vice President, Iameter
(medical information and educational service provider); prior thereto, Senior
Vice President and Director, Booz, Allen & Hamilton, Inc. (management
consulting firm) (retired); Director, Rohr, Inc., Therapeutic Discovery Corp.
and Litton Industries.
STEPHEN B. TIMBERS (8/8/44), President and Trustee*, (39), 222 South Riverside
Plaza, Chicago, Illinois; President, Chief Executive Officer, Chief Investment
Officer and Director, ZKI; Director, ZKDI and LTV Corporation; formerly,
President and Chief Operating Officer of Kemper Corporation.
JOHN E. NEAL (3/9/50), Vice President*, (39), 222 South Riverside Plaza,
Chicago, Illinois; President, Kemper Funds Group, a unit of ZKI; Director, ZKI
and ZKDI.
CHARLES R. MANZONI, JR. (1/23/47), Vice President*, (39), 222 South Riverside
Plaza, Chicago, Illinois; Executive Vice President, Secretary and General
Counsel of ZKI; Secretary, ZKI Holding Corp.; Secretary, ZKI Agency, Inc.;
formerly, Partner, Gardner, Carton & Douglas (attorneys).
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ROBERT C. PECK, JR. (10/1/46), Vice President*, (16), 222 South Riverside
Plaza, Chicago, Illinois; Executive Vice President, ZKI; formerly, executive
vice president and chief investment officer with an unaffiliated investment
management firm from 1988 to June 1997.
FRANK J. RACHWALSKI, JR. (3/26/45), Vice President*, (9), 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice president, ZKI.
JEROME L. DUFFY (6/29/36), Treasurer*, (39), 222 South Riverside Plaza,
Chicago, Illinois; Senior Vice President, ZKI.
PHILIP J. COLLORA (11/15/45), Vice President and Secretary*, (39), 222 South
Riverside Plaza, Chicago, Illinois; Attorney, Senior Vice President and
Assistant Secretary, ZKI.
ELIZABETH C. WERTH (10/1/47), Assistant Secretary*, (32), 222 South Riverside
Plaza, Chicago, Illinois; Vice President, ZKI; and Vice President and Director
of State Registrations, ZKDI.
*Interested persons as defined in the Investment Company Act of 1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Fund. The table below shows amounts paid or
accrued to those trustees who are not designated "interested persons". The
information in the last column is for calendar year 1996.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE ZKI - MANAGED
COMPENSATION FUNDS PAID TO
NAME OF TRUSTEE FROM FUND** TRUSTEES***
- --------------------------------------------------------------------------------
<S> <C> <C>
David W. Belin*................................. -- $143,400
Lewis A. Burnham................................ -- $ 88,800
Donald L. Dunaway*.............................. -- $141,200
Robert B. Hoffman............................... -- $ 92,100
Donald R. Jones................................. -- $ 92,100
Shirley D. Peterson............................. -- $ 89,800
William P. Sommers.............................. -- $ 87,500
</TABLE>
* Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with ZKI-Managed Funds. Deferred amounts accrue
interest monthly at a rate equal to the yield of Zurich Money Funds--Zurich
Money Market Fund.
** The Fund has not yet adopted a trustee compensation table.
*** Includes compensation for services as trustee on twenty-four fund boards
with forty-one portfolios. Each trustee currently serves as a trustee of
twenty-six ZKI-Managed Funds with forty-seven portfolios.
As of September 30, 1997, the trustees and officers as a group owned less than
1% of the then outstanding shares of the Fund and no person owned of record
more than 5% of the outstanding shares of the Fund.
SPECIAL FEATURES
AUTOMATIC WITHDRAWAL PLAN. If you own $10,000 or more of the Fund's shares you
may provide for the payment from your account of any requested dollar amount
to be paid to you or your designated payee monthly, quarterly, semi-annually
or annually. Dividend distributions will be automatically reinvested at net
asset value. A sufficient number of full and fractional shares will be
redeemed to make the designated payment. Depending upon the size of the
payments requested, redemptions for the purpose of making such payments may
reduce or even exhaust the account. Additionally, there is a $1/month small
account fee for account balances under $10,000. The program
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may be amended on thirty days notice by the Fund and may be terminated at any
time by the shareholder or the Fund. The minimum automatic withdrawal amount
is $1,000 and the shareholder will be charged a $5.00 fee for each withdrawal.
TAX-SHELTERED RETIREMENT PROGRAMS. The Shareholder Service Agent provides
retirement plan services and documents and can establish your account in any
of the following types of retirement plans:
. Individual Retirement Accounts (IRAs) with IFTC as custodian. This includes
Savings Incentive Match Plan for Employees of Small Employers ("SIMPLE") IRA
accounts and Simplified Employee Pension Plan (SEP) IRA accounts and
prototype documents.
. 403(b) Custodial Accounts also with IFTC as custodian. This type of plan is
available to employees of most non-profit organizations.
. Prototype money purchase pension and profit-sharing plans may be adopted by
employers. The maximum contribution per participant is the lesser of 25% of
compensation or $30,000.
