<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
CASH ACCOUNT TRUST
CASH EQUIVALENT FUND
INVESTORS CASH TRUST
INVESTORS MUNICIPAL CASH FUND
TAX-EXEMPT CALIFORNIA MONEY MARKET FUND
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
November 9, 1998
Kemper
Important News
Important News
for Kemper Fund Shareholders
While we encourage you to read the full text of the enclosed Proxy Statement,
here's a brief overview of some matters affecting your Fund that will be the
subject of a shareholder vote.
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Q&A
QUESTIONS AND ANSWERS
Q WHAT IS HAPPENING?
A Zurich Insurance Company ("Zurich"), which is the majority owner of your
Fund's investment manager, Scudder Kemper Investments, Inc. ("Scudder Kemper"),
has combined its businesses with the financial services businesses of B.A.T
Industries p.l.c. ("B.A.T"). The resulting company, Zurich Financial Services
("Zurich Financial Services"), has become Zurich's parent company. Although this
transaction will have virtually no effect on the operations of Scudder Kemper or
your Fund, we are asking the Fund's shareholders to approve a new investment
management agreement to assure that there is no interruption in the services
Scudder Kemper provides to your Fund. The following pages give you additional
information about Zurich Financial Services, the new investment management
agreement and certain other matters.
THE BOARD MEMBERS OF YOUR FUND, INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE
FUND, SCUDDER KEMPER OR ZURICH, RECOMMEND THAT YOU VOTE FOR APPROVAL OF THE NEW
INVESTMENT MANAGEMENT AGREEMENT.
Q WHY AM I BEING ASKED TO VOTE ON THE NEW INVESTMENT MANAGEMENT AGREEMENT?
A As a result of the Zurich-B.A.T transaction, the former shareholders of B.A.T
indirectly own a 43% interest in Zurich through a new holding company, Allied
Zurich p.l.c. This change in ownership of Zurich may be deemed to have caused a
"change in control" of Scudder Kemper, even though Scudder Kemper's operations
will not change as a result. The Investment Company Act of 1940, which regulates
investment companies such as your Fund, requires that fund shareholders approve
a new investment management agreement whenever there is a change in control of a
fund's investment manager (even in the most technical sense). Pursuant to an
exemptive order issued by the Securities and Exchange Commission, your Fund
entered into a new investment management agreement, subject to receipt of
shareholder approval within 150 days. Accordingly, we are seeking shareholder
approval of the new investment management agreement with your Fund.
KEMPER LOGO KEMPER LOGO
<PAGE> 3
Q HOW WILL THE ZURICH-B.A.T TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A We do not expect the transaction to affect you as a Fund shareholder. Your
Fund and your Fund's investment objectives will not change as a result of the
transaction. You will still own the same shares in the same Fund. The new
investment management agreement is substantially identical to the former
investment management agreement, except for the dates of execution and
termination. Similarly, the other service arrangements between your Fund and
Scudder Kemper or affiliates of Scudder Kemper will not be affected by the
transaction.
If shareholders do not approve the new investment management agreement, the
agreement will terminate and the Board Members of your Fund will take such
action as they deem to be in the best interests of your Fund and its
shareholders.
Q WILL THE INVESTMENT MANAGEMENT FEES INCREASE?
A No, the investment management fee rates paid by your Fund will remain the
same.
Q WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A In order to save your Fund the expense of a subsequent meeting, a vote is
being sought for the modification and elimination of certain policies and the
elimination of the shareholder approval requirement as to certain other matters
in order to simplify and modernize matters relating to the Fund's policies and
objective(s).
Q HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A After careful consideration, the Board Members of your Fund, including those
who are not affiliated with the Fund, Scudder Kemper or Zurich, recommend that
you vote FOR the Proposals on the enclosed proxy card(s).
Q WILL THE FUND PAY FOR THIS PROXY SOLICITATION?
A No, Zurich or its affiliates will bear these costs.
Q WHOM DO I CALL FOR MORE INFORMATION?
A Please call Shareholder Communications Corporation, your Fund's information
agent, at (800) 249-3451.
ABOUT THE PROXY CARD
Because each Fund must vote separately, you are being
sent a proxy card for each Fund account that you have.
Please vote all issues shown on each proxy card that you receive.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each proxy card. On Item 1, mark--For, Against or
Abstain. On Item 2, mark--For All Applicable Proposals Except As Noted Below,
Against All or Abstain All. If you wish to vote against a particular proposal
in Item 2, you should mark the For All Applicable Proposals Except As Noted
Below box and print the proposal number on the line provided. Then sign, date
and return each of your proxy cards in the accompanying postage-paid envelope.
All registered owners of an account, as shown in the address on the proxy
card, must sign the proxy card. If you are signing for a corporation, trust or
estate, please indicate your title or position.
We appreciate your continuing support and look forward to serving your future
investment needs.
THANK YOU FOR MAILING YOUR
PROXY CARD PROMPTLY!
PROXY CARD SAMPLE
<PAGE> 4
CASH ACCOUNT TRUST
CASH EQUIVALENT FUND
INVESTORS CASH TRUST
INVESTORS MUNICIPAL CASH FUND
TAX-EXEMPT CALIFORNIA MONEY MARKET FUND
222 South Riverside Plaza
Chicago, Illinois 60606
November 9, 1998
Dear Shareholders:
Zurich Insurance Company, the majority owner of Scudder Kemper Investments,
Inc., has combined its businesses with the financial services businesses of
B.A.T Industries p.l.c. The resulting company, Zurich Financial Services, has
become the parent company of Zurich and the majority owner of Scudder Kemper. As
a result of this transaction, we are asking the shareholders of each of the
funds for which Scudder Kemper acts as investment manager, including your Fund,
to approve a new investment management agreement with Scudder Kemper.
The Zurich-B.A.T transaction should not affect you as a Fund shareholder.
Your Fund shares will not change, the advisory fee rates and expenses paid by
your Fund will not increase and the investment objectives of your Fund will
remain the same.
Shareholders are also being asked to approve certain other matters that
have been set forth in the Notice of Meetings. AFTER CAREFUL REVIEW, THE MEMBERS
OF YOUR FUND'S BOARD HAVE APPROVED THE NEW INVESTMENT MANAGEMENT AGREEMENT. THE
BOARD MEMBERS OF YOUR FUND BELIEVE THAT EACH OF THE PROPOSALS SET FORTH IN THE
NOTICE OF MEETINGS FOR YOUR FUND IS IMPORTANT AND RECOMMEND THAT YOU READ THE
ENCLOSED MATERIALS CAREFULLY AND THEN VOTE FOR ALL PROPOSALS.
Because all of the funds for which Scudder Kemper acts as investment
manager are holding shareholder meetings, if you own shares of more than one
fund, you will receive more than one proxy card. Please sign and return each
proxy card you receive.
<PAGE> 5
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your executed proxy card(s) after a reasonable amount of time, you may receive a
telephone call from our proxy solicitor, Shareholder Communications Corporation,
reminding you to vote.
Respectfully,
/s/ Daniel Pierce
Daniel Pierce
Chairman
WE URGE YOU TO SIGN AND RETURN YOUR PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID
ENVELOPE TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT REGARDLESS OF
THE NUMBER OF SHARES YOU OWN.
<PAGE> 6
CASH ACCOUNT TRUST
CASH EQUIVALENT FUND
INVESTORS CASH TRUST
INVESTORS MUNICIPAL CASH FUND
TAX-EXEMPT CALIFORNIA MONEY MARKET FUND
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each a "Special
Meeting") of each Kemper Trust listed above (each a "Trust," collectively, the
"Trusts"), or, if applicable, each of its series that is listed on Appendix 1 to
the Proxy Statement (each such series is referred to herein as a "Fund" and,
collectively, where applicable, with TECMF, which does not have any series, the
"Funds"), will be held jointly at the offices of Scudder Kemper Investments,
Inc., 13th Floor, Two International Place, Boston, Massachusetts 02110, on
December 17, 1998, at 11:00 a.m., Eastern time, for the following purposes:
PROPOSAL 1: To approve a new investment management agreement for each
Fund with Scudder Kemper Investments, Inc.; and
PROPOSAL 2: To modify or eliminate certain policies and to eliminate the
shareholder approval requirement as to certain other
matters.
The appointed proxies will vote in their discretion on any other business
as may properly come before a Special Meeting or any adjournments thereof.
Holders of record of shares of each Fund at the close of business on
September 22, 1998 are entitled to vote at the Special Meeting and at any
adjournments thereof.
<PAGE> 7
In the event that the necessary quorum to transact business or the vote
required to approve a Proposal is not obtained at the Special Meeting with
respect to one or more Funds, the persons named as proxies may propose one or
more adjournments of the Special Meeting in accordance with applicable law, to
permit further solicitation of proxies. Any such adjournment as to a matter will
require the affirmative vote of the holders of a majority of the concerned
Fund's shares present in person or by proxy at the Special Meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of the Proposals and will vote against any such
adjournment those proxies to be voted against the Proposals.
By Order of the Boards of Trustees,
/s/ Philip J. Collora
Philip J. Collora
Secretary
November 9, 1998
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN IT
IN THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR
YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE SPECIAL
MEETINGS. IF YOU CAN ATTEND THE SPECIAL MEETINGS AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
<PAGE> 8
CASH ACCOUNT TRUST
CASH EQUIVALENT FUND
INVESTORS CASH TRUST
INVESTORS MUNICIPAL CASH FUND
TAX-EXEMPT CALIFORNIA MONEY MARKET FUND
222 South Riverside Plaza
Chicago, Illinois 60606
JOINT PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Board") of each of the Kemper Trusts
listed above (each a "Trust," collectively, the "Trusts") for use at the Special
Meeting of Shareholders of each Trust, or, if applicable, its series that are
listed on Appendix 1 hereto (each such series is referred to herein as a "Fund"
and, collectively, where applicable, with TECMF, which does not have any series,
the "Funds"), to be held jointly at the offices of Scudder Kemper Investments,
Inc. ("Scudder Kemper"), 13th Floor, Two International Place, Boston,
Massachusetts 02110, on December 17, 1998 at 11:00 a.m., Eastern time, and at
any and all adjournments thereof (the "Special Meeting").
In the descriptions of the Proposals below, the Trusts and Funds are
referred to by the acronyms listed in Appendix 1. The word "fund" is sometimes
used to mean investment companies or series thereof in general, and not the
Funds whose proxy statement this is. In addition, in this Proxy Statement, for
simplicity, actions are described as being taken by a Fund that is a series of a
Trust, although all actions are actually taken by the respective Trust on behalf
of the applicable series.
This Proxy Statement, the Notice of Special Meetings and the proxy cards
are first being mailed to shareholders on or about November 10, 1998 or as soon
as practicable thereafter. Any shareholder giving a proxy has the power to
revoke it by mail (addressed to the Secretary at the principal executive office
of the Funds, c/o Scudder Kemper Investments, Inc., at 222 South Riverside
Plaza, Chicago, Illinois 60606) or in person at the Special Meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the Special Meeting
will be voted as specified in the proxy or, if no specification is made, in
favor of the Proposals referred to in the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of 30% of the shares of a Fund entitled to be cast shall be necessary
and sufficient to constitute a quorum for the transaction of business. In the
event that the necessary quorum to transact business or the vote required to
approve any Proposal is not obtained at the Special Meeting with respect to one
or more Funds, the persons named as proxies may propose one or more adjournments
of
<PAGE> 9
the Special Meeting in accordance with applicable law to permit further
solicitation of proxies with respect to the Proposal that did not receive the
vote necessary for its passage or to obtain a quorum. Any such adjournment as to
a matter will require the affirmative vote of the holders of a majority of the
concerned Fund's shares present in person or by proxy at the Special Meeting.
The persons named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of that Proposal and will vote
against any such adjournment those proxies to be voted against that Proposal.
For purposes of determining the presence of a quorum for transacting business at
a Special Meeting, abstentions and broker "non-votes" will be treated as shares
that are present but which have not been voted. Broker non-votes are proxies
received by a Fund from brokers or nominees when the broker or nominee has
neither received instructions from the beneficial owner or other persons
entitled to vote nor has discretionary power to vote on a particular matter.
Accordingly, shareholders are urged to forward their voting instructions
promptly.
Each Proposal requires the affirmative vote of a "majority of the
outstanding voting securities" of a Fund. The term "majority of the outstanding
voting securities," as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), and as used in this Proxy Statement, means: the affirmative
vote of the lesser of (1) 67% of the voting securities of each Fund present at
the meeting if more than 50% of the outstanding voting securities of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding voting
securities of each Fund.
Abstentions will have the effect of a "no" vote on each Proposal. Broker
non-votes will have the effect of a "no" vote on each Proposal, each of which
requires the approval of a specified percentage of the outstanding shares of
each Fund, if such vote is determined on the basis of obtaining the affirmative
vote of more than 50% of the outstanding voting securities of the Fund. Broker
non-votes will not constitute "yes" or "no" votes, and will be disregarded in
determining the voting securities "present" if such vote is determined on the
basis of the affirmative vote of 67% of the voting securities of the Fund
present at the Special Meeting with respect to each Proposal.
Shareholders of each Fund will vote separately with respect to each
Proposal.
Holders of record of the shares of each Fund at the close of business on
September 22, 1998 (the "Record Date"), as to any matter on which they are
entitled to vote, will be entitled to one vote per share on all business of the
Special Meeting. The table provided in Appendix 2 hereto sets forth the number
of shares outstanding for each Fund as of June 30, 1998.
Appendix 3 sets forth the beneficial owners of at least 5% of a Fund's
shares. To the best of each Trust's knowledge, as of June 30, 1998, no person
2
<PAGE> 10
owned beneficially more than 5% of any Fund's outstanding shares, except as
stated in Appendix 3.
Appendix 4 hereto sets forth the number of shares of each Fund owned
directly or beneficially by the Trustees of the relevant Board.
Each Fund provides periodic reports to all of its shareholders which
highlight relevant information, including investment results and a review of
portfolio changes. You may receive an additional copy of the most recent annual
report for each Fund and a copy of any more recent semi-annual report, without
charge, by calling 800-621-1048 or writing the Fund, c/o Scudder Kemper
Investments, Inc., at 222 South Riverside Plaza, Chicago, Illinois 60606.
3
<PAGE> 11
TABLE OF PROPOSALS
<TABLE>
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PAGE
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<S> <C> <C> <C> <C>
Proposal 1: Approval of a New Investment Management Agreement for
each Fund with Scudder Kemper Investments, Inc.
All Funds............................................ 6
Proposal 2: Approval of the Modification or Elimination of
Certain Policies and the Elimination of the
Shareholder Approval Requirement as to Certain Other
Matters
ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO
AMEND INVESTMENT OBJECTIVES AND INVESTMENT POLICIES
2.0 Investment Objectives
All Funds...................................... 23
2.1 Investment Policies
CAT Funds, CEF Funds, ICT Funds................ 23
REVISION OF FUNDAMENTAL POLICIES MANDATED BY THE 1940
ACT
2.2 Diversification
(a) CAT Funds, CEF Funds, TECMF, ICT.......... 24
(b) IMCF Funds................................ 24
2.3 Borrowing
All Funds...................................... 25
2.4 Senior Securities
All Funds...................................... 25
2.5 Concentration
(a) All Funds (except for CAT-MMP)............ 26
(b) CAT-MMP................................... 26
2.6 Underwriting of Securities
All Funds...................................... 26
2.7 Investment in Real Estate
All Funds...................................... 27
2.8 Purchase of Commodities
All Funds...................................... 27
2.9 Lending
All Funds...................................... 27
ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO
CHANGE OTHER FUNDAMENTAL POLICIES
2.10 Margin Purchases and Short Sales
All Funds...................................... 28
</TABLE>
4
<PAGE> 12
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C> <C> <C>
2.11 Purchase of Securities of Related Issuers
CAT Funds, CEF Funds, TECMF, TNYMF............. 29
2.12 Pledging of Assets
CEF-TEP, TECMF................................. 29
2.13 Restricted and Illiquid Securities
CEF Funds, TECMF............................... 29
2.14 Purchases of Securities
CAT-MMP, CAT-GSP, CEF-MMP, CEF-GSP............. 30
2.15 Purchases of Puts and Calls
CAT Funds, CEF Funds, TNYMF, TECMF............. 30
2.16 Investment for the Purpose of Exercising
Control or Management
CAT Funds, CEF Funds, TNYMF, TECMF............. 30
2.17 Investment in Mineral Exploration
CAT Funds, CEF Funds, TNYMF, TECMF............. 30
2.18 Investment in Issuers With Short Histories
CEF Funds, TECMF............................... 31
2.19 Investment in other Investment Companies
CEF Funds, TECMF............................... 31
2.20 Investment in non-U.S. Government Securities
ICT Funds...................................... 31
2.21 Investment other than in Accordance With
Objectives and Policies
CEF Funds, TECMF............................... 31
2.22 Investment in Municipal Securities
TECMF.......................................... 32
</TABLE>
5
<PAGE> 13
PROPOSAL 1: APPROVAL OF NEW
INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder Kemper acts as the investment manager to each Fund pursuant to an
investment management agreement entered into by each Fund and Scudder Kemper.
