<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
<TABLE>
<S> <C>
KEMPER AGGRESSIVE GROWTH FUND KEMPER NATIONAL TAX FREE INCOME SERIES
KEMPER ASIAN GROWTH FUND KEMPER PORTFOLIOS
KEMPER DIVERSIFIED INCOME FUND KEMPER SECURITIES TRUST
KEMPER EQUITY TRUST KEMPER SMALL CAPITALIZATION EQUITY FUND
KEMPER EUROPE FUND KEMPER STATE TAX-FREE INCOME SERIES
KEMPER GLOBAL INCOME FUND KEMPER TARGET EQUITY FUND
KEMPER GLOBAL/INTERNATIONAL SERIES, INC. KEMPER TECHNOLOGY FUND
KEMPER GROWTH FUND KEMPER TOTAL RETURN FUND
KEMPER HIGH YIELD SERIES KEMPER U.S. GOVERNMENT SECURITIES FUND
KEMPER HORIZON FUND KEMPER VALUE+GROWTH FUND
KEMPER INCOME AND CAPITAL PRESERVATION FUND KEMPER VALUE SERIES, INC.
KEMPER INTERNATIONAL FUND
</TABLE>
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(Name of Registrant as Specified In Its Charter)
Thomas F. McDonough
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
October , 1998
KEMPER AGGRESSIVE GROWTH FUND
KEMPER ASIAN GROWTH FUND
KEMPER DIVERSIFIED INCOME FUND
KEMPER EQUITY TRUST
KEMPER EUROPE FUND
KEMPER GLOBAL INCOME FUND
KEMPER GLOBAL/INTERNATIONAL SERIES, INC.
KEMPER GROWTH FUND
KEMPER HIGH YIELD SERIES
KEMPER HORIZON FUND
KEMPER INCOME AND CAPITAL PRESERVATION FUND
KEMPER INTERNATIONAL FUND
KEMPER NATIONAL TAX FREE INCOME SERIES
KEMPER PORTFOLIOS
KEMPER SECURITIES TRUST
KEMPER SMALL CAPITALIZATION EQUITY FUND
KEMPER STATE TAX-FREE INCOME SERIES
KEMPER TARGET EQUITY FUND
KEMPER TECHNOLOGY FUND
KEMPER TOTAL RETURN FUND
KEMPER U.S. GOVERNMENT SECURITIES FUND
KEMPER VALUE+GROWTH FUND
KEMPER VALUE SERIES, INC.
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.
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
<PAGE> 3
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.
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. 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. 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.
(continues on inside back cover)
<PAGE> 4
Q: WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A: Shareholders of certain Funds are being asked to vote for approval of a new
sub-advisory agreement on the same terms as the former sub-advisory
agreement. In addition, in order to save your Fund the expense of a
subsequent meeting, a vote is also being sought for the modification or
elimination of certain policies and the elimination of the shareholder
voting 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 1-800-733-8481, ext. 429.
<PAGE> 5
KEMPER AGGRESSIVE GROWTH FUND
KEMPER ASIAN GROWTH FUND
KEMPER DIVERSIFIED INCOME FUND
KEMPER EUROPE FUND
KEMPER GLOBAL INCOME FUND
KEMPER GROWTH FUND
KEMPER HIGH YIELD SERIES
KEMPER HORIZON FUND
KEMPER INCOME AND CAPITAL PRESERVATION FUND
KEMPER INTERNATIONAL FUND
KEMPER NATIONAL TAX FREE INCOME SERIES
KEMPER PORTFOLIOS
KEMPER SMALL CAPITALIZATION EQUITY FUND
KEMPER STATE TAX-FREE INCOME SERIES
KEMPER TARGET EQUITY FUND
KEMPER TECHNOLOGY FUND
KEMPER TOTAL RETURN FUND
KEMPER U.S. GOVERNMENT SECURITIES FUND
KEMPER VALUE+GROWTH FUND
KEMPER VALUE SERIES, INC.
222 South Riverside Plaza
Chicago, Illinois 60606
KEMPER EQUITY TRUST
KEMPER SECURITIES TRUST
Two International Place
Boston, Massachusetts 02110
KEMPER GLOBAL/INTERNATIONAL SERIES, INC.
345 Park Avenue
New York, New York 10154
October , 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
<PAGE> 6
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 Meeting. 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 MEETING 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.
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/ Mark S. Casady
Mark S. Casady
President
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> 7
KEMPER AGGRESSIVE GROWTH FUND
KEMPER ASIAN GROWTH FUND
KEMPER DIVERSIFIED INCOME FUND
KEMPER EQUITY TRUST
KEMPER EUROPE FUND
KEMPER GLOBAL INCOME FUND
KEMPER GLOBAL/INTERNATIONAL SERIES, INC.