Brochures describing the above plans as well as providing model defined
benefit plans, target benefit plans, 457 plans, 401(k) plans, SIMPLE 401(k)
plans and materials for establishing them are available from the Shareholder
Service Agent upon request. The brochures for plans with IFTC as custodian
describe the current fees payable to IFTC for its services as custodian.
Investors should consult with their own tax advisers before establishing a
retirement plan.
SHAREHOLDER RIGHTS
The Fund generally is not required to hold meetings of its shareholders. Under
the Agreement and Declaration of Trust of the Fund ("Declaration of Trust"),
however, shareholder meetings will be held in connection with the following
matters: (a) the election or removal of trustees, if a meeting is called for
such purpose; (b) the adoption of any contract for which shareholder approval
is required by the Investment Company Act of 1940 ("1940 Act"); (c) any
termination of the Fund or a class to the extent and as provided in the
Declaration of Trust; (d) any amendment of the Declaration of Trust (other
than amendments changing the name of the Fund supplying any omission, curing
any ambiguity or curing, correcting or supplementing any defective or
inconsistent provision thereof); and (e) such additional matters as may be
required by law, the Declaration of Trust, the By-laws of the Fund, or any
registration of the Fund with the Securities and Exchange Commission or any
state, or as the trustees may consider necessary or desirable. The
shareholders also would vote upon changes in fundamental investment
objectives, policies or restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of
his successor or until such trustee sooner dies, resigns, retires or is
removed by a majority vote of the shares entitled to vote (as described below)
or a majority of the trustees. In accordance with the 1940 Act (a) the Fund
will hold a shareholder meeting for the election of trustees at such time as
less than a majority of the trustees have been elected by shareholders, and
(b) if, as a result of a vacancy in the Board of Trustees, less than two-
thirds of the trustees have been elected by the shareholders, that vacancy
will be filled only by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting
shall be held upon the written request of the holders of not less than 10% of
the outstanding shares. Upon the written request of ten or more shareholders
who have been such for at least six months and who hold shares constituting at
least 1% of the outstanding shares of the Fund stating that such
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<PAGE>
shareholders wish to communicate with the other shareholders for the purpose
of obtaining the signatures necessary to demand a meeting to consider removal
of a trustee, the Fund has undertaken to disseminate appropriate materials at
the expense of the requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting
in person or by proxy of at least 30% of the shares entitled to vote on a
matter shall constitute a quorum. Thus, a meeting of shareholders of the Fund
could take place even if less than a majority of the shareholders were
represented on its scheduled date. Shareholders would in such a case be
permitted to take action which does not require a larger vote than a majority
of a quorum, such as the election of trustees and ratification of the
selection of auditors. Some matters requiring a larger vote under the
Declaration of Trust, such as termination or reorganization of the Fund and
certain amendments of the Declaration of Trust, would not be affected by this
provision; nor would matters which under the 1940 Act require the vote of a
"majority of the outstanding voting securities" as defined in the 1940 Act.
The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Fund or any portfolio or class by notice to the shareholders
without shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Fund. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by
the Fund or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Fund property for all losses and expenses of any
shareholder held personally liable for the obligations of the Fund and the
Fund will be covered by insurance which the trustees consider adequate to
cover foreseeable tort claims. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered by ZKI remote
and not material since it is limited to circumstances in which a disclaimer is
inoperative and the Fund itself is unable to meet its obligations.
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<PAGE>
APPENDIX--RATINGS OF INVESTMENTS
COMMERCIAL PAPER RATINGS
A-1, A-2; PRIME-1, PRIME-2, DUFF-1, DUFF-2; AND F-1, F-2 COMMERCIAL PAPER
RATINGS
Commercial paper rated by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are adequate to meet cash requirements.
Long-term senior debt is rated "A" or better. The issuer has access to at
least two additional channels of borrowing. Basic earnings and cash flow have
an upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is rated A-1, A-2 or A-3.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by it
in assigning ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or industries and
an appraisal of speculative-type risks which may be inherent in certain areas;
(3) evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years; (7) financial strength of a
parent company and the relationships which exist with the issuer; and (8)
recognition by the management of obligations which may be present or may arise
as a result of public interest questions and preparations to meet such
obligations. Relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated Prime-1, 2 or 3.
The rating Duff-1 is the highest commercial paper rating assigned by Duff &
Phelps Inc. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors that are supported by ample
asset protection. Risk factors are minor. Paper rated Duff-2 is regarded as
having good certainty of timely payment, good access to capital markets and
sound liquidity factors and company fundamentals. Risk factors are small.
The ratings F-1 and F-2 are the highest commercial paper ratings assigned by
Fitch Investors Services, Inc. Issues assigned a rating of F-1 are regarded as
having the strongest degree of assurance for timely payment. Issues assigned a
rating of F-2 have a satisfactory degree of assurance for timely payment, but
the margin of safety is not as great as for issues assigned an F-1 rating.
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