The investment management agreement in effect between each Fund and Scudder
Kemper prior to the consummation of the transaction between Zurich Insurance
Company ("Zurich") and B.A.T Industries p.l.c. ("B.A.T") (the "Zurich-B.A.T
Transaction" or the "Transaction"), which is described below, is referred to in
this Proxy Statement as a "Former Investment Management Agreement,"
collectively, the "Former Investment Management Agreements." The investment
management agreement currently in effect between each Fund and Scudder Kemper,
which is also described below, was executed as of the consummation of the
Zurich-B.A.T Transaction and is referred to in this Proxy Statement as a "New
Investment Management Agreement," collectively, the "New Investment Management
Agreements" and, together with the Former Investment Management Agreements, the
"Investment Management Agreements." (Scudder Kemper is sometimes referred to in
this Proxy Statement as the "Investment Manager.")
The information set forth in this Proxy Statement and the accompanying
materials concerning the Transaction, Scudder Kemper, Zurich, B.A.T and their
respective affiliates has been provided to the Funds by Scudder Kemper based
upon information that Scudder Kemper received from Zurich and its affiliates.
On June 26, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") entered into
an agreement with Zurich pursuant to which Scudder and Zurich agreed to form an
alliance. On December 31, 1997, Zurich acquired a majority interest in Scudder,
and Zurich Kemper Investments, Inc. ("Kemper"), a Zurich subsidiary, became part
of Scudder. Scudder's name was changed to Scudder Kemper Investments, Inc. The
transaction between Scudder and Zurich (the "Scudder-Zurich Transaction")
resulted in the termination of each Fund's investment management agreement with
Kemper. Consequently, the Former Investment Management Agreement between each
Fund and Scudder Kemper was approved by each Trust's Board and by each Fund's
shareholders.
The Zurich-B.A.T Transaction. On December 22, 1997, Zurich and B.A.T
entered into a definitive agreement (the "Merger Agreement") pursuant to which
businesses of Zurich (including Zurich's almost 70% ownership interest in
Scudder Kemper) were to be combined with the financial services businesses of
B.A.T. On October 12, 1997, Zurich and B.A.T had confirmed that they were
engaged in discussions concerning a possible business combination; on October
16, 1997, Zurich and B.A.T announced that they had entered into an Agreement in
Principle, dated as of October 15, 1997 (the "Agreement in Principle"), to merge
B.A.T's financial services businesses with Zurich's businesses. The Merger
Agreement superseded the Agreement in Principle.
6
<PAGE> 14
In order to effect this combination, Zurich and B.A.T first reorganized
their respective operations. Zurich became a subsidiary of a new Swiss holding
company, Zurich Allied AG, and Zurich shareholders became Zurich Allied AG
shareholders. At the same time, B.A.T separated its financial services business
from its tobacco-related businesses by spinning off to its shareholders a new
British company, Allied Zurich p.l.c., 22 Arlington Street, London, England SW1A
1RW, United Kingdom, which held B.A.T's financial services businesses.
Zurich Allied AG then contributed its interest in Zurich, and Allied Zurich
p.l.c. contributed the B.A.T financial services businesses, to a jointly owned
company, Zurich Financial Services ("Zurich Financial Services"), in each case
in exchange for shares of Zurich Financial Services. These transactions were
completed on September 7, 1998. As a result, upon the completion of the
Transaction, the former Zurich shareholders became the owners (through Zurich
Allied AG) of 57% of the voting stock of Zurich Financial Services, and former
B.A.T shareholders became the owners (through Allied Zurich p.l.c.) of 43% of
the voting stock of Zurich Financial Services. Zurich Financial Services now
owns Zurich and the financial services businesses previously owned by B.A.T.
7
<PAGE> 15
Below is a simplified chart showing the corporate structure of Zurich
Financial Services after these transactions:
[FLOW CHART]
Corporate Governance. At the closing of the Zurich-B.A.T Transaction, the
parties entered into a Governing Agreement that establishes the corporate
governance structure for Zurich Allied AG, Allied Zurich p.l.c. and Zurich
Financial Services.
The Board of Directors of Zurich Financial Services consists of ten
members, five of whom were initially selected by Zurich and five by B.A.T. Mr.
Rolf Huppi, Zurich's Chairman and Chief Executive Officer, became Chairman and
Chief Executive Officer of Zurich Financial Services. In addition to his vote by
virtue of
8
<PAGE> 16
his position on the Board of Directors, as Chairman, Mr. Huppi will have a tie-
breaking vote on all matters except recommendations of the Audit Committee,
recommendations of the Remuneration Committee in respect of the remuneration of
the Chairman and the CEO, appointment and removal of the Chairman and CEO,
appointments to the Nominations, Audit and Remuneration Committees and
nominations to the Board of Directors not made through the Nominations
Committee.
The Group Management Board of Zurich Financial Services has been given
responsibility by the Board of Directors for the executive management of Zurich
Financial Services and has wide authority for such purpose. Of the 11 initial
members of the Group Management Board, eight were members of the Corporate
Executive Board of Zurich (including Mr. Edmond D. Villani, CEO of Scudder
Kemper, who is responsible for Global Asset Management for Zurich Financial
Services), and three were B.A.T executives.
The Board of Directors of Zurich Allied AG initially consists of 11
members, eight of whom were Zurich directors and three of whom were proposed by
B.A.T. The Board of Directors of Allied Zurich p.l.c. also initially consists of
11 members, eight of whom were B.A.T directors and three of whom were proposed
by Zurich. The parties have agreed that, as soon as possible, the Boards of
Directors of Zurich Financial Services, Zurich Allied AG and Allied Zurich
p.l.c. will have identical membership.
Shareholder resolutions of Zurich Financial Services in general require
approval by at least 58% of all shares outstanding.
The Governing Agreement also contains provisions relating to dividend
equalization and provisions intended to ensure equal treatment of Zurich Allied
AG and Allied Zurich p.l.c. shareholders in the event of a takeover bid for
either company.
The B.A.T financial services businesses, which, since the closing of the
Transaction, are owned by Zurich Financial Services, include: the Farmers Group
of Insurance companies; Eagle Star Reinsurance Company Ltd., UK ("Eagle Star")
(which Zurich Financial Services has agreed to sell to GE Capital); Allied-
Dunbar, one of the leading U.K. unit-linked life insurance and pensions
companies; and Threadneedle Asset Management, which was formed initially to
manage the investment assets of Eagle Star and Allied-Dunbar, and which, at
December 31, 1997, had $58.8 billion under management. Overall, at year-end
1997, the financial services businesses of B.A.T had $79 billion in assets under
management, including $18 billion in third party assets.
Zurich has informed the Funds that the financial services businesses of
B.A.T do not include any of B.A.T's tobacco businesses and that, after careful
review, Zurich has concluded that the tobacco-related liabilities connected with
B.A.T's tobacco business should not adversely affect Zurich or the present
Zurich subsidiaries, including Scudder Kemper.
9
<PAGE> 17
Governance arrangements that were put in place at the time of the
acquisition of Zurich's 70% interest in Scudder Kemper (which are discussed
below under "Investment Manager") remain unaffected by the Transaction. These
arrangements preclude the making of certain major decisions affecting Scudder
Kemper without the approval of Scudder Kemper directors elected by the
non-Zurich shareholders of Scudder Kemper.
Consummation of the Zurich-B.A.T Transaction may be deemed to have
constituted an "assignment," as that term is defined in the 1940 Act, of each
Fund's Former Investment Management Agreement with Scudder Kemper. As required
by the 1940 Act, each of the Former Investment Management Agreements provided
for its automatic termination in the event of its assignment. Accordingly, a New
Investment Management Agreement between each Fund and Scudder Kemper was
approved by the Board members of each Fund and is now being proposed for
approval by shareholders of each Fund. Scudder Kemper has received an exemptive
order from the Securities and Exchange Commission (the "SEC" or the
"Commission") permitting each Fund to obtain shareholder approval of its New
Investment Management Agreement within 150 days after the consummation of the
Transaction, which occurred on September 7, 1998 (and, consequently, within 150
days after the termination of its Former Investment Management Agreement),
instead of before the consummation of the Transaction. Pursuant to the exemptive
order, each Fund's investment management fees are being held in escrow until the
earlier of shareholder approval of the Fund's New Investment Management
Agreement or the expiration of the 150 day period. A copy of the master form of
New Investment Management Agreement is attached hereto as Exhibit A. THE NEW
INVESTMENT MANAGEMENT AGREEMENT FOR EACH FUND IS SUBSTANTIALLY IDENTICAL TO THE
CORRESPONDING FORMER INVESTMENT MANAGEMENT AGREEMENT, EXCEPT FOR THE DATES OF
EXECUTION AND TERMINATION. In addition, the portfolio managers for each Fund
will not change as a result of the Transaction. The material terms of the
Investment Management Agreements are described under "Description of the
Investment Management Agreements" below.
BOARD'S RECOMMENDATION
On July 21, 1998, the Board of each Trust met and the Board members of each
Trust, including the Board members who are not parties to such agreement or
"interested persons" (as defined in the 1940 Act) (the "Non-Interested Trustees"
or "Non-Interested Board members") of any such party, voted to approve the New
Investment Management Agreements and to recommend approval to the shareholders
of each applicable Fund.
For information about the Boards' deliberations and the reasons for their
recommendation, please see "Board's Evaluation" below.
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<PAGE> 18
BOARD'S EVALUATION
Each Board met on July 21, 1998 to consider the Transaction and its effects
on the Funds. Each Board met with senior management personnel of Scudder Kemper.
Each Board had the assistance of legal counsel, who prepared among other things,
an analysis of the Board's fiduciary obligations. As a result of its review and
consideration of the Transaction and the proposed new investment management
agreement, each Board voted unanimously to approve the applicable New Investment
Management Agreement and to recommend it to the shareholders of the respective
Fund for their approval.
In connection with its review, Scudder Kemper represented to each Board
that: the Transaction will have no effect on the operational management of any
Fund; the Transaction will not result in any change in the management or
operations of Scudder Kemper; there will not be any increase in the advisory fee
or any change in any other provision, other than the term, of any Investment
Management Agreement as a result of the Transaction; the Transaction will not
adversely affect Scudder Kemper's financial condition; and the Transaction
should expand Scudder Kemper's global asset management capabilities and enhance
Scudder Kemper's research capabilities, particularly with respect to the United
Kingdom and Europe.
In connection with its deliberations, each Board obtained certain
assurances from Zurich, including the following:
- Zurich has provided to the Board such information as is reasonably
necessary to evaluate the New Investment Management and other agreements.
- Zurich looks upon Scudder Kemper as the core of Zurich's global asset
management strategy. With that focus, Zurich will devote to Scudder
Kemper and its affairs all attention and resources that are necessary to
provide for the Funds top quality investment management, shareholder,
administrative and product distribution services.
- The Transaction will not result in any change in any Fund's investment
objectives or policies.
- The Transaction will not result in any change in the management or
operations of Scudder Kemper or its subsidiaries.
- The Transaction is not expected to result in any adverse change in the
investment management or operations of any Fund; and Zurich neither plans
nor proposes, for the foreseeable future, to make any material change in
the manner in which investment advisory services or other services are
rendered to any Fund which has the potential to have a material adverse
effect upon the Fund.
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<PAGE> 19
- Zurich is committed to the continuance, without interruption, of services
to the Funds of the type and quality currently provided by Scudder Kemper
and its subsidiaries, or superior thereto.
- Zurich plans to maintain or enhance Scudder Kemper's facilities and
organization.
- In order to retain and attract key personnel, Zurich intends for Scudder
Kemper to maintain overall compensation policies and practices at market
levels or better.
- Zurich intends to maintain the distinct brand identity of the Kemper and
Scudder Funds and is committed to strengthening and enhancing both brands
and the distribution channels for both families of funds, while
maintaining their separate brand identity.
- Zurich will promptly advise the Boards of decisions materially affecting
the Scudder Kemper organization as they relate to a Fund. Neither this,
nor any of the other above commitments will be altered by Zurich without
the applicable Board's prior consideration.
Zurich assured the Boards that it intends to comply with Section 15(f) of
the 1940 Act, which provides a non-exclusive safe harbor for an investment
adviser to an investment company or any of the investment adviser's affiliated
persons (as defined in the 1940 Act) to receive any amount or benefit in
connection with a change in control of the investment adviser so long as two
conditions are met. First, for a period of three years after the transaction, at
least 75% of the board members of the investment company must not be "interested
persons" of the investment company's investment adviser or its predecessor
adviser. On or prior to the consummation of the Transaction, each of the Boards
was in compliance with this provision of Section 15(f). Second, an "unfair
burden" must not be imposed upon the investment company as a result of such
transaction or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" is defined in Section 15(f) to
include any arrangement during the two-year period after the transaction whereby
the investment adviser, or any interested person of any such adviser, receives
or is entitled to receive any compensation, directly or indirectly, from the
investment company or its shareholders (other than fees for bona fide investment
advisory or other services) or from any person in connection with the purchase
or sale of securities or other property to, from or on behalf of the investment
company (other than bona fide ordinary compensation as principal underwriter for
such investment company). Zurich has advised the Boards that it is not aware of
any express or implied term, condition, arrangement or understanding that would
impose an "unfair burden" on the Funds as a result of the Transaction. Zurich
has agreed that it, and its affiliates, will take no action that would have the
effect of imposing an "unfair burden" on the Funds as a result of the
Transaction. In furtherance thereof, Zurich has undertaken to pay the costs of
preparing and distributing proxy materials to and of holding the
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<PAGE> 20
meetings of the Funds' shareholders as well as other fees and expenses in
connection with the Transaction, including the fees and expenses of legal
counsel to the Funds and the Non-Interested Board members.
The Board also considered whether tobacco-related liability connected with
B.A.T's tobacco business could adversely affect the Adviser and the services
provided to the Fund. (See "Corporate Governance" in the "Introduction" above.)
In evaluating the New Investment Management Agreements, each Board took
into account that the fees and expenses payable by each Fund under its New
Investment Management Agreement are the same as under its Former Investment
Management Agreement, that the services provided to each Fund are the same and
that the other terms are, except for the dates of execution and termination,
substantially similar. The Boards also took into consideration that the
portfolio managers and research personnel would continue their functions with
Scudder Kemper after the Transaction. The Boards noted that, in previously
approving the Former Investment Management Agreements, the Boards had considered
a number of factors, including the nature and quality of services provided by
Scudder Kemper; investment performance, both that of each Fund itself and
relative to that of competitive investment companies; investment management fees
and expense ratios of each Fund and competitive investment companies; Scudder
Kemper's profitability from managing each Fund; fall-out benefits to Scudder
Kemper from its relationship to each Fund, including revenues derived from
services provided to the Fund by affiliates of Scudder Kemper; and the potential
benefits to Scudder Kemper and to each Fund and its shareholders of receiving
research services from broker/dealer firms in connection with the allocation of
portfolio transactions to such firms.
The Boards discussed the Transaction with the senior management of Scudder
Kemper and Zurich and among themselves. The Boards considered that Zurich is a
large, well-established company with substantial resources, and, as noted above,
has undertaken to devote such resources to Scudder Kemper as are necessary to
provide the Funds with top quality services.
As a result of their review and consideration of the Transaction and the
New Investment Management Agreements, at their meetings the Boards of each Trust
voted to approve the New Investment Management Agreements and to recommend their
approval to the shareholders of each Fund.
DESCRIPTION OF THE INVESTMENT MANAGEMENT AGREEMENTS
Except as disclosed below, all Former and New Investment Management
Agreements are substantially identical. Under the Investment Management
Agreements, Scudder Kemper provides each Fund with continuing investment
management services. The Investment Manager also determines which securities
should be purchased, held, or sold, and what portion of each Fund's assets
should be held uninvested, subject to each Trust's Charter, By-Laws, investment
13
<PAGE> 21
policies and restrictions, the provisions of the 1940 Act, and such policies and
instructions as the Trustees may have determined.
Each Investment Management Agreement applicable to each Fund, other than
TECMF and CEF-TEP, also applies to the other Funds in the same Trust, except
that CEF-TEP is not included in the Investment Management Agreements applicable
to CEF-MMP and CEF-GSP. The Investment Management Agreements applicable to each
of TECMF and CEF-TEP respectively apply to each of those Funds individually. The
Investment Management Agreements applicable to each Fund other than TECMF and
CEF-TEP each provides that if the applicable Trust establishes any additional
series with respect to which it desires to retain the Investment Manager's
services under the particular Investment Management Agreement, the Trust must so
notify the Investment Manager in writing; the particular Investment Management
Agreement will become applicable to the new series as soon as the Investment
Manager has notified the Trust in writing that it is willing to render services
under the Investment Management Agreement to the new series.