KEMPER GROWTH FUND
KEMPER HIGH YIELD SERIES
KEMPER HORIZON FUND
KEMPER INCOME AND CAPITAL PRESERVATION FUND
KEMPER INTERNATIONAL FUND
KEMPER NATIONAL TAX FREE INCOME SERIES
KEMPER PORTFOLIOS
KEMPER SECURITIES TRUST
KEMPER SMALL CAPITALIZATION EQUITY FUND
KEMPER STATE TAX-FREE INCOME SERIES
KEMPER TARGET EQUITY FUND
KEMPER TECHNOLOGY FUND
KEMPER TOTAL RETURN FUND
KEMPER U.S. GOVERNMENT SECURITIES FUND
KEMPER VALUE+GROWTH FUND
KEMPER VALUE SERIES, INC.
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each a "Special
Meeting") of each Kemper Trust/Corporation listed above (each Trust is a
"Trust," collectively, the "Trusts" and each Corporation is a "Corporation,"
collectively, the "Corporations"), 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 those
Trusts/Corporations that do 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 16, 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.;
PROPOSAL 2: (For shareholders of KEF, KGIF, KIF, KWF, KDFSF and KVS-b
only) to approve a new subadvisory agreement for each
Fund with either Scudder Investments (U.K.) Limited or
Dreman Value Management, L.L.C.; and
PROPOSAL 3: To modify or eliminate certain policies and to eliminate
the shareholder approval requirement as to certain other
matters.
<PAGE> 8
The appointed proxies will vote in their discretion on any other business
as may properly come before the 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.
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/Directors,
/s/ Philip J. Collora
Philip J. Collora
Secretary
October , 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> 9
KEMPER AGGRESSIVE GROWTH FUND
KEMPER ASIAN GROWTH FUND
KEMPER DIVERSIFIED INCOME FUND
KEMPER EUROPE FUND
KEMPER GLOBAL INCOME FUND
KEMPER GROWTH FUND
KEMPER HIGH YIELD SERIES
KEMPER HORIZON FUND
KEMPER INCOME AND CAPITAL PRESERVATION FUND
KEMPER INTERNATIONAL FUND
KEMPER NATIONAL TAX FREE INCOME SERIES
KEMPER PORTFOLIOS
KEMPER SMALL CAPITALIZATION EQUITY FUND
KEMPER STATE TAX-FREE INCOME SERIES
KEMPER TARGET EQUITY FUND
KEMPER TECHNOLOGY FUND
KEMPER TOTAL RETURN FUND
KEMPER U.S. GOVERNMENT SECURITIES FUND
KEMPER VALUE+GROWTH FUND
KEMPER VALUE SERIES, INC.
222 South Riverside Plaza
Chicago, Illinois 60606
KEMPER EQUITY TRUST
KEMPER SECURITIES TRUST
Two International Place
Boston, Massachusetts 02110
KEMPER GLOBAL/INTERNATIONAL SERIES, INC.
345 Park Avenue
New York, New York 10154
JOINT PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees/Directors (the "Board") of each of the Kemper
Trusts/Corporations listed above (each Trust is a "Trust," collectively, the
"Trusts" and each Corporation is a "Corporation," collectively, the
"Corporations") for use at the Special Meetings of Shareholders of each Trust/
Corporation, 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 those Trusts/Corporations that do 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 16, 1998 at 11:00 a.m., Eastern time, and at any and all
adjournments thereof (the "Special Meeting").
<PAGE> 10
In the descriptions of the Proposals below, 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 or Corporation, although all actions are actually taken by the respective
Trust or Corporation on behalf of the applicable series.
This Proxy Statement, the Notice of Special Meeting and the proxy cards are
first being mailed to shareholders on or about , 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 the address for each Fund shown
at the beginning of this Proxy Statement) 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%, in the case of each Fund other than those Funds in KVS, or one-
third, in the case of each Fund in KVS, 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 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 the 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
<PAGE> 11
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/Corporation's knowledge, as of June 30,
1998, no person 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/Directors 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 800-225-5163 or writing the Fund, c/o Scudder Kemper
Investments, Inc., at the address for each Fund shown at the beginning of this
Proxy Statement.
PROPOSAL 1: APPROVAL OF NEW
INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder Kemper acts as the investment manager to each Fund pursuant to
investment management agreements 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")
<PAGE> 12
(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 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.")
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/Corporation'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.
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., 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 initially became the owners (through
Zurich Allied AG) of 57% of the voting stock of Zurich Financial
<PAGE> 13
Services, and former B.A.T shareholders initially 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.
Below is a simplified chart showing the corporate structure of Zurich
Financial Services after these transactions:
[SCUDDER 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.