Each Investment Management Agreement provides that the Investment Manager
will provide portfolio management services, place portfolio transactions in
accordance with policies expressed in each Fund's registration statement, pay
each Fund's office rent, and render significant administrative services on
behalf of each Fund (not otherwise provided by third parties) necessary for each
Fund's operating as an open-end investment company, including, but not limited
to, preparing reports to and meeting materials for each Trust's Board and
reports and notices to Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of
various third-party and affiliated service providers to each Fund (such as each
Fund's transfer and pricing agents, fund accounting agent, custodian,
accountants and others) and other persons in any capacity deemed necessary or
desirable to Fund operations; preparing and making filings with the SEC and
other regulatory and self-regulatory organizations, including but not limited
to, preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by each
Fund's transfer agent; assisting in the preparation and filing of each Fund's
federal, state and local tax returns; preparing and filing each Fund's federal
excise tax returns pursuant to Section 4982 of the Internal Revenue Code of
1986, as amended; providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities and the calculation of
net asset value; monitoring the registration of shares of each Fund under
applicable federal and state securities laws; maintaining or causing to be
maintained for each Fund all books, records and reports and any other
information required under the 1940 Act, to the extent such books, records and
reports and other information are not maintained by each Fund's custodian or
other agents of each Fund; assisting in establishing accounting policies of each
Fund; assisting in the resolution of accounting issues that may arise with
respect to
14
<PAGE> 22
each Fund's operations and consulting with each Fund's independent accountants,
legal counsel and other agents as necessary in connection therewith;
establishing and monitoring each Fund's operating expense budgets; reviewing
each Fund's bills; processing the payment of bills that have been approved by an
authorized person; assisting each Fund in determining the amount of dividends
and distributions available to be paid by each Fund to its shareholders,
preparing and arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the custodian, and the
accounting agent with such information as is required for such parties to effect
the payment of dividends and distributions; and otherwise assisting each Fund in
the conduct of its business, subject to the direction and control of each
Trust's Board.
Under each Investment Management Agreement, each Fund is responsible for
other expenses, including organizational expenses (including out-of-pocket
expenses, but not including the Investment Manager's overhead or employee
costs); brokers' commissions or other costs of acquiring or disposing of any
portfolio securities of each Fund; legal, auditing and accounting expenses;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; taxes and governmental fees;
the fees and expenses of each Fund's transfer agent; expenses of preparing share
certificates and any other expenses, including clerical expenses, of issuance,
offering, distribution, sale, redemption or repurchase of shares; the expenses
of and fees for registering or qualifying securities for sale; the fees and
expenses of Non-Interested Trustees; the cost of printing and distributing
reports, notices and dividends to current shareholders; and the fees and
expenses of each Fund's custodians, subcustodians, accounting agent, dividend
disbursing agents and registrars. Each Fund may arrange to have third parties
assume all or part of the expenses of sale, underwriting and distribution of
shares of each Fund. Each Fund is also responsible for expenses of shareholders'
and other meetings and its expenses incurred in connection with litigation and
the legal obligation it may have to indemnify officers and Trustees of each
Trust with respect thereto. Each Fund is also responsible for the maintenance of
books and records which are required to be maintained by each Fund's custodian
or other agents of each Trust; telephone, telex, facsimile, postage and other
communications expenses; any fees, dues and expenses incurred by each Fund in
connection with membership in investment company trade organizations; expenses
of printing and mailing prospectuses and statements of additional information of
each Fund and supplements thereto to current shareholders; costs of stationery;
fees payable to the Investment Manager and to any other Fund advisors or
consultants; expenses relating to investor and public relations; interest
charges, bond premiums and other insurance expense; freight, insurance and other
charges in connection with the shipment of each Fund's portfolio securities; and
other expenses.
The Investment Manager is responsible for the payment of the compensation
and expenses of all Trustees, officers and executive employees of each Fund
(including each Fund's share of payroll taxes) affiliated with the Invest-
15
<PAGE> 23
ment Manager and making available, without expense to each Fund, the services of
such Trustees, officers and employees as may duly be elected officers of each
Trust, subject to their individual consent to serve and to any limitations
imposed by law. Each Fund is responsible for the fees and expenses (specifically
including travel expenses relating to Fund business) of Trustees not affiliated
with the Investment Manager. Under each Investment Management Agreement, the
Investment Manager also pays each Fund's share of payroll taxes. During each
Fund's most recent fiscal year, no compensation, direct or otherwise (other than
through fees paid to the Investment Manager), was paid or became payable by each
Trust to any of its officers or Trustees who were affiliated with the Investment
Manager.
In return for the services provided by the Investment Manager as investment
manager and the expenses it assumes under each Investment Management Agreement,
each Fund pays the Investment Manager a management fee which is accrued daily
and payable monthly. The management fee rate for each Fund under the Investment
Management Agreements is set forth in Appendix 5 hereto. As of the end of each
Fund's last fiscal year, each Fund had net assets and paid an aggregate
management fee to the Investment Manager during such period as also set forth in
Appendix 5 hereto. The investment management fee for each Fund, other than TECMF
and CEF-TEP, and the expense limitation for each of CEF-MMP and CEF-GSP
(described below) are computed based on combined average daily net assets of all
Funds (except for CEF-TEP, in the case of CEF) of each applicable Trust. These
are allocated among the Funds (except for CEF-TEP, in the case of CEF) in that
Trust based upon the relative net assets of each such Fund. The investment
management fee for each of TECMF and CEF-TEP is computed based upon the average
daily net assets of TECMF and CEF-TEP individually, respectively.
The Investment Management Agreements applicable to the Funds in CEF each
provides that the Investment Manager will reimburse the applicable Fund should
expenses of the Fund exceed on an annual basis: for CEF-MMP and CEF-GSP, in the
aggregate, .90% of the first $500 million; .80% of the next $500 million; or
.75% of the next $1 billion and .70% thereafter; and, for CEF-TEP, 1.5% of the
first $30 million of average daily net assets and 1% thereafter. For this
purpose, operating expenses include the investment management fee but exclude
interest, taxes, extraordinary expenses, brokerage commissions and transaction
costs and distribution fees.
Each Investment Management Agreement further provides that the Investment
Manager shall not be liable for any error of judgment or mistake of law or for
any loss suffered by any Fund in connection with matters to which such agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Manager in the performance of its
duties or from reckless disregard by the Investment Manager of its obligations
and duties under such agreement. Each Investment Management Agreement also
provides that purchase and sale opportunities, which are suitable for more
16
<PAGE> 24
than one client of the Investment Manager, will be allocated by the Investment
Manager in an equitable manner. Lastly, each Investment Management Agreement
contains a provision stating that it supersedes all prior agreements.
Each Investment Management Agreement may be terminated without penalty upon
sixty (60) days' written notice by either party. Each Fund may agree to
terminate its Investment Management Agreement either by the vote of a majority
of the outstanding voting securities of the Fund, or by a vote of the Board.
Each Investment Management Agreement may also be terminated at any time without
penalty by the vote of a majority of the outstanding voting securities of the
Fund or by a vote of the Board if a court establishes that the Investment
Manager or any of its officers or directors has taken any action resulting in a
breach of the Investment Manager's covenants under the Investment Management
Agreement. As stated above, each Investment Management Agreement automatically
terminates in the event of its assignment.
Scudder Kemper or one of its predecessors has acted as the Investment
Manager for each Fund as of the date set forth in the table in Appendix 6
hereto. Also shown in Appendix 6 is the date of each Former Investment
Management Agreement, the date when each Former Investment Management Agreement
was last approved by the shareholders of each Fund, the date when each New
Investment Management Agreement was last approved by the Trustees of each Fund
and the date to which each New Investment Management Agreement was last
continued. Each Former Investment Management Agreement was last submitted to
shareholders prior to its becoming effective, as required by the 1940 Act, in
connection with the Scudder-Zurich Transaction.
THE NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreement for each Fund, which is currently
in effect, is dated the date of the consummation of the Transaction, which
occurred on September 7, 1998. Each New Investment Management Agreement was to
be in effect for an initial term ending on December 1, 1998 and to be continued
thereafter from year to year only if specifically approved at least annually by
the vote of "a majority of the outstanding voting securities" of each Fund, or
by the Board and, in either event, the vote of a majority of the Non-Interested
Trustees, cast in person at a meeting called for such purpose. At meetings held
on September 18, 1998, the Board of each Fund, including a majority of the
Non-Interested Trustees, approved the continuance of each New Investment
Management Agreement through September 30, 1999. In the event that shareholders
of a Fund do not approve the New Investment Management Agreement, it will
terminate. In such event, each Board will take such action as it deems to be in
the best interests of the Fund and its shareholders.
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<PAGE> 25
DIFFERENCES BETWEEN THE FORMER AND NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreements are substantially identical to the
Former Investment Management Agreements, except for the dates of execution and
termination.
INVESTMENT MANAGER
Scudder Kemper, an indirect subsidiary of Zurich which resulted from the
combination of the businesses of Scudder and Kemper in connection with the
Scudder-Zurich Transaction, is one of the largest and most experienced
investment counsel firms in the United States. Scudder was established in 1919
as a partnership and was restructured as a Delaware corporation in 1985. Scudder
launched its first fund in 1928. Kemper launched its first fund in 1948. Since
December 31, 1997, Scudder Kemper has served as investment adviser to both
Scudder and Kemper funds. As of August 31, 1998, Scudder Kemper has more than
$241.1 billion in assets under management. The principal source of Scudder
Kemper's income is professional fees received from providing continuing
investment advice. Scudder Kemper provides investment counsel for many
individuals and institutions, including insurance companies, endowments,
industrial corporations and financial and banking organizations.
Founded in 1872, Zurich is a multinational, public corporation organized
under the laws of Switzerland. Its home office (and the home offices of Zurich
Financial Services and Zurich Allied AG) is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services
and have branch offices and subsidiaries in more than 40 countries throughout
the world. Zurich owns approximately 70% of the Investment Manager, with the
balance owned by the Investment Manager's officers and employees.
As stated above, Scudder Kemper is a Delaware corporation. Rolf Huppi* is
the Chairman of the Board and Director, Edmond D. Villani(#) is the President,
Chief Executive Officer and Director, Stephen R. Beckwith(#) is the Treasurer
and Chief Financial Officer, Kathryn L. Quirk(#) is the General Counsel, Chief
Compliance Officer and Secretary, Lynn S. Birdsong(#) is a Corporate Vice
President and Director, Cornelia M. Small(#) is a Corporate Vice President and
Director, Laurence Cheng* is a Director, and, effective November 1, 1998, each
of Gunther Gose* and William H. Bolinder(+) is a Director of the Investment
Manager. The principal occupation of each of Edmond D. Villani, Stephen R.
Beckwith,
- ------------------------------
* Mythenquai 2, Zurich, Switzerland
(#) 345 Park Avenue, New York, New York
(+) 1400 American Lane, Schaumburg, Illinois
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<PAGE> 26
Kathryn L. Quirk, Lynn S. Birdsong and Cornelia M. Small is serving as a
Managing Director of the Investment Manager; the principal occupation of Rolf
Huppi is serving as an officer of Zurich; the principal occupation of Laurence
Cheng is serving as a senior partner of Capital Z Partners, an investment fund;
the principal occupation of Gunther Gose is serving as the Chief Financial
Officer of Zurich Financial Services; the principal occupation of William H.
Bolinder is serving as a member of the Group Executive Board of Zurich Financial
Services. Appendix 7 includes information regarding each Trustee and officer of
each Trust who is associated with Scudder Kemper.
The outstanding voting securities of the Investment Manager are held of
record 36.63% by Zurich Holding Company of America ("ZHCA"), a subsidiary of
Zurich; 32.85% by ZKI Holding Corp. ("ZKIH"), a subsidiary of Zurich; 20.86% by
Stephen R. Beckwith, Lynn S. Birdsong, Kathryn L. Quirk, Cornelia M. Small and
Edmond D. Villani, in their capacity as representatives (the "Management
Representatives") of the Investment Manager's management holders and retiree
holders pursuant to a Second Amended and Restated Security Holders Agreement
(the "Security Holders Agreement") among the Investment Manager, Zurich, ZHCA,
ZKIH, the Management Representatives, the management holders, the retiree
holders and Edmond D. Villani, as trustee of Scudder Kemper Investments, Inc.
Executive Defined Contribution Plan Trust (the "Plan Trust"); and 9.66% by the
Plan Trust. There are no outstanding non-voting securities of the Investment
Manager.
In connection with the Scudder-Zurich Transaction (described above),
pursuant to which Zurich acquired a two-thirds interest in Scudder for $866.7
million in cash in December, 1997, Daniel Pierce, a Trustee of each Trust, sold
85.4% of his holdings in Scudder to Zurich for cash.
Pursuant to the Security Holders Agreement (which was entered into in
connection with the Scudder-Zurich Transaction), the Board of Directors of the
Investment Manager consists of four directors designated by ZHCA and ZKIH and
three directors designated by Management Representatives.
The Security Holders Agreement requires the approval of a majority of the
Scudder-designated directors for certain decisions, including changing the name
of Scudder Kemper, effecting an initial public offering before April 15, 2005,
causing Scudder Kemper to engage substantially in non-investment management and
related business, making material acquisitions or divestitures, making material
changes in Scudder Kemper's capital structure, dissolving or liquidating Scudder
Kemper, or entering into certain affiliated transactions with Zurich. The
Security Holders Agreement also provides for various put and call rights with
respect to Scudder Kemper stock held by persons who were employees of Scudder at
the time of the Scudder-Zurich Transaction, limitations on Zurich's ability to
purchase other asset management companies outside of Scudder Kemper, rights of
Zurich to repurchase Scudder Kemper stock upon termination of employment of
Scudder Kemper personnel, and registration rights for stock held by stockholders
of Scudder continuing after the Scudder-Zurich Transaction.
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<PAGE> 27
Directors, officers and employees of Scudder Kemper from time to time may
enter into transactions with various banks, including each Fund's custodian
bank. It is Scudder Kemper's opinion that the terms and conditions of those
transactions will not be influenced by existing or potential custodial or other
Fund relationships.
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street, Kansas
City, Missouri 64105, is each Fund's transfer agent and dividend-paying agent.
Pursuant to a services agreement with IFTC, Kemper Service Company ("KSC"), an
affiliate of Scudder Kemper, serves as Shareholder Service Agent of each Fund
for which IFTC serves as transfer and dividend-paying agent and, as such,
performs all of IFTC's duties as transfer agent and dividend-paying agent. IFTC
receives as transfer agent, and pays to KSC, annual account fees plus account
set up, maintenance, transaction and out-of-pocket expense reimbursement.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder Kemper,
computes net asset value for each Fund. Currently, SFAC receives no fee for its
services to each Fund; however, subject to Board approval, at some time in the
future, SFAC may seek payment for its services from the Funds. Kemper
Distributors, Inc. ("KDI"), 222 South Riverside Plaza, Chicago, Illinois 60606,
a subsidiary of Scudder Kemper, provides information and administrative services
for shareholders of each Fund. KDI is also the principal underwriter and
distributor of each Fund's shares and acts as agent of each Fund in the sale of
its shares. For the shares of each Fund other than those in ICT, KDI receives a
Rule 12b-1 distribution fee of 0.60% for each of CAT-MMP and CAT-GSP; 0.50% for
CAT-TEP and for each Fund in IMCF; .38% for each of CEF-MMP and CEF-GSP; and
.33% for each of CEF-TEP and TECMF of the average daily net assets of such Fund.
The table provided in Appendix 8 sets forth for each Fund the respective fees
paid to KSC (fees received from each Fund by IFTC and remitted to KSC), SFAC and
KDI (including administration fees and Rule 12b-1 fees) during the last fiscal
year of each Fund. Money market instruments are normally purchased in principal
transactions directly from the issuer or from an underwriter or market maker.
There are normally no brokerage commissions paid 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. No Fund paid any brokerage commissions
during its most recently completed fiscal year.
KSC, SFAC and KDI will continue to provide transfer agency, fund accounting
and underwriting, administrative and distribution services, respectively, to the
Funds, as described above, under the current arrangements if the New Investment
Management Agreements are approved.
Exhibit B sets forth (as of each fund's last fiscal year end, unless
otherwise noted) the fees and other information regarding investment companies
advised by Scudder Kemper that have similar investment objectives to any of the
Funds. (See Appendix 5 for information regarding the management fee rate, net
assets and aggregate management fee paid for each Fund.)
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<PAGE> 28
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
To the maximum extent feasible, Scudder Kemper places orders for portfolio
transactions through Scudder Investor Services, Inc. ("SIS"), Two International
Place, Boston, Massachusetts 02110, which in turn places orders on behalf of the
Funds with issuers, underwriters or other brokers and dealers. SIS is a
corporation registered as a broker/dealer and a subsidiary of Scudder Kemper.
SIS does not receive any commissions, fees or other remuneration from the Funds
for this service. In selecting brokers and dealers with which to place portfolio
transactions for a Fund, Scudder Kemper may consider sales of shares of the
Funds and of other Kemper funds. When it can be done consistently with the
policy of obtaining the most favorable net results, Scudder Kemper may place
such orders with brokers and dealers who supply research, market and statistical
information to a Fund or to Scudder Kemper. Scudder Kemper is authorized when
placing portfolio transactions for a Fund to pay a brokerage commission (to the
extent applicable) in excess of that which another broker might charge for
executing the same transaction on account of the receipt of research, market or
statistical information. Allocation of portfolio transactions is supervised by
Scudder Kemper.
THE BOARD MEMBERS OF EACH TRUST RECOMMEND THAT THE SHAREHOLDERS OF EACH
FUND VOTE IN FAVOR OF THIS PROPOSAL 1.
PROPOSAL 2: APPROVAL OF THE MODIFICATION OR ELIMINATION OF
CERTAIN POLICIES AND THE ELIMINATION OF THE SHAREHOLDER
APPROVAL REQUIREMENT AS TO CERTAIN OTHER MATTERS
The 1940 Act requires an investment company to adopt policies governing
certain specified activities, which can be changed only by a shareholder vote.
Policies that cannot be changed or eliminated without a shareholder vote are
referred to in this Proxy Statement as "fundamental" policies. The purposes of
this Proposal are to eliminate the requirement of shareholder approval to change
policies except where required by the 1940 Act and to provide the maximum
permitted flexibility in those policies that do require shareholder approval.
Management has advised the Boards that some of the Funds' fundamental policies
that are not required to be such under the 1940 Act were adopted in the past as
a result of now rescinded regulatory requirements and no longer serve any useful
purpose. Management believes that other fundamental policies, as well as the
classification of each Fund's investment objective(s) as fundamental, are
unnecessary because the provisions of the 1940 Act or federal tax law, together
with the disclosure requirements of the federal securities laws, provide
adequate safeguards for a Fund and its shareholders. The Proposal is described
in more detail below.
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This Proposal is sub-divided into the following three sections:
(1) Elimination of Shareholder Approval Requirement to Amend Investment
Objectives and Investment Policies. Certain of the Funds listed below currently
require shareholder approval to amend "investment objectives and policies." The
first section of this Proposal seeks shareholder approval of the elimination of
the shareholder approval requirement for amending (a) "investment objectives,"
and (b) "investment policies" which are not otherwise specifically identified as
fundamental. Eliminating the shareholder approval requirement for amending the
investment objective (or objectives) of a Fund is intended to enhance the Fund's
investment flexibility in the event of changing circumstances. Additionally,
management believes that currently it is not possible to determine precisely
which policies are fundamental on the basis of the language in the Funds'
Prospectuses and Statements of Additional Information, thus creating uncertainty
and restricting the Funds' investment flexibility and their ability to respond
to changing regulatory and industry conditions.
(2) Revision of Fundamental Policies Mandated by the 1940 Act. Each of the
fundamental policies proposed for revision relates to an activity that the 1940
Act requires be governed by a fundamental policy. Each proposed revision is, in
general, intended to provide the Funds' Boards with the maximum flexibility
permitted under the 1940 Act, and to promote simplicity among the Funds'
policies.
(3) Elimination of Shareholder Approval Requirement to Change Other
Fundamental Policies. This Proposal seeks to eliminate certain policies that
are specifically designated as fundamental but which are not required to be
fundamental under the 1940 Act. The Boards of the Funds anticipate adopting
certain of these policies as non-fundamental. Any policy that is not designated
as fundamental can be modified or eliminated by the Board, and, as indicated
below, management intends to recommend to the Boards the elimination of several
of them as being inappropriate or unnecessary under current conditions.
Each proposed policy is identified in bold-type below together with a list
of Funds whose shareholders' vote is required.
Each Fund's current fundamental policies are set forth in Exhibit C.
Changes in fundamental policies that are approved by shareholders, as well as
changes in non-fundamental policies that are adopted by a Board, will be
reflected in each Fund's Prospectus and other disclosure documents. Any change
in the method of operation of a Fund will require prior Board approval. Except
as specifically indicated below, the Board of each Fund does not presently
intend to change the investment objectives or the investment policies of that
Fund.
Approval of each item of this Proposal with respect to any Fund requires
the affirmative vote of a majority of the outstanding voting securities, as
defined above, of that Fund. If the shareholders of any Fund fail to approve the
proposed modification or elimination of policies or the elimination of the
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<PAGE> 30
shareholder approval requirement as to a matter, the current policy or approval
requirement will remain in effect.
ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO AMEND INVESTMENT OBJECTIVES
AND INVESTMENT POLICIES
Investment Objectives
PROPOSAL 2.0: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THE
INVESTMENT OBJECTIVE(S) OF THAT FUND WILL NOT BE CLASSIFIED AS FUNDAMENTAL.
This proposal applies to all Funds.
Management believes that leaving the power to modify investment objectives
up to the discretion of the Board would strengthen each Fund's ability to
respond to changing circumstances. The Board of each Fund does not presently
intend to modify any investment objective, and would disclose any changes to
applicable shareholders by amending the particular Fund's Prospectus and
Statement of Additional Information.
Investment Policies
PROPOSAL 2.1: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THE
"INVESTMENT POLICIES" OF THAT FUND WILL NOT BE CLASSIFIED AS FUNDAMENTAL EXCEPT
AS OTHERWISE PROVIDED IN THIS PROXY STATEMENT.
This proposal applies to the CAT Funds, the CEF Funds, and the ICT Funds.
This proposal is intended to provide the Funds with clarity of disclosure
and the investment flexibility necessary to respond to changing circumstances by
eliminating the shareholder approval requirement for amending "investment
policies" which are not specifically identified as fundamental. The Funds'
Prospectuses currently contain a statement that characterizes the "investment
policies" of a Fund as fundamental. Management believes that this current
statement is overbroad and, therefore, creates difficulty for portfolio managers
in operating a Fund and for current or potential shareholders of a Fund in
determining which policies of the Fund are fundamental. The current statement
also unnecessarily restricts a Fund's flexibility and may make it more difficult
to respond to changing conditions. Management believes that removing the
fundamental characterization of all policies not otherwise specifically
identified as fundamental is consistent with industry standards and would allow
the Board of a Fund to modify its investment policies in light of changes in the
investment management industry, market conditions and the regulatory
environment, but only consistent with applicable law, the Fund's investment
objective and its clearly-identified fundamental policies.
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<PAGE> 31
REVISION OF FUNDAMENTAL POLICIES MANDATED BY THE 1940 ACT
Diversification
PROPOSAL 2.2(A): IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND,
THAT FUND WILL REMAIN A "DIVERSIFIED" FUND UNDER THE 1940 ACT, BUT WILL NOT BE
SUBJECT TO ADDITIONAL REQUIREMENTS THAT ARE MORE RESTRICTIVE THAN THE 1940 ACT.
This proposal applies to the CAT Funds, the CEF Funds, TECMF, and ICT.
Each Fund is currently classified as a diversified open-end investment
company, or as a diversified series of an open-end investment company. Under the
1940 Act, a "diversified" Fund may not, with respect to 75% of the value of its
total assets, invest more that 5% of the value of its total assets in securities
issued by any one issuer or purchase more that 10% of the outstanding voting
securities of any one issuer, except in each case in U.S. Government securities
or securities issued by other investment companies. Currently, each Fund also
has adopted additional diversification policies. Under their current
diversification policies, each of the CAT Funds and the CEF Funds may not invest
more than 5% of its assets in the securities of any one issuer. CAT-MMP,
CAT-GSP, CEF-MMP and CEF-GSP also contain separate policies prohibiting the
purchase of more than 10% of the securities of any one issuer. TECMF is
currently restricted, with respect to 75% of its total assets, from investing
more than 5% of its total assets in the securities of a single issuer. All
policies contain an exception for U.S. Government securities. Accordingly, the
elimination of the additional diversification policies for a Fund means that the
Fund must comply with only the 1940 Act diversification requirements. As a
result, the elimination of the additional diversification policies that apply to
75% of the value of a Fund's total assets will not represent a substantive
change to that Fund's diversification requirements. However, the elimination of
the additional diversification policies that apply to 100% of the value of a
Fund's total assets will cause that Fund to have less restrictive
diversification requirements.
PROPOSAL 2.2(B): IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND,
THAT FUND WILL REMAIN A "NON-DIVERSIFIED" FUND UNDER THE 1940 ACT BUT WILL
ELIMINATE AS FUNDAMENTAL THE CURRENT DIVERSIFICATION POLICIES.
This proposal applies to the IMCF Funds.
Each Fund has elected to be classified as a non-diversified series of an
open-end investment company. Consequently, the Funds have no diversification
requirements under the 1940 Act. However, the Funds currently have
diversification policies that restrict each Fund, with respect to 50% of the
value of its total assets, from investing more than 5% of the value of its total
assets in the securities of any one issuer, and with respect to the other 50% of
its total assets, from investing more than 25% of the value of its total assets
in the securities of any one issuer. Except for TNYMF, the policies of the Funds
contain an exception for investments in a master fund within a master/feeder
fund structure. These diversification policies reflect the requirements of the
Internal
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<PAGE> 32
Revenue Code of 1986, as amended, for a fund to qualify for the favorable tax
status as a "regulated investment company." Whether or not this proposal is
approved by shareholders, all Funds intend to continue to meet these
requirements.
Borrowing
PROPOSAL 2.3: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT BORROW MONEY, EXCEPT AS PERMITTED UNDER THE INVESTMENT COMPANY ACT
OF 1940, AS AMENDED, AND AS INTERPRETED OR MODIFIED BY REGULATORY AUTHORITY
HAVING JURISDICTION, FROM TIME TO TIME.
This proposal applies to all Funds.
The current policy of each Fund prohibits borrowing money, except as a
temporary measure for extraordinary or emergency purposes, in which case each
Fund may borrow up to one-third of the value of its total assets. Additionally,
the ICT Funds and the IMCF Funds are restricted from borrowing for leverage or
from making investments while borrowings are outstanding, and the CAT Funds,
CEF-MMP and CEF-GSP may not borrow for leverage purposes. TECMF and CEF-TEP may
not purchase securities or make investments while borrowings are outstanding.
The proposed policy would permit each Fund to engage in borrowing in a
manner and to the full extent permitted by applicable law. The 1940 Act requires
borrowings to have 300% asset coverage, which means, in effect, that a Fund
would be permitted to borrow up to an amount equal to 50% of its total assets
under the proposed borrowing policy. Additionally, under the proposed policy,
each Fund would not be limited to borrowing for temporary or emergency purposes,
could borrow for leverage, and could purchase securities for investment while
borrowings are outstanding. However, the Boards have no current intention of
authorizing any of these practices. If a Board authorized a Fund to borrow for
leverage, such borrowings would increase the Fund's volatility and the risk of
loss in a declining market.
Senior Securities
PROPOSAL 2.4: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT ISSUE SENIOR SECURITIES, EXCEPT AS PERMITTED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, AND AS INTERPRETED OR MODIFIED BY REGULATORY
AUTHORITY HAVING JURISDICTION, FROM TIME TO TIME.
This proposal applies to all Funds.
The proposed policy rewords the current policy without making any material
changes.
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Concentration
PROPOSAL 2.5(A): IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND,
THAT FUND MAY NOT CONCENTRATE ITS INVESTMENTS IN A PARTICULAR INDUSTRY, AS THAT
TERM IS USED IN THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND AS
INTERPRETED OR MODIFIED BY REGULATORY AUTHORITY HAVING JURISDICTION, FROM TIME
TO TIME.
This proposal applies to all Funds (except for CAT-MMP; see Proposal 2.5(b)
below).
While the 1940 Act does not define what constitutes "concentration" in an
industry, the staff of the Commission takes the position that investment of more
than 25% of a fund's assets in an industry constitutes concentration. If a fund
concentrates in an industry, it must at all times have more than 25% of its
assets invested in that industry, and if its policy is not to concentrate, as is
the case with each of the Funds, it may not invest more than 25% of its assets
in the applicable industry, unless, in either case, the fund discloses the
specific conditions under which it will change from concentrating to not
concentrating or vice versa.
Each Fund's current policy in effect prohibits the purchase of securities
if it would result in more than 25% of the Fund's total assets being invested in
the same industry. For each of the Funds, there are certain exceptions for U.S.
Government securities, state securities, certain bank investments, and/or for
investment in a master fund within a master/feeder fund structure. In some
cases, what constitutes an industry for the purposes of this restriction is
included in the policy itself. A fund is permitted to adopt reasonable
definitions of what constitutes an industry, or it may use standard
classifications recognized by the Commission, or some combination thereof.
Because a fund may create its own reasonable industry classifications,
management believes that it is not necessary to include such matters in the
fundamental policy of a Fund.
PROPOSAL 2.5(B): IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF THE FUND,
THE FUND MAY NOT CONCENTRATE ITS INVESTMENTS IN A PARTICULAR INDUSTRY, AS THAT
TERM IS USED IN THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND AS
INTERPRETED OR MODIFIED BY REGULATORY AUTHORITY HAVING JURISDICTION, FROM TIME
TO TIME, EXCEPT THAT THE FUND INTENDS TO INVEST MORE THAN 25% OF ITS NET ASSETS
IN INSTRUMENTS ISSUED BY BANKS.
This proposal applies to CAT-MMP.
The Fund currently concentrates more than 25% of its net assets in
instruments issued by banks. The proposed policy is not materially different
from the current policy.
Underwriting of Securities
PROPOSAL 2.6: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT ENGAGE IN THE BUSINESS OF UNDERWRITING SECURITIES ISSUED BY
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<PAGE> 34
OTHERS, EXCEPT TO THE EXTENT THAT A FUND MAY BE DEEMED TO BE AN UNDERWRITER IN
CONNECTION WITH THE DISPOSITION OF PORTFOLIO SECURITIES.
This proposal applies to all Funds.
The proposed underwriting policy has been reworded without making any
material changes.
Investment In Real Estate
PROPOSAL 2.7: IF THIS PROPOSAL IS APPROVED BY SHAREHOLDERS OF A FUND, THAT FUND
MAY NOT PURCHASE OR SELL REAL ESTATE, WHICH TERM DOES NOT INCLUDE SECURITIES OF
COMPANIES WHICH DEAL IN REAL ESTATE OR MORTGAGES OR INVESTMENTS SECURED BY REAL
ESTATE OR INTERESTS THEREIN, EXCEPT THAT THE FUND RESERVES FREEDOM OF ACTION TO
HOLD AND TO SELL REAL ESTATE ACQUIRED AS A RESULT OF THE FUND'S OWNERSHIP OF
SECURITIES.
This proposal applies to all Funds.
The proposed real estate policy rewords the current policies for all Funds,
except for the ICT Funds, without making any material changes. The ICT Funds
invest only in U.S. Government obligations and do not currently contain a
separate policy prohibiting investments in real estate. The policies of the CAT
Funds and the IMCF Funds currently also prohibit investment in real estate
limited partnerships. Management intends to recommend to the Boards of these
Funds the adoption of each of the foregoing policies as non-fundamental
policies.
Purchase of Commodities
PROPOSAL 2.8: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT PURCHASE PHYSICAL COMMODITIES OR CONTRACTS RELATING TO PHYSICAL
COMMODITIES.
This proposal applies to all Funds.
The proposed policy rewords the current policy for each Fund without making
any material changes.
Lending
PROPOSAL 2.9: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT MAKE LOANS EXCEPT AS PERMITTED UNDER THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED, AND AS INTERPRETED OR MODIFIED BY REGULATORY AUTHORITY HAVING
JURISDICTION, FROM TIME TO TIME.
This proposal applies to all Funds.
Each Fund's current lending policy prohibits making loans to others, except
for purchase of debt obligations or repurchase agreements in accordance with
investment objectives and policies. The proposed policy, unlike the current
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policy, does not specify the particular types of lending in which each Fund is
permitted to engage; instead, the proposed policy permits each Fund to lend in a
manner and to an extent permitted by applicable law. The proposed change would,
therefore, permit each Fund, subject to the receipt of any necessary regulatory
approval and Board authorization, to enter into lending arrangements, including
lending agreements under which the Funds advised by Scudder Kemper could for
temporary purposes lend money directly to and borrow money directly from each
other through a credit facility. Each of the Funds believes that the flexibility
provided by this policy change could possibly reduce the Fund's borrowing costs
and enhance its ability to earn higher rates of interest on short-term lendings
in the event that the Board determines that such arrangements are warranted in
light of the Fund's particular circumstances.
ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO CHANGE OTHER FUNDAMENTAL
POLICIES
Certain of the policies listed below (Margin Purchases and Short Sales,
Purchase of Securities of Related Issuers, Pledging of Assets, Restricted and
Illiquid Securities, Purchases of Securities, Investment in Issuers with Short
Histories and Investment in other Investment Companies) were initially adopted
by the Funds due to state securities regulatory policies that are no longer in
effect. Others reflected industry conditions at the time. Management believes
that each of these policies should be eliminated as a fundamental policy in the
interest of simplicity and flexibility. Except as otherwise stated, if
shareholders approve the elimination of these policies as fundamental,
management will recommend to the Boards that they eliminate these policies
entirely as being unnecessary.
Management believes that adoption of these proposals will have no
substantive effect on the way the Funds are currently managed because many of
the practices to which the proposals described below relate are generally
inconsistent with the operation of money market funds.
Margin Purchases and Short Sales
PROPOSAL 2.10: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON MARGIN PURCHASES AND SHORT
SALES.
This proposal applies to all Funds.
Each Fund is currently prohibited from making either margin purchases or
short sales, except to obtain short-term credits necessary for clearance of
transactions. If elimination of this restriction is approved by shareholders,
each Fund's potential use of margin transactions beyond the clearance of
transactions, would be generally limited by the current position taken by the
staff of the SEC that margin transactions with respect to securities are
prohibited under Section 18 of the 1940 Act because they create senior
securities. "Margin transac-
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tions" involve the purchase of securities with money borrowed from a broker,
with cash or eligible securities being used as collateral against the loan. Each
Fund's ability to engage in margin transactions is also limited by its borrowing
policies, which permit a Fund to borrow money only as permitted by applicable
law.
Purchase of Securities of Related Issuers
PROPOSAL 2.11: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON THE PURCHASE OF SECURITIES OF
RELATED ISSUERS.
This proposal applies to the CAT Funds, the CEF Funds, TECMF, and TNYMF.
The current policy of each Fund prohibits the purchase of securities of
issuers any of whose officers, directors, trustees or security holders is an
officer, trustee or director of the Fund or an officer, director, trustee or
security holder of Scudder Kemper if one or more of such individuals owns more
than 1/2 of one percent of the shares or securities of such issuer and own
collectively more than 5% of the shares or securities of such issuer.
Transactions between each Fund and an affiliated person of a Fund are currently
regulated under the 1940 Act.
Pledging of Assets
PROPOSAL 2.12: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON THE PLEDGING OF ASSETS.
This proposal applies to CEF-TEP and TECMF.
Each Fund is currently prohibited from pledging, mortgaging or
hypothecating assets in an amount exceeding 10% of the Fund's assets. Each Fund
may only pledge securities in order to secure borrowings.
Restricted and Illiquid Securities
- ------------------------------------
PROPOSAL 2.13: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON THE PURCHASE OF RESTRICTED AND
ILLIQUID SECURITIES.
This proposal applies to the CEF Funds and TECMF.
CEF Funds are currently prohibited from entering into repurchase agreements
if, as a result, more than 10% of each Fund's total assets would be invested in
repurchase agreements maturing in more than seven days. TECMF is prohibited from
investing more than 10% of its total assets in illiquid securities. The CEF
Funds are each prohibited from investing more than 5% of its total assets in
securities restricted as to disposition under the federal securities laws. Under
the 1940 Act and applicable interpretations of the SEC, each Fund is currently
prohibited from investing more than 15% of its net assets in illiquid
securities, including restricted securities which are deemed to be illiquid.
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Purchases of Securities
- -------------------------
PROPOSAL 2.14: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON THE PURCHASE OF A SPECIFIED
PERCENTAGE OF AN ISSUER'S SECURITIES.
This proposal applies to CAT-MMP, CAT-GSP, CEF-MMP, and CEF-GSP.
Each Fund is currently prohibited with respect to 100% of its assets from
purchasing more than 10% of the securities of a single issuer. Additionally,
each Fund is a "diversified" fund and is therefore limited to purchasing, with
respect to 75% of its assets, not more than 10% of the voting securities of a
single issuer.
Purchases of Puts and Calls
- -------------------------------
PROPOSAL 2.15: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON PURCHASES OF PUTS AND CALLS.
This proposal applies to the CAT Funds, the CEF Funds, TNYMF, and TECMF.
The Funds are currently prohibited from or limited in writing, purchasing
or selling puts and calls. The policies of CAT-TEP, CEF-TEP, TNYMF and TECMF
contain exceptions for purchases of municipal securities. CAT-MMP, CAT-GSP,
CEF-MMP and CEF-GSP contain absolute prohibitions on such transactions.
Investment for the Purpose of Exercising Control or Management
- --------------------------------------------------------------------------
PROPOSAL 2.16: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON INVESTMENT FOR THE PURPOSE OF
EXERCISING CONTROL OR MANAGEMENT.
This proposal applies to the CAT Funds, the CEF Funds, TNYMF, and TECMF.
The Funds are currently prohibited from investing for the purpose of
exercising control or management of another issuer. The Funds do not intend to
invest for this purpose.
Investment in Mineral Exploration
- --------------------------------------
PROPOSAL 2.17: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON INVESTMENT IN MINERAL
EXPLORATION PROGRAMS.
This proposal applies to the CAT Funds, the CEF Funds, TNYMF, and TECMF.
The Funds are currently prohibited from investing in oil, gas or other
mineral exploration or development programs, although they may invest in the
securities of issuers which invest in or sponsor such programs.
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<PAGE> 38
Investment in Issuers With Short Histories
- -----------------------------------------------
PROPOSAL 2.18: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON INVESTMENT IN ISSUERS WITH SHORT
HISTORIES.
This proposal applies to the CEF Funds and TECMF.
Each Fund is currently prohibited from investing more than 5% of its total
assets in securities of issuers which, with their predecessors, have a record of
less than three years of continuous operation.
Investment in other Investment Companies
PROPOSAL 2.19: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON INVESTMENT IN OTHER INVESTMENT
COMPANIES.
This proposal applies to the CEF Funds and TECMF.
The Funds are currently prohibited from purchasing securities of other
investment companies, except in connection with a merger, consolidation,
reorganization or acquisition of assets. The 1940 Act limits a fund's ability to
invest in other investment companies.
Investment in non-U.S. Government Securities
PROPOSAL 2.20: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON INVESTMENT IN NON-U.S.
GOVERNMENT SECURITIES, EXCEPT THAT A FUND WILL NOT INVEST SUBSTANTIALLY ALL OF
ITS ASSETS IN A "MASTER" INVESTMENT COMPANY WITHOUT THE APPROVAL OF A MAJORITY
OF THE OUTSTANDING VOTING SECURITIES OF THE FUND, AS DEFINED IN THE 1940 ACT.
This proposal applies to the ICT Funds.
The Funds are currently prohibited from purchasing securities other than
obligations issued or, in the case of ICT-GSP, issued or guaranteed by the U.S.
Government, and repurchase agreements of such obligations. Although each Fund
intends to continue to invest in U.S. Government securities pursuant to the
current requirement, management believes that this policy should be subject to
Board discretion as a non-fundamental policy. However, if a Fund implements a
master/feeder fund structure, shareholder approval will be required, as is
currently the case.
Investment other than in Accordance with Objectives and Policies
PROPOSAL 2.21: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON INVESTMENT OTHER THAN IN
ACCORDANCE WITH ITS OBJECTIVES AND POLICIES.
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This proposal applies to the CEF Funds and TECMF.
The Funds are currently prohibited from purchasing securities or making
investments other than in accordance with their respective investment objectives
and policies. Management believes that this policy is not meaningful.
Investment in Municipal Securities
PROPOSAL 2.22: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF THE FUND, THE
FUND WILL NOT HAVE A FUNDAMENTAL POLICY REGARDING INVESTMENT IN MUNICIPAL
SECURITIES.
This proposal applies to TECMF.
The Fund currently contains a fundamental policy defining the quality of
municipal securities that the Fund may invest in and a fundamental policy that
requires the Fund to invest at least 65% of its total assets in California
municipal securities. Although the Fund intends to continue to invest in
municipal securities pursuant to such current requirements, management believes
that these policies should be subject to Board discretion as non-fundamental
policies.
THE BOARD MEMBERS OF EACH TRUST RECOMMEND THAT THE
SHAREHOLDERS OF EACH FUND VOTE IN FAVOR OF THIS PROPOSAL 2.
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ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy card and
Proxy Statement and all other costs incurred in connection with the solicitation
of proxies, including any additional solicitation made by letter, telephone or
telegraph, will be paid by Zurich or its affiliates. In addition to solicitation
by mail, certain officers and representatives of each Trust, officers and
employees of Scudder Kemper and certain financial services firms and their
representatives, who will receive no extra compensation for their services, may
solicit proxies by telephone, telegram or personally.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Special Meeting date approaches, certain
shareholders of each Fund may receive a telephone call from a representative of
SCC if their votes have not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of each Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Trustees believe that these procedures are reasonably designed to
ensure that the identity of the shareholder casting the vote is accurately
determined and that the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security or
employer identification number, title (if the shareholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned,
and to confirm that the shareholder has received the proxy materials in the
mail. If the information solicited agrees with the information provided to SCC,
then the SCC representative has the responsibility to explain the process, read
the Proposals on the proxy card, and ask for the shareholder's instructions on
the Proposals. The SCC representative, although he or she is permitted to answer
questions about the process, is not permitted to recommend to the shareholder
how to vote, other than to read any recommendation set forth in the Proxy
Statement. SCC will record the shareholder's instructions on the card. Within 72
hours, the shareholder will be sent a letter or mailgram to confirm his or her
vote and asking the shareholder to call SCC immediately if his or her
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Special Meeting, but does not
wish to give a proxy by telephone, the shareholder may still submit the proxy
card originally sent with the Proxy Statement or attend in person. Should
shareholders require additional information regarding the proxy or replacement
proxy cards, they may contact SCC toll-free at 1-800-249-3451. Any proxy given
by a shareholder, whether in writing or by telephone, is revocable until voted
at the Special Meeting.
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PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Trust, c/o Scudder Kemper
Investments, Inc., at 222 South Riverside Plaza, Chicago, Illinois 60606, within
a reasonable time before the solicitation of proxies for such meeting. The
timely submission of a proposal does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No Board member is aware of any matters that will be presented for action
at a Special Meeting other than the matters set forth herein. Should any other
matters requiring a vote of shareholders arise, the proxy in the accompanying
form will confer upon the person or persons entitled to vote the shares
represented by such proxy the discretionary authority to vote the shares as to
any such other matters in accordance with their best judgment in the interest of
each Trust and/or Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards of Trustees,
/s/ Philip J. Collora
Philip J. Collora
Secretary
34
<PAGE> 42
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<PAGE> 43
EXHIBIT A
MASTER FORM OF
NEW INVESTMENT MANAGEMENT AGREEMENT
[Underscored items in brackets apply to the New Investment Management
Agreements applicable to all Funds of CAT, all Funds of ICT, all Funds of IMCF,
CEF-MMP and CEF-GSP.]
[BOLD AND UNDERSCORED ITEMS IN BRACKETS APPLY TO TECMF AND CEF-TEP ONLY.]
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF TRUST]
222 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
SEPTEMBER 7, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF PORTFOLIO[s], IF ANY]
Ladies and Gentlemen:
[NAME OF TRUST] (the "Trust") has been established as a Massachusetts
business trust to engage in the business of an investment company. Pursuant to
the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the Trust's shares
of beneficial interest (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized the [Name of series, if any] [each a "Fund" and
collectively, the "Funds"][THE "FUND"]. Series may be abolished and dissolved,
and additional series established, from time to time by action of the Trustees.
The Trust, on behalf of the Fund[s], has selected you to act as the
investment manager of the Fund[s] and to provide certain other services, as more
fully set forth below, and you have indicated that you are willing to act as
such investment manager and to perform such services under the terms and
conditions hereinafter set forth. [In the event the Trust establishes one or
more additional series with respect to which it desires to retain you to render
the services described hereunder, it shall notify you in writing. If you are
willing to render such services, you shall notify the Trust in writing,
whereupon such series shall become a Fund hereunder.] Accordingly, the Trust on
behalf of the Fund[s] agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of [each][THE] Fund in the manner and
in accordance with the investment objectives, policies and restrictions
A-1
<PAGE> 44
specified in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information (the "SAI") relating to each Fund
included in the Trust's Registration Statement on Form N-1A, as amended
from time to time, (the "Registration Statement") filed by the Trust under
the Investment Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents referred to in
the preceding sentence have been furnished to you by the Trust. The Trust
has also furnished you with copies properly certified or authenticated of
each of the following additional documents related to the Trust and the
Fund[s]:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-
Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders
of [each][THE] Fund selecting you as investment manager and approving
the form of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial
Interest relating to the Fund[s], as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to
the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund[s], you shall provide continuing investment management of the assets
of the Fund[s] in accordance with the investment objectives, policies and
restrictions set forth in the Prospectus and SAI; the applicable provisions
of the 1940 Act and the Internal Revenue Code of 1986, as amended, (the
"Code") relating to regulated investment companies and all rules and
regulations thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to policies and
instructions adopted by the Trust's Board of Trustees. In connection
therewith, you shall use reasonable efforts to manage the Fund so that it
will qualify as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder. The Fund[s] shall have the benefit
of the investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range investment policy
generally available to your investment advisory clients. In managing the
Fund[s] in accordance with the requirements set forth in this section 2,
you shall be entitled to receive and act upon advice of counsel to the
Trust. You shall also make available to the Trust promptly upon request all
of the Fund[s']['S] investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940 Act and
other applicable laws. To the extent required by law, you shall furnish to
regula-
A-2
<PAGE> 45
tory authorities having the requisite authority any information or reports
in connection with the services provided pursuant to this Agreement which
may be requested in order to ascertain whether the operations of the Trust
are being conducted in a manner consistent with applicable laws and
regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts
relating to investments to be purchased, sold or entered into by
[each][THE] Fund and place orders with broker-dealers, foreign currency
dealers, futures commission merchants or others pursuant to your
determinations and all in accordance with Fund policies as expressed in the
Registration Statement. You shall determine what portion of [each][THE]
Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on
the investment performance of [each][THE] Fund and on the performance of
your obligations pursuant to this Agreement, and you shall supply such
additional reports and information as the Trust's officers or Board of
Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio management
services specified above in section 2, you shall furnish at your expense
for the use of the Fund[s] such office space and facilities in the United
States as the Fund[s] may require for its reasonable needs, and you (or one
or more of your affiliates designated by you) shall render to the Trust
administrative services on behalf of the Fund[s] necessary for operating as
an open end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports to and
meeting materials for the Trust's Board of Trustees and reports and notices
to Fund shareholders; supervising, negotiating contractual arrangements
with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be necessary
or desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC") and other regulatory and
self-regulatory organizations, including, but not limited to, preliminary
and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices
pursuant to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund[s']['S] transfer agent; assisting in the preparation
and filing of [each][THE] Fund[s']['S] federal, state and local tax
returns; preparing and filing [each][THE] Fund[s']['S] federal excise tax
return pursuant to Section 4982 of the Code; providing assistance with
investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring
A-3
<PAGE> 46
the registration of Shares of [each][THE] Fund under applicable federal and
state securities laws; maintaining or causing to be maintained for the
Fund[s] all books, records and reports and any other information required
under the 1940 Act, to the extent that such books, records and reports and
other information are not maintained by the Fund[s']['S] custodian or other
agents of the Fund[s]; assisting in establishing the accounting policies of
the Fund; assisting in the resolution of accounting issues that may arise
with respect to the Fund[s']['S] operations and consulting with the
Fund[s']['S] independent accountants, legal counsel and the Fund[s']['S]
other agents as necessary in connection therewith; establishing and
monitoring [each][THE] Fund[s']['S] operating expense budgets; reviewing
[each][THE] Fund[s']['S] bills; processing the payment of bills that have
been approved by an authorized person; assisting the Fund[s] in determining
the amount of dividends and distributions available to be paid by
[each][THE] Fund to its shareholders, preparing and arranging for the
printing of dividend notices to shareholders, and providing the transfer
and dividend paying agent, the custodian, and the accounting agent with
such information as is required for such parties to effect the payment of
dividends and distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund[s']['S] business, subject to
the direction and control of the Trust's Board of Trustees. Nothing in this
Agreement shall be deemed to shift to you or to diminish the obligations of
any agent of the Fund[s] or any other person not a party to this Agreement
which is obligated to provide services to the Fund[s].
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the compensation and
expenses of all Trustees, officers and executive employees of the Trust
(including [each][THE] Fund's share of payroll taxes) who are affiliated
persons of you, and you shall make available, without expense to the
Fund[s], the services of such of your directors, officers and employees as
may duly be elected officers of the Trust, subject to their individual
consent to serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in section 2
hereof and the administrative services described in section 3 hereof.
You shall not be required to pay any expenses of the Fund[s] other
than those specifically allocated to you in this section 4. In particular,
but without limiting the generality of the foregoing, you shall not be
responsible, except to the extent of the reasonable compensation of such of
the Fund[s']['S] Trustees and officers as are directors, officers or
employees of you whose services may be involved, for the following expenses
of [each][THE] Fund: organization expenses of [each][THE] Fund (including
out of-pocket expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or consultants; legal
expenses; auditing and accounting expenses; maintenance of books and
records which are required to be maintained by the Fund[s']['S]
A-4
<PAGE> 47
custodian or other agents of the Trust; telephone, telex, facsimile,
postage and other communications expenses; taxes and governmental fees;
fees, dues and expenses incurred by the Fund[s] in connection with
membership in investment company trade organizations; fees and expenses of
the Fund[s']['S] accounting agent for which the Trust is responsible
pursuant to the terms of the Fund Accounting Services Agreement,
custodians, subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; expenses of
preparing share certificates and, except as provided below in this section
4, other expenses in connection with the issuance, offering, distribution,
sale, redemption or repurchase of securities issued by [each][THE] Fund;
expenses relating to investor and public relations; expenses and fees of
registering or qualifying Shares of [each][THE] Fund for sale; interest
charges, bond premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of [each][THE] Fund's
portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Trust business) of Trustees, officers
and employees of the Trust who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund[s]; expenses of printing and distributing reports,
notices and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of [each][THE] Fund and supplements thereto; costs of
stationery; any litigation expenses; indemnification of Trustees and
officers of the Trust; and costs of shareholders' and other meetings.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of a Fund if and to the
extent that (i) such expenses are required to be borne by a principal
underwriter which acts as the distributor of [a][THE] Fund's Shares
pursuant to an underwriting agreement which provides that the underwriter
shall assume some or all of such expenses, or (ii) the Trust on behalf of a
Fund shall have adopted a plan in conformity with Rule 12b-1 under the 1940
Act providing that a Fund (or some other party) shall assume some or all of
such expenses. You shall be required to pay such of the foregoing sales
expenses as are not required to be paid by the principal underwriter
pursuant to the underwriting agreement or are not permitted to be paid by a
Fund (or some other party) pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments to be
made and costs to be assumed by you as provided in sections 2, 3, and 4
hereof, the Trust on behalf of the Fund[s] shall pay you in United States
Dollars on the last day of each month the unpaid balance of a fee equal to
the excess of (a) _ % of the [combined] average daily net assets as
defined below of the Fund[s] for such month; over (b) GFOR FUNDS OF CEF
ONLY: the greater of (i) the amount by which the Funds'/Fund's expense
exceed _ or (ii)H any compensation waived by you from time to time (as
A-5
<PAGE> 48
more fully described below). You shall be entitled to receive during any
month such interim payments of your fee hereunder as you shall request,
provided that no such payment shall exceed 75 percent of the amount of your
fee then accrued on the books of the Fund[s] and unpaid.
The "average daily net assets" of a Fund shall mean the average of the
values placed on [a][THE] Fund's net assets as of 4:00 p.m. (New York time)
on each day on which the net asset value of a Fund is determined consistent
with the provisions of Rule 22c-1 under the 1940 Act or, if a Fund lawfully
determines the value of its net assets as of some other time on each
business day, as of such time. The value of the net assets of a Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination of net
asset value does not take place for any particular day, then for the
purposes of this section 5, the value of the net assets of such Fund as
last determined shall be deemed to be the value of its net assets as of
4:00 p.m. (New York time), or as of such other time as the value of the net
assets of the Fund's portfolio may be lawfully determined on that day. If
[a][THE] Fund determines the value of the net assets of its portfolio more
than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 5.
GFOR FUNDS OF CEF ONLY: You agree that your gross compensation for any
fiscal year shall not be greater than an amount which, when added to other
expenses of the Fund[s], shall cause the aggregate expenses of the Fund[s]
to exceed on an annual basis _ . Except to the extent that such amount has
been reflected in reduced payments to you, you shall refund to the Fund[s]
the amount of any payment received in excess of the limitation pursuant to
this section 5 as promptly as practicable after the end of such fiscal
year, provided that you shall not be required to pay the Fund[s] an amount
greater than the fee paid to you in respect of such year pursuant to this
Agreement. As used in this section 5, "expenses" shall mean those expenses
included in the applicable expense limitation having the broadest
specifications thereof, and "expense limitation" means a limit on the
maximum annual expenses which may be incurred by an investment company
determined (i) by multiplying a fixed percentage by the average, or by
multiplying more than one such percentage by different specified amounts of
the average, of the values of an investment company's net assets for a
fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year.H
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your
services. You shall be contractually bound hereunder by the terms of any
publicly announced waiver of your fee, or any limitation of the
Fund[s']['S] expenses, as if such waiver or limitation were fully set forth
herein.
A-6
<PAGE> 49
6. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other
investments for the account of the Fund[s], neither you nor any of your
directors, officers or employees shall act as a principal or agent or
receive any commission. You or your agent shall arrange for the placing of
all orders for the purchase and sale of portfolio securities and other
investments for [each][THE] Fund's account with brokers or dealers selected
by you in accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of a Fund, you shall act solely as
investment counsel for such clients and not in any way on behalf of such
Fund.
Your services to the Fund[s] pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement,
you shall be an independent contractor and not an agent of the Trust.
Whenever a Fund and one or more other accounts or investment companies
advised by you have available Fund[s] for investment, investments suitable
and appropriate for each shall be allocated in accordance with procedures
believed by you to be equitable to each entity. Similarly, opportunities to
sell securities shall be allocated in a manner believed by you to be
equitable. The Fund[s] recognize[s] that in some cases this procedure may
adversely affect the size of the position that may be acquired or disposed
of for the Fund[s].
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust agrees
that you shall not be liable under this Agreement for any error of judgment
or mistake of law or for any loss suffered by a Fund in connection with the
matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund[s] or [their][ITS] shareholders to which
you would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of your duties, or by reason of your
reckless disregard of your obligations and duties hereunder.
8. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1999, and continue in force from year
to year thereafter [with respect to each Fund], but only so long as such
continuance is specifically approved [for each Fund] at least annually (a)
by the vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and
(b) by the Trustees of the Trust, or by the vote of a majority of the
outstanding voting securities of [such][THE] Fund. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act
and
A-7
<PAGE> 50
the rules and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to a Fund at any time,
without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of [such][THE] Fund or by the Trust's Board
of Trustees on 60 days' written notice to you, or by you on 60 days'
written notice to the Trust. This Agreement shall terminate automatically
in the event of its assignment.
This Agreement may be terminated with respect to [a][THE] Fund at any
time without the payment of any penalty by the Board of Trustees or by vote
of a majority of the outstanding voting securities of [such][THE] Fund in
the event that it shall have been established by a court of competent
jurisdiction that you or any of your officers or directors has taken any
action which results in a breach of your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved in a manner consistent
with the 1940S Act and rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of
the Secretary of the Commonwealth of Massachusetts, provides that the name
"Name of Trust" refers to the Trustees under the Declaration collectively
as Trustees and not as individuals or personally, and that no shareholder
of a Fund, or Trustee, officer, employee or agent of the Trust, shall be
subject to claims against or obligations of the Trust or of a Fund to any
extent whatsoever, but that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability
as set forth in the Declaration and you agree that the obligations assumed
by the Trust on behalf of [each][THE] Fund pursuant to this Agreement shall
be limited in all cases to [each][THE] Fund and its assets, and you shall
not seek satisfaction of any such obligation from the shareholders or any
shareholder of a Fund or any other series of the Trust, or from any
Trustee, officer, employee or agent of the Trust. You understand that the
rights and obligations of [each][THE] Fund, or series, under the
Declaration are separate and distinct from those of any and all other
series.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts,
A-8
<PAGE> 51
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject,
however, to such exemptions as may be granted by the SEC by any rule,
regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, or in a manner which
would cause [a][THE] Fund to fail to comply with the requirements of
Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on behalf of
the Fund[s].
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
[NAME OF TRUST], on behalf of
[Name of Series, if any]
By:
------------------------------------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
------------------------------------------------------------
President
A-9
<PAGE> 52
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<PAGE> 53
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS NOT INCLUDED IN THIS PROXY STATEMENT AND
ADVISED BY SCUDDER KEMPER INVESTMENTS, INC.
SCUDDER FUNDS(+)
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
MONEY MARKET FUNDS
Government Money Market High level of current income 0.250% of net assets++ $ 83,870,139
Series consistent with preservation
of capital and liquidity.
Money Market Series High level of current income 0.250% of net assets++ $1,041,528,715
consistent with preservation
of capital and liquidity.
Scudder Cash Investment Trust Stability of capital while 0.500% to $250 million $1,182,012,567
maintaining liquidity of 0.450% next $250 million
capital and providing current 0.400% next $500 million
income. 0.350% thereafter++
Scudder U.S. Treasury Money Safety, liquidity, and 0.500% of net assets++ $ 388,528,203
Fund stability of capital and,
consistent therewith, current
income.
TAX FREE MONEY MARKET FUNDS
Scudder California Tax Free Stability of capital and the 0.500% of net assets $ 218,236
Money Fund maintenance of a constant net
asset value of $1.00 per share
while providing California
taxpayers income exempt from
both California personal and
regular federal income tax.
Scudder New York Tax Free Stability of capital while 0.500% of net assets++ $ 92,514,040
Money Fund providing New York taxpayers
income exempt from New York
state and New York City
personal income taxes and
regular federal income tax.
Scudder Tax Free Money Fund Income exempt from regular 0.500% to $500 million $ 283,055,833
federal income tax and 0.480% thereafter++
stability of principal through
investments in municipal
securities.
Tax Free Money Market Series High level of current income 0.250% of net assets++ $ 270,225,034
exempt from federal income
tax, consistent with
preservation of capital and
liquidity.
INSURANCE PRODUCTS
Scudder Variable Life Stability of capital and 0.370% of net assets $ 102,576,377
Investment Fund Money current income from a
Market Portfolio portfolio of money market
instruments.
</TABLE>
B-1
<PAGE> 54
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
AARP FUNDS
AARP High Quality Money Fund Current income consistent with 0.350% to $2 billion $ 471,310,867
maintaining stability and 0.330% next $2 billion
safety of principal and a 0.300% next $2 billion
constant net asset value of 0.280% next $2 billion
$1.00 per share while offering 0.260% next $3 billion
liquidity, through investment 0.250% next $3 billion
in high quality securities. 0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of net assets
AARP High Quality Tax Free Current income free from 0.350% to $2 billion $ 102,613,893
Money Fund federal income taxes 0.330% next $2 billion
consistent with maintaining 0.300% next $2 billion
stability and safety of 0.280% next $2 billion
principal and a constant net 0.260% next $3 billion
asset value of $1.00 per share 0.250% next $3 billion
while offering liquidity, 0.240% thereafter
through investment in INDIVIDUAL FUND FEE
high-quality municipal 0.100% of net assets
securities.
</TABLE>
- ------------------------------
+ The information provided below is shown as of the end of each Fund's last
fiscal year.
++ Subject to waivers and/or expense limitations.
B-2
<PAGE> 55
KEMPER FUNDS(+)
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
ANNUITY PRODUCTS
Kemper Money Market Maximum current income to the 0.500% of net assets $ 100,143,000
Portfolio extent consistent with
stability of principal from a
portfolio of high quality
money market instruments.
MONEY MARKET FUNDS
Kemper Cash Reserves Fund Maximum current income to the 0.400% to $250 million $ 339,655,000
extent consistent with 0.380% next $750 million
stability of principal from a 0.350% next $1.5 billion
portfolio of high quality 0.320% next $2.5 billion
money market instruments. 0.300% next $2.5 billion
0.280% next $2.5 billion
0.260% next $2.5 billion
0.250% thereafter
Zurich Government Money Fund Maximum current income to the 0.500% to $215 million $ 686,871,000
extent consistent with 0.375% next $335 million
stability of principal from a 0.300% next $250 million
portfolio of U.S. Government 0.250% thereafter(1)
obligations.
Zurich Money Market Fund Maximum current income to the 0.500% to $215 million $4,538,627,000
extent consistent with 0.375% next $335 million
stability of principal from a 0.300% next $250 million
portfolio primarily 0.250% thereafter(1)
consisting of commercial
paper and bank obligations.
Zurich Tax-Free Money Fund Maximum current income to the 0.500% to $215 million $ 815,894,000
extent consistent with 0.375% next $335 million
stability of principal from a 0.300% next $250 million
portfolio of municipal 0.250% thereafter(1)
securities.
Zurich YieldWise Money Fund Maximum current income to the 0.500% to $215 million $1,071,728,000
extent consistent with 0.375% next $335 million
stability of principal by 0.300% next $250 million
investing in high-quality 0.250% thereafter*
short-term money market
instruments.
</TABLE>
- ----------------------------
(+) The information provided below is shown as of the end of each Fund's last
fiscal year, unless otherwise noted.
(*) Subject to waivers and/or reimbursements.
(1) Payable in the aggregate for each of the Zurich Government Money Fund,
Zurich Money Market Fund and Zurich Tax-Free Money Fund series of Zurich
Money Funds.
B-3
<PAGE> 56
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<PAGE> 57
EXHIBIT C
CURRENT FUNDAMENTAL INVESTMENT POLICIES
CASH ACCOUNT TRUST
MONEY MARKET PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
TAX-EXEMPT PORTFOLIO
CAT-MMP and CAT-GSP each may not:
(1) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the value of the
Portfolio's assets would be invested in securities of that issuer.
(2) Purchase more than 10% of any class of securities of any issuer.
All debt securities and all preferred stocks are each considered as one
class.
(3) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(4) 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 sections will not be collateralized). If, for any reason, the current
value of the Portfolio's total assets falls below an amount equal to three
times the amount of its indebtedness from money borrowed, the Portfolio
will, within three days (not including Sundays and holidays), reduce its
indebtedness to the extent necessary. The Portfolio will not borrow for
leverage purposes.
(5) 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.
(6) Write, purchase or sell puts, calls or combinations thereof.
(7) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment advisor owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
(8) Invest for the purpose of exercising control or management of
another issuer.
(9) Invest in commodities or commodity futures contracts or in real
estate (or real estate limited partnerships), although it may invest in
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securities which are secured by real estate and securities of issuers which
invest or deal in real estate.
(10) Invest in interests in oil, gas or other mineral exploration or
development programs or leases, although it may invest in the securities of
issuers which invest in or sponsor such programs.
(11) Underwrite securities issued by others except to the extent the
Portfolio may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities.
(12) Issue senior securities as defined in the Investment Company Act
of 1940.
Additionally, CAT-MMP may not:
(13) Concentrate 25% or more of the value of the Portfolio's assets in
any one industry; provided, however, that (a) the Portfolio reserves
freedom of action to invest up to 100% of its assets in obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities in accordance with its investment objective and policies
and (b) the Portfolio will invest at least 25% of its assets in obligations
issued by banks in accordance with its investment objective and policies.
However, the Portfolio may, in the discretion of its investment adviser,
invest less than 25% of its assets in obligations issued by banks whenever
the Portfolio assumes a temporary defensive posture.
CAT-TEP may not:
(1) Purchase securities if as a result of such purchase more than 25%
of the Portfolio's total assets would be invested in any industry or in any
one state. Municipal Securities and obligations of, or guaranteed by, the
U.S. Government, its agencies or instrumentalities are not considered an
industry for purposes of this restriction.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities) if
as a result more than 5% of the value of the Portfolio's assets would be
invested in the securities of such issuer. For purposes of this limitation,
the Portfolio will regard the entity that has the primary responsibility
for the payment of interest and principal as the issuer.
(3) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(4) 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 sections will not be collateralized). If, for any reason, the current
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value of the Portfolio's total assets falls below an amount equal to three
times the amount of its indebtedness from money borrowed, the Portfolio
will, within three days (not including Sundays and holidays), reduce its
indebtedness to the extent necessary. The Portfolio will not borrow for
leverage purposes.
(5) Make short sales of securities, or purchase securities on margin,
except to obtain such short-term credits as may be necessary for the
clearance of transactions.
(6) Write, purchase or sell puts, calls or combinations thereof,
although the Portfolio may purchase Municipal Securities subject to Standby
Commitments in accordance with its investment objective and policies.
(7) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment advisor owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
(8) Invest for the purpose of exercising control or management of
another issuer.
(9) Invest in commodities or commodity futures contracts or in real
estate (or real estate limited partnerships), except that the Portfolio may
invest in Municipal Securities secured by real estate or interests therein.
(10) Invest in interests in oil, gas or other mineral exploration or
development programs or leases, although it may invest in Municipal
Securities of issuers which invest in or sponsor such programs or leases.
(11) Underwrite securities issued by others except to the extent the
Portfolio may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities.
(12) Issue senior securities as defined in the Investment Company Act
of 1940.
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CASH EQUIVALENT FUND
MONEY MARKET PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
TAX-EXEMPT PORTFOLIO
CEF-MMP and CEF-GSP each may not:
(1) Purchase securities or make investments other than in accordance
with its investment objective and policies, except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the value of the
Portfolio's assets would be invested in securities of that issuer, except
that all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(3) Purchase, in the aggregate with all other Portfolios, more than
10% of any class of securities of any issuer, except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund. All debt securities
and all preferred stocks are each considered as one class.
(4) Invest more than 5% of the Portfolio's total assets in securities
of issuers (other than obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities) which with their
predecessors have a record of less than three years continuous operation,
except that all or substantially all of the assets of the Fund may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(5) Enter into repurchase agreements if, as a result thereof, more
than 10% of the Portfolio's total assets valued at the time of the
transaction would be subject to repurchase agreements maturing in more than
seven days.
(6) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(7) 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
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value of the Portfolio's total assets falls below an amount equal to three
times the amount of its indebtedness from money borrowed, the Portfolio
will, within three business days, reduce its indebtedness to the extent
necessary. The Portfolio will not borrow for leverage purposes.
(8) 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.
(9) Write, purchase or sell puts, calls or combinations thereof.
(10) Concentrate more than 25% of the value of the Portfolio's assets
in any one industry; provided, however, that the Portfolio reserves freedom
of action to invest up to 100% of its assets in certificates of deposit or
bankers' acceptances or U.S. Government securities in accordance with its
investment objective and policies, and except that all or substantially all
of the assets of the Fund may be invested in another registered investment
company having the same investment objective and substantially similar
investment policies as the Fund.
(11) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer, except that all
or substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(12) Invest more than 5% of the Portfolio's total assets in securities
restricted as to disposition under the federal securities laws (except
commercial paper issued under Section 4(2) of the Securities Act of 1933),
and except that all or substantially all of the assets of the Fund may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(13) Invest for the purpose of exercising control or management of
another issuer.
(14) Invest in commodities or commodity futures contracts or in real
estate, although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate.
(15) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
(16) Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets, and except that all or substantially all of the assets of the Fund
may be invested in another registered investment company having the same
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investment objective and substantially similar investment policies as the
Fund.
(17) Underwrite securities issued by others except to the extent the
Portfolio may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities, and
except that all or substantially all of the assets of the Fund may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(18) Issue senior securities as defined in the Investment Company Act
of 1940.
CEF-TEP may not:
(1) Purchase securities or make investments other than in accordance
with its investment objective and policies, except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(2) Purchase securities (other than securities of the U.S. Government,
its agencies or instrumentalities) if as a result of such purchase more
than 25% of the Portfolio's total assets would be invested in any industry
or in any one state, except that all or substantially all of the assets of
the Fund may be invested in another registered investment company having
the same investment objective and substantially similar investment policies
as the Fund, nor may it enter into a repurchase agreement if more than 10%
of its assets would be subject to repurchase agreements maturing in more
than seven days.
(3) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities) if
as a result more than 5% of the value of the Portfolio's assets would be
invested in the securities of such issuer, except that all or substantially
all of the assets of the Fund may be invested in another registered
investment company having the same investment objective and substantially
similar investment policies as the Fund. For purposes of this limitation,
the Portfolio will regard the entity which has the primary responsibility
for the payment of interest and principal as the issuer.
(4) Invest more than 5% of the Portfolio's total assets in industrial
development bonds sponsored by companies which with their predecessors have
less than three years' continuous operation.
(5) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
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(6) Borrow money except from banks for temporary purposes (but not for
the purpose of purchase of investments) and then only in an amount not to
exceed one-third of the value of the Portfolio's total assets (including
the amount borrowed) in order to meet redemption requests which otherwise
might result in the untimely disposition of securities; or pledge the
Portfolio's securities or receivables or transfer or assign or otherwise
encumber them in an amount to exceed 10% of the Portfolio's net assets to
secure borrowings. Reverse purchase agreements made by the Portfolio are
permitted within the limitations of this paragraph. The Portfolio will not
purchase securities or make investments while reverse repurchase agreements
or borrowings are outstanding.
(7) Make short sales of securities or purchase securities on margin,
except to obtain such short-term credits as may be necessary for the
clearance of transactions.
(8) Write, purchase or sell puts, calls or combinations thereof,
although the Portfolio may purchase Municipal Securities subject to Standby
Commitments, Variable Rate Demand Notes or Repurchase Agreements in
accordance with its investment objective and policies.
(9) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer, except that all
or substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(10) Invest more than 5% of the Portfolio's total assets in securities
restricted as to disposition under the federal securities laws, except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(11) Invest for the purpose of exercising control or management of
another issuer.
(12) Invest in commodities or commodity futures contracts or in real
estate except that the Portfolio may invest in Municipal Securities secured
by real estate or interests therein.
(13) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in Municipal Securities of
issuers which invest in or sponsor such programs.
(14) Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets, and except that all or substantially all of the assets of the Fund
may be invested in another registered investment company having the same
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investment objective and substantially similar investment policies as the
Fund.
(15) Underwrite securities issued by others except to the extent the
Portfolio may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities, and
except that all or substantially all of the assets of the Fund may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(16) Issue senior securities as defined in the Investment Company Act
of 1940.
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INVESTORS CASH TRUST
GOVERNMENT SECURITIES PORTFOLIO
TREASURY PORTFOLIO
ICT-GSP and ICT-TP each may not:
(1) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(2) 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 Portfolio's total assets falls below an amount equal to three
times the amount of its indebtedness from money borrowed, the Portfolio
will, within three days (not including Sundays and holidays), reduce its
indebtedness to the extent necessary. The Portfolio will not borrow for
leverage purposes and will not purchase securities to make investments
while borrowings are outstanding. (The Fund has no present intention of
borrowing during the coming year.)
(3) Underwrite securities issued by others except to the extent the
Portfolio may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities, and
except that all or substantially all of the assets of the Portfolio may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Portfolio ("Master/ Feeder Exception").
(4) Issue senior securities as defined in the Investment Company Act
of 1940.
(5) 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.
(6) Write, purchase or sell puts, calls or combinations thereof.
(7) Concentrate more than 25% of the value of the Portfolio's assets
in any one industry; provided, however, that the Portfolio reserves freedom
of action to invest up to 100% of its assets in U.S. Government securities
in accordance with its investment objective and policies.
(8) Invest in commodities or commodity futures contracts.
ICT-GSP may not:
(1) Purchase any securities other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, and
repurchase
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agreements of such obligations, and except for the Master/Feeder Exception
defined above.
ICT-TP may not:
(1) Purchase any securities other than obligations issued by the U.S.
Government and repurchase agreements of such obligations, and except for
the Master/Feeder Exception defined above.
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INVESTORS MUNICIPAL CASH FUND
INVESTORS FLORIDA MUNICIPAL CASH FUND
INVESTORS MICHIGAN MUNICIPAL CASH FUND
INVESTORS NEW JERSEY MUNICIPAL CASH FUND
INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND
TAX-EXEMPT NEW YORK MONEY MARKET FUND
TNYMF may not, as a fundamental policy:
(1) Purchase securities (other than securities of the United States
Government, its agencies or instrumentalities or of a state or its
political subdivisions) if as a result of such purchase more than 25% of
the Fund's total assets would be invested in any one industry, except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the Fund's total assets
would be invested in securities of that issuer; except that, as to 50% of
the value of the Fund's total assets, the Fund may invest up to 25% of its
total assets in the securities of any one issuer, and except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund. For purposes of this
limitation, the Fund will regard as the issuer the entity that has the
primary responsibility for the payment of interest and principal.
(3) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(4) 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 are outstanding.
(5) Make short sales of securities or purchase securities on margin,
except to obtain such short-term credits as may be necessary for the
clearance of transactions.
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(6) Write, purchase or sell puts, calls or combinations thereof,
although the Fund may purchase Municipal Securities subject to Standby
Commitments, Variable Rate Demand Notes or Repurchase Agreements in
accordance with its investment objective and policies.
(7) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer, except that all
or substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(8) Invest for the purpose of exercising control or management of
another issuer.
(9) Invest in commodities or commodity futures contracts or in real
estate (or real estate limited partnerships) except that the Fund may
invest in Municipal Securities secured by real estate or interests therein
and securities of issuers that invest or deal in real estate.
(10) Invest in interests in oil, gas or other mineral exploration or
development programs or leases, although it may invest in Municipal
Securities of issuers that invest in or sponsor such programs or leases.
(11) Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities, and except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(12) Issue senior securities as defined in the 1940 Act.
IFLCF, IMMCF, INJCF and IPACF each may not, as a fundamental policy:
(1) Purchase securities (other than securities of the United States
Government, its agencies or instrumentalities or of a state or its
political subdivisions) if as a result of such purchase more than 25% of
the Fund's total assets would be invested in any one industry, except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the Fund's total assets
would be invested in securities of that issuer; except that, as to 50% of
the value of the Fund's total assets, the Fund may invest up to 25% of its
total assets in the securities of any one issuer, and except that all or
substantially all of the
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assets of the Fund may be invested in another registered investment company
having the same investment objective and substantially similar investment
policies as the Fund. For purposes of this limitation, the Fund will regard
as the issuer the entity that has the primary responsibility for the
payment of interest and principal.
(3) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(4) 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 are outstanding.
(5) Make short sales of securities or purchase securities on margin,
except to obtain such short-term credits as may be necessary for the
clearance of transactions.
(6) Invest in commodities or commodity futures contracts or in real
estate (or real estate limited partnerships) except that the Fund may
invest in Municipal Securities secured by real estate or interests therein
and securities of issuers that invest or deal in real estate.
(7) Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities, and except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(8) Issue senior securities as defined in the 1940 Act.
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TAX-EXEMPT CALIFORNIA MONEY MARKET FUND
TECMF may not:
(1) Purchase securities or make investments other than in accordance
with its investment objective and policies, except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(2) Purchase securities (other than securities of the United States
Government, its agencies or instrumentalities or of a state or its
political subdivisions) if as a result of such purchase more than 25% of
the Fund's total assets would be invested in any one industry, except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(3) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the Fund's total assets
would be invested in securities of that issuer, except that up to 25% of
the value of the Fund's total assets may be invested without regard to this
5% limitation, and except that all or substantially all of the assets of
the Fund may be invested in another registered investment company having
the same investment objective and substantially similar investment policies
as the Fund. For purposes of this limitation, the Fund will regard the
entity which has the primary responsibility for the payment of interest and
principal as the issuer.
(4) Invest more than 10% of its total assets in illiquid securities,
including repurchase agreements maturing in more than seven days, except
that all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(5) Invest more than 5% of the Fund's total assets in industrial
development bonds sponsored by companies which with their predecessors have
less than three years' continuous operation.
(6) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(7) Borrow money except from banks for temporary purposes (but not for
the purpose of purchase of investments) and then only in an amount not to
exceed one-third of the value of the Fund's total assets (including the
amount borrowed) in order to meet redemption requests which otherwise might
result in the untimely disposition of securities; or pledge the Fund's
securities or receivable or transfer or assign or otherwise encumber them
in an amount to exceed 10% of the Fund's net assets to secure borrowings.
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Reverse repurchase agreements made by the Portfolio are permitted within
the limitations of this paragraph. The Fund will not purchase securities or
make investments while reverse repurchase agreements or borrowings are
outstanding.
(8) Make short sales of securities or purchase securities on margin,
except to obtain such short-term credits as may be necessary for the
clearance of transactions.
(9) Write, purchase or sell puts, calls or combinations thereof,
although the Fund may purchase Municipal Securities subject to Standby
Commitments, Variable Rate Demand Notes or Repurchase Agreements in
accordance with its investment objective and policies.
(10) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer, except that all
or substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(11) Invest for the purpose of exercising control or management of
another issuer.
(12) Invest in commodities or commodity futures contracts or in real
estate except that the Fund may invest in Municipal Securities secured by
real estate or interests therein and securities of issuers which invest or
deal in real estate.
(13) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in Municipal Securities of
issuers which invest in or sponsor such programs.
(14) Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets, and except that all or substantially all of the assets of the Fund
may be invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(15) Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities, and except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(16) Issue senior securities as defined in the Investment Company Act
of 1940.
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<PAGE> 73
APPENDIX 1
KEMPER TRUSTS and Series
CASH ACCOUNT TRUST ("CAT")
Money Market Portfolio ("CAT-MMP")
Government Securities Portfolio ("CAT-GSP")
Tax-Exempt Portfolio ("CAT-TEP")
CASH EQUIVALENT FUND ("CEF")
Money Market Portfolio ("CEF-MMP")
Government Securities Portfolio ("CEF-GSP")
Tax-Exempt Portfolio ("CEF-TEP")
INVESTORS CASH TRUST ("ICT")
Government Securities Portfolio ("ICT-GSP")
Treasury Portfolio ("ICT-TP")
INVESTORS MUNICIPAL CASH FUND ("IMCF")
Investors Florida Municipal Cash Fund ("IFLCF")
Investors Michigan Municipal Cash Fund ("IMMCF")
Investors New Jersey Municipal Cash Fund ("INJCF")
Investors Pennsylvania Municipal Cash Fund ("IPACF")
Tax-Exempt New York Money Market Fund ("TNYMF")
TAX-EXEMPT CALIFORNIA MONEY MARKET FUND ("TECMF")
<PAGE> 74
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<PAGE> 75
APPENDIX 2
FUND SHARES OUTSTANDING
Holders of record of the shares of each Fund at the close of business on
September 22, 1998 (the "Record Date"), as to any matter on which they are
entitled to vote, will be entitled to one vote per share on all business of the
Special Meeting. The table below sets forth the number of shares outstanding for
each Fund as of June 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING
FUND AS OF JUNE 30, 1998
---- -------------------
<S> <C>
Government Securities Portfolio (CAT) 631,686,638.500
Government Securities Portfolio (CEF) 380,083,430.080
Government Securities Portfolio (ICT) 316,813,800.430
Investors Florida Municipal Cash Fund 5,850,591.310
Investors Michigan Municipal Cash Fund 32,715,511.680
Investors New Jersey Municipal Cash Fund 5,935,953.480
Investors Pennsylvania Municipal Cash Fund 3,100,838.720
Money Market Portfolio (CAT) 1,629,841,792.840
Money Market Portfolio (CEF) 838,687,575.800
Tax-Exempt California Money Market Fund 149,598,481.160
Tax-Exempt New York Money Market Fund 97,287,352.680
Tax-Exempt Portfolio (CAT) 297,551,022.060
Tax-Exempt Portfolio (CEF) 350,947,294.990
Treasury Portfolio 60,646,233.700
</TABLE>
<PAGE> 76
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<PAGE> 77
APPENDIX 3
BENEFICIAL OWNERS OF 5% OR MORE OF FUND SHARES
As of June 30, 1998, 259,192,905 shares in the aggregate, 15.86% of the
outstanding shares of CAT-MMP were held in the name of Roney & Co., CAT Money
Market Portfolio, Omnibus Account #1, Attn: Sharon Paul, 5th Floor, 1 Griswood,
Detroit, MI 48226, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 368,223,561 shares in the aggregate, 58.47% of the
outstanding shares of CAT-GSP were held in the name of Roney & Co., CAT
Government Securities Portfolio, Omnibus Account #1, Attn: Sharon Paul, 5th
Floor, 1 Griswood, Detroit, MI 48226, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1998, 39,189,562 shares in the aggregate, 6.22% of the
outstanding shares of CAT-GSP were held in the name of May Financial Corp,
Special Account for the Exclusive, Benefit of May Financial Customers, Suite 400
LB-82, 8333 Douglas Ave., Dallas, TX 75225, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 79,715,038 shares in the aggregate, 26.49% of the
outstanding shares of CAT-TEP were held in the name of Roney & Co., CAT Tax-
Exempt Portfolio, Omnibus Account #1, Attn: Sharon Paul, 5th Floor, 1 Griswold,
Detroit, MI 48226, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 95,435,391 shares in the aggregate, 11.55% of the
outstanding shares of CEF-MMP (A Shares) were held in the name of Chicago
Corporation, Omnibus Account, Attn: Rich Schubert, 208 S. Lasalle St., Chicago,
IL 60604, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 318,237,458 shares in the aggregate, 38.51% of the
outstanding shares of CEF-MMP (A Shares) were held in the name of Special
Custody Account for , the Exclusive Benefit of customers of Hilliard Lyons, 5th
Fl., 4th Ave & Muhammed ALI Blvd., Lousville, KY 40202, who may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 221,792,780 shares in the aggregate, 26.84% of the
outstanding shares of CEF-MMP (A Shares) were held in the name of D A Davidson &
Co., Money Market Omnibus Acct #1, Attn: Beth Ann Thelen, P.O. Box 5015, Great
Falls, MT 59403, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
<PAGE> 78
As of June 30, 1998, 101,041,000 shares in the aggregate, 28.96% of the
outstanding shares of CEF-TEP (A Shares) were held in the name of Special
Custody Account for The Exclusive Benefit of Customers of Hilliard Lyons, 5th
Floor, 4th Ave. & Muhammad Ali Blvd., Louisville, KY 40202, who may be deemed to
be the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 16,907,757 shares in the aggregate, 5.50% of the
outstanding shares of ICT-GSP (A Shares) were held in the name of Pecos
County-Gas Reserve, c/o Funds Management Group, 5005 Woodway, Suite 313,
Houston, TX 77056, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 15,469,450 shares in the aggregate, 5.03% of the
outstanding shares of ICT-GSP (A Shares) were held in the name of Spring Branch
ISD, Food Service Account, c/o Funds Management Group, 5005 Woodway, Suite 313,
Houston, TX 77056, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 41,978,929 shares in the aggregate, 13.66% of the
outstanding shares of ICT-GSP (A Shares) were held in the name of Asset
Preservation, Inc., Dividend Account, c/o Everen, 77 W. Wacker Drive, Chicago,
IL 60601, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 6,910,956 shares in the aggregate, 11.79% of the
outstanding shares of ICT-TP (A Shares) were held in the name of Upper Gwynedd
TWP, Capital Contributions, c/o Invest Financial Corporation, 2701 N. Rocky
Point Drive, Suite 700, Tampa, FL 33607, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1998, 13,663,840 shares in the aggregate, 23.32% of the
outstanding shares of ICT-TP (A Shares) were held in the name of First of
America-Michigan, Trust Operations Division, c/o Funds Management Group, 5005
Woodway, Suite 313, Houston, TX 77056, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1998, 3,778,421 shares in the aggregate, 6.44% of the
outstanding shares of ICT-TP (A Shares) were held in the name of Walker County,
Disbursement Account, c/o Funds Management Group, 5005 Woodway, Suite 313,
Houston, TX 77056, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 8,635,999 shares in the aggregate, 14.74% of the
outstanding shares of ICT-TP (A Shares) were held in the name of Angelina County
General Fund, c/o Funds Management Group, 5005 Woodway, Suite
<PAGE> 79
313, Houston, TX 77056, who may be deemed to be the beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 5,590,119 shares in the aggregate, 9.54% of the
outstanding shares of ICT-TP (A Shares) were held in the name of Erath County,
Workers Compensation, c/o Funds Management Group, 5005 Woodway, Suite 313,
Houston, TX 77056, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 3,995,898 shares in the aggregate, 6.82% of the
outstanding shares of ICT-TP (A Shares) were held in the name of Lamb County
General Fund, c/o Funds Management Group, 5005 Woodway, Suite 313, Houston, TX
77056, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of June 30, 1998, 32,610,775.67 shares in the aggregate, 99.69% of the
outstanding shares of IMMCF (A Shares) were held in the name of Roney & Co.,
IMMCF Money Market Omnibus Account, Attn: Sharon Paul, 1 Griswold, Detroit, MI
48226, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of June 30, 1998, 1,837,161 shares in the aggregate, 59.61% of the
outstanding shares of IPACF (A Shares) were held in the name of Zurich Kemper
Distributors Inc., Attn: Elizabeth Skalany Corp Account 31st Floor, 222 S.
Riverside Place, Chicago, IL 60606, who may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 45,210,046 shares in the aggregate, 44.75% of the
outstanding shares of TNYMF (A Shares) were held in the name of National
Investor Services Corp., For the Exclusive Benefit of our customers, 55 Water
Street, New York, NY 10041, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 18,152,608 shares in the aggregate, 17.97% of the
outstanding shares of TNYMF (A Shares) were held in the name of J. B. Hanauer &
Company, Omnibus Account-TENYMMF, Attn: Pauline Clarke, Gatehall Corporate
Center, 4 Gatehall Drive, Parsippany, NJ 07054, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 12,047,281 shares in the aggregate, 11.92% of the
outstanding shares of TNYMF (A Shares) were held in the name of Southwest
Securities Inc., Omnibus Account, Attn: Cashiering Dept., 1201 Elm Street, Suite
4300, Dallas, TX 75270 who may be deemed to be the beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
<PAGE> 80
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<PAGE> 81
APPENDIX 4
FUND SHARES OWNED BY TRUSTEES
<TABLE>
<CAPTION>
TRUSTEES AND
OFFICERS AS A
FUND(1) BELIN BURNHAM DUNAWAY HOFFMAN JONES PIERCE PETERSON SOMMERS VILLANI GROUP
- ------- ----- ------- ------- ------- ----- ------ -------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CAT
MMP 0 1,012 0 0 0 0 1,299 0 2,311
GSP 0 0 0 0 0 0 0 0 0
TEP 1,193 0 0 0 0 0 0 0 0 1,193
</TABLE>
<TABLE>
<CAPTION>
TRUSTEES AND
OFFICERS AS A
FUND(1) BELIN BURNHAM CASADY DUNAWAY HOFFMAN JONES PIERCE PETERSON SOMMERS VILLANI GROUP
- ------- ------ ------- ------ ------- ------- ----- ------ -------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CEF
MMP 3,531 0 0 3,087 0 0 0 0 0 0 6,618
GSP 0 0 0 0 0 0 0 0 0 0 0
TEP 14,325 0 0 0 0 0 0 0 0 0 14,325
TECMF 0 0 0 0 0 0 0 0 0 0 0
ICT
GSP 0 0 0 0 0 0 0 0 0 0 0
TP 0 0 0 0 0 0 0 0 0 0 0
IMCF
IFLCF 0 0 0 0 0 0 0 0 0 0 0
INJCF 0 0 0 0 0 0 0 0 0 0 0
IPACF 0 0 0 0 0 0 0 0 0 0 0
TNYMF 0 0 0 0 0 0 0 0 1,185 0 1,185
IMICF 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
(1) Set forth below is the number of shares of each Fund owned beneficially by
each Trustee as of June 30, 1998. Also shown is the number of shares owned
beneficially by the Trustees and officers as a group. In each case, the amounts
shown are less than 1% of the outstanding shares of each Trust or any series
thereof.
<PAGE> 82
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<PAGE> 83
APPENDIX 5
FUND MANAGEMENT FEE RATES, NET ASSETS AND
AGGREGATE MANAGEMENT FEES
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID++
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Government Securities 4/30/98 $ 804,565,000 0.22 of 1% of the first $500 $ 1,020,000
Portfolio (CAT) million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(1)
Government Securities 7/31/98 $ 391,861,000 0.22 of 1% of the first $500 $ 834,000
Portfolio (CEF) million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(3)
Government Securities 3/31/98 $ 312,194,000 0.15 of 1% of average daily $ 124,000*
Portfolio (ICT) net assets(4)
Investors Florida Municipal 3/31/98 $ 7,611,000 0.22 of 1% of the first $500 $ 5,000
Cash Fund million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(2)
Investors Michigan Municipal N/A N/A 0.22 of 1% of the first $500 N/A
Cash Fund** million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(2)
Investors New Jersey 3/31/98 $ 4,665,000 0.22 of 1% of the first $500 $ 0
Municipal Cash Fund million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(2)
Investors Pennsylvania 3/31/98 $ 3,195,000 0.22 of 1% of the first $500 $ 0
Municipal Cash Fund million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(2)
Money Market Portfolio (CAT) 4/30/98 $1,995,057,000 0.22 of 1% of the first $500 $ 1,210,000*
million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(1)
Money Market Portfolio (CEF) 7/31/98 $ 851,592,000 0.22 of 1% of the first $500 $ 1,868,000
million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(3)
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID++
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Tax-Exempt California Money 9/30/97 $ 117,432,000 0.22 of 1% of the first $500 $ 127,000
Market Fund million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter
Tax-Exempt New York Money 3/31/98 $ 104,198,000 0.22 of 1% of the first $500 $ 32,000*
Market Fund million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter(2)
Tax-Exempt Portfolio (CAT) 4/30/98 $ 368,141,000 0.22 of 1% of the first $500 $ 530,000*
million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter
Tax-Exempt Portfolio (CEF) 7/31/98 $ 333,427,000 0.22 of 1% of the first $500 $ 945,000
million of average daily net
assets; 0.20 of 1% of the
next $500 million; 0.175 of
1% of the next $1 billion;
0.16 of 1% of the next $1
billion; 0.15 of 1%
thereafter
Treasury Portfolio (ICT) 3/31/98 $ 74,290,000 0.15 of 1% of average daily $ 12,000*
net assets(4)
</TABLE>
- ------------------------------
+ The management fee rates shown are for each Fund's most recently completed
fiscal year, unless otherwise noted.
++ Aggregate management fees disclosed in this table may include fees paid to
successors and affiliates of Scudder Kemper Investments, Inc.
* After waiver and/or expense limitations.
** Fee and net asset information is not available for Investors Michigan
Municipal Cash Fund, which commenced operations on April 6, 1998.
(1) Payable in the aggregate for each of the Government Securities Portfolio,
Money Market Portfolio and Tax-Exempt Portfolio series of Cash Account
Trust.
(2) Payable in the aggregate for each of the Investors Florida Municipal Cash
Fund, Investors New Jersey Municipal Cash Fund, Investors Pennsylvania
Municipal Cash Fund and Tax-Exempt New York Money Market series of
Investors Municipal Cash Fund.
(3) Payable in the aggregate for each of the Government Securities Portfolio
and Money Market Portfolio series of Cash Equivalent Fund.
(4) Payable in the aggregate for each of the Government Securities Portfolio
and Treasury Portfolio series of Investors Cash Trust.
<PAGE> 85
APPENDIX 6
DATES RELATING TO
INVESTMENT MANAGEMENT AGREEMENTS
<TABLE>
<CAPTION>
TERMINATION
FORMER DATE
INVESTMENT NEW (UNLESS
DATE OF MANAGEMENT INVESTMENT CONTINUED)
FORMER AGREEMENT MANAGEMENT FOR NEW
COMMENCEMENT INVESTMENT LAST AGREEMENT INVESTMENT
OF MANAGEMENT APPROVED BY LAST APPROVED MANAGEMENT
FUND OPERATIONS AGREEMENT SHAREHOLDERS BY TRUSTEES AGREEMENT
---- ------------ ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Government Securities 12/3/90 12/31/97 12/3/97 9/18/98 9/30/99
Portfolio (CAT)
Government Securities 3/16/79 12/31/97 12/3/97 9/18/98 9/30/99
Portfolio (CEF)
Government Securities 9/27/90 12/31/97 12/3/97 9/18/98 9/30/99
Portfolio (ICT)
Investors Florida Municipal 5/21/97 12/31/97 12/3/97 9/18/98 9/30/99
Cash Fund
Investors Michigan Municipal 4/6/98 4/6/98 3/2/98 9/18/98 9/30/99
Cash Fund
Investors New Jersey 5/21/97 12/31/97 12/3/97 9/18/98 9/30/99
Municipal Cash Fund
Investors Pennsylvania 5/21/97 12/31/97 12/3/97 9/18/98 9/30/99
Municipal Cash Fund
Money Market Portfolio (CAT) 12/3/90 12/31/97 12/3/97 9/18/98 9/30/99
Money Market Portfolio (CEF) 3/16/79 12/31/97 12/3/97 9/18/98 9/30/99
Tax-Exempt California Money 6/2/87 12/31/97 12/3/97 9/18/98 9/30/99
Market Fund
Tax-Exempt New York Money 12/13/90 12/31/97 12/3/97 9/18/98 9/30/99
Market Fund
Tax-Exempt Portfolio (CAT) 12/3/90 12/31/97 12/3/97 9/18/98 9/30/99
Tax-Exempt Portfolio (CEF) 7/9/82* 12/31/97 12/3/97 9/18/98 9/30/99
Treasury Portfolio 12/17/91 12/31/97 12/3/97 9/18/98 9/30/99
</TABLE>
- ------------------------------
* As successor to Tax-Exempt Money Market Fund.
<PAGE> 86
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<PAGE> 87
APPENDIX 7
TRUSTEES AND OFFICERS ASSOCIATED
WITH SCUDDER KEMPER
<TABLE>
<CAPTION>
NAME POSITION WITH TRUSTS ASSOCIATION WITH SCUDDER KEMPER
---- -------------------- -------------------------------
<S> <C> <C>
Daniel Pierce Chairman of the Board and Trustee Managing Director
Mark S. Casady Trustee and President Managing Director
Philip J. Collora Vice President and Secretary Senior Vice President
Thomas W. Littauer Vice President Managing Director
Ann M. McCreary Vice President Managing Director
Robert C. Peck, Jr. Vice President Managing Director
Kathryn L. Quirk Vice President Managing Director
Frank J. Rachwalski, Jr. Vice President Managing Director
John W. Stuebe Vice President of CAT and CEF only Vice President
Linda J. Wondrack Vice President Senior Vice President
John R. Hebble Treasurer Senior Vice President
Brenda Lyons Assistant Treasurer Senior Vice President
Caroline Pearson Assistant Secretary Senior Vice President
Maureen E. Kane Assistant Secretary Vice President
Elizabeth C. Werth Assistant Secretary Vice President
</TABLE>
<PAGE> 88
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<PAGE> 89
APPENDIX 8
FEES PAID TO KSC AND KDI(+)
<TABLE>
<CAPTION>
AGGREGATE
FEE PAID TO
KSC AGGREGATE FEE AGGREGATE
(REMITTED BY PAID TO KDI FEE PAID TO
FISCAL IFTC, WHERE (ADMINISTRATIVE KDI (12B-1
FUND YEAR APPLICABLE) FEES) FEES)
---- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C>
Government Securities Portfolio (CAT) 4/30/98 $1,807,000 N/A $4,158,000
Government Securities Portfolio (CEF) 7/31/98 $ 732,000 N/A $1,577,000
Government Securities Portfolio (ICT) 3/31/98 $ 25,000 $228,000 N/A
Investors Florida Municipal Cash Fund 3/31/98 $ 3,000 N/A $ 21,000
Investors New Jersey Municipal Cash Fund 3/31/98 $ 1,000 N/A $ 18,000
Investors Pennsylvania Municipal Cash Fund 3/31/98 $ 2,000 N/A $ 12,000
Money Market Portfolio (CAT) 4/30/98 $2,619,000 N/A $7,193,000
Money Market Portfolio (CEF) 7/31/98 $2,020,000 N/A $3,500,000
Tax-Exempt California Money Market Fund 9/30/97 $ 21,000 N/A N/A
Tax-Exempt New York Money Market Fund 3/31/98 $ 88,000 N/A $ 411,000
Tax-Exempt Portfolio (CAT) 4/30/98 $ 504,000 N/A $1,678,000
Tax-Exempt Portfolio (CEF) 7/31/98 $ 196,000 N/A $1,416,000
Treasury Portfolio 3/31/98 $ 1,000 $ 60,000 N/A
</TABLE>
- ------------------------------
+ This information is not available for Investors Michigan Municipal Cash Fund
which commenced operations on April 6, 1998.
<PAGE> 90
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<PAGE> 91
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<PAGE> 92
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<PAGE> 93
Thank you
Thank you
for mailing your proxy card promptly!
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We appreciate your
continuing support and
look forward to serving
your future investment needs.
<PAGE> 94
KEMPER FUNDS
- --------------------------------------------------------------------------------
CASH ACCOUNT TRUST
c Money Market Portfolio
c Government Securities Portfolio
c Tax-Exempt Portfolio
CASH EQUIVALENT FUND
c Money Market Portfolio
c Government Securities Portfolio
c Tax-Exempt Portfolio
TAX-EXEMPT CALIFORNIA MONEY MARKET FUND
INVESTORS CASH TRUST
c Government Securities Portfolio
c Treasury Portfolio
INVESTORS MUNICIPAL CASH FUND
c Investors Florida Municipal Cash Fund
c Investors Michigan Municipal Cash Fund
c Investors New Jersey Municipal Cash Fund
c Investors Pennsylvania Municipal Cash Fund
c Tax-Exempt New York Money Market Fund
Kemper Funds Statement
(LOGO)Printed on recycled paper.
<PAGE> 95
[KEMPER FUNDS LOGO]
PLEASE VOTE PROMPTLY!
Your vote is needed! Please vote on the reverse side of this form and sign in
the space provided below. Return your completed proxy in the enclosed envelope
today.
You may receive additional proxies for your other accounts. These are not
duplicates; you should sign and return each proxy card in order for your votes
to be counted. Please return them as soon as possible to help save the cost of
additional mailings.
[NAME OF FUND]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF YOUR FUND
SPECIAL MEETING OF SHAREHOLDERS -- DECEMBER 17, 1998
The undersigned hereby appoints Bruce H. Goldfarb, Kathryn L. Quirk, Thomas
F. McDonough and Daniel Pierce and each of them, the proxies of the undersigned,
with the power of substitution to each of them, to vote all shares of the Fund
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Fund to be held at the offices of Scudder Kemper Investments, Inc., Two
International Place, Boston, Massachusetts 02110, on Thursday, December 17, 1998
at 11:00 a.m., Eastern time, and at any adjournments thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder Kemper Investments, Inc. or Zurich Insurance Company,
recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To modify or eliminate certain policies and to eliminate the shareholder
approval requirement as to certain other matters.
[ ] FOR ALL APPLICABLE PROPOSALS EXCEPT AS NOTED BELOW [ ] AGAINST ALL [
] ABSTAIN ALL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2.0 Investment objectives [ ] 2.9 Lending [ ] 2.17 Investment in mineral
exploration [ ]
2.1 Investment policies [ ] 2.10 Margin purchases and short 2.18 Investment in issuers with
sales [ ] short
2.2 Diversification [ ] 2.11 Purchase of securities of histories [ ]
related [ ]
2.3 Borrowing [ ] issuers [ ] 2.19 Investment in other investment
2.4 Senior securities [ ] 2.12 Pledging of assets [ ] companies [ ]
2.5 Concentration [ ] 2.13 Restricted and illiquid 2.20 Investment in non-U.S.
securities [ ] Government
2.6 Underwriting of [ ] 2.14 Purchases of securities [ ] securities
securities
2.7 Investment in real [ ] 2.15 Purchases of puts and calls [ ] 2.21 Investment other than in
estate accordance
2.8 Purchase of [ ] 2.16 Investment for the purpose of with objectives and policies [ ]
commodities
exercising control or 2.22 Investment in municipal
management [ ] securities [ ]
</TABLE>
To vote against a particular proposed change
applicable to your Fund, write the proposal number
on the line below.
- ------------------------------------------------------
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Dated
------------------------------------------------------,
1998
Please sign exactly as your name or
names appear. When signing as
attorney, executor, administrator,
trustee or guardian, please give
your full title as such.
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Signature(s)