<PAGE> 14
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 current Chairman and Chief Executive Officer, became
Chairman and Chief Executive Officer of Zurich Financial Services. 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 are current 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 are current B.A.T executives.
The Board of Directors of Zurich Allied AG initially consists of 11
members, eight of whom are current 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 are current 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; the Eagle Star Insurance business, primarily in the
U.K.; 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
<PAGE> 15
B.A.T's tobacco business should not adversely affect Zurich or the present
Zurich subsidiaries, including Scudder Kemper.
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 are 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
the 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 either July 17, 1998 or July 21, 1998, the Board of each Trust/
Corporation met and the Board members of each Trust/Corporation, including the
Board Members who are not parties to such agreement or "interested persons" (as
defined under the 1940 Act) (the "Non-Interested Trustees/ Directors" 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.
<PAGE> 16
For information about the Boards' deliberations and the reasons for their
recommendation, please see "Board's Evaluation" below.
BOARD'S EVALUATION
Each Board met on either July 17, 1998 or 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.
<PAGE> 17
- 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 under 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 expenses 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
<PAGE> 18
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 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/Corporation 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/Corporation's Charter, By-
<PAGE> 19
Laws, investment policies and restrictions, the provisions of the 1940 Act, and
such policies and instructions as the Trustees/Directors may have determined.
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/Corporation'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 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/Corporation's Board.
Under each Investment Management Agreement, each Fund is responsible for
other expenses, including organizational expenses (including out-of-pocket
<PAGE> 20
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/Directors; 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/Directors of each Trust/Corporation 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/Corporation; 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/Directors, officers and executive employees of each
Fund (including each Fund's share of payroll taxes) affiliated with the
Investment Manager and making available, without expense to each Fund, the
services of such Trustees/Directors, officers and employees as may duly be
elected officers of each Trust/Corporation, 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/Directors 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/Corporation to any
of its officers or Trustees/Directors who were affiliated with the Investment
Manager.
<PAGE> 21
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 (other than KAGGF and KSCF) pays the Investment Manager a management
fee which is accrued daily and payable monthly. KSCF and KAGGF each pays a base
annual management fee rate of .65% of average daily net assets, subject to
upward or downward adjustment on the basis of the investment performance of the
Class A Shares of the Fund compared with the performance of the Standard &
Poor's 500 Stock Index. 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 Agreement for each of KMBF, KCATF and KGSF
provide that the Investment Manager will reimburse the Fund should operating
expenses of the Fund exceed on an annual basis the following levels: for KMBF
and KGSF, 1% of average daily net assets; and for KCATF, 1.5% of the first $30
million of average daily net assets and 1% of average daily net assets over $30
million. For this purpose, operating expenses include the investment management
fee but exclude interest, taxes, extraordinary expenses, brokerage commissions
and transaction costs and distribution fees. The investment management fee and
the expense limitation are computed based upon average daily net assets of each
series.
Each 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 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.
<PAGE> 22
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/Directors 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 (or, in some cases, to a Fund's sole shareholder) 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 is dated the date of
the consummation of the Transaction, which occurred on September 7, 1998. Each
New Investment Management Agreement will be in effect for an initial term ending
on April 1, 1999 for KEF and for each series of KTEF, KVS, KHF, KGIS, KST and
KET and on March 1, 1999 for all other Funds, and may continue 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/Directors, cast in person at a meeting called for such purpose. At
meetings held on September 18, 1998 and September 22, 1998, the Board of each
Fund, including a majority of the Non-Interested Trustees/ Directors, 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.
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, which resulted from the combination of the businesses of
Scudder and Kemper, an indirect subsidiary of Zurich, 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 July , 1998, Scudder Kemper has more than
<PAGE> 23
$230 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 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 Marcus Rohrbasser* is a Director of
the Investment Manager. The principal occupation of each of Edmond D. Villani,
Stephen R. Beckwith, Kathryn L. Quirk, Lynn S. Birdsong and Cornelia M. Small is
serving as a Managing Director of the Investment Manager; the principal
occupation of each of Rolf Huppi and Marcus Rohrbasser 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 Executive Committee
members are Messrs. Birdsong, Cheng, Rohrbasser and Villani (Chairman).
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
- ------------------------------
* Mythenquai 2, Zurich Switzerland.
(#) 345 Park Avenue, New York, New York
<PAGE> 24
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/Director of each
Trust/Corporation, 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.
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.
Kemper Service Company ("KSC") is the transfer agent and dividend-paying
agent for each Fund of KGIS, KSCRVF, KUSGIF and KDFSF. Investors Fiduciary Trust
Company ("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105, is each
other 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,
other than KDFSF, KEMGF, KEMIF, KGBCF, KIGIF, KLAF,
<PAGE> 25
KUSGIF and KSCRVF. 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 pursuant to
administrative services agreements. 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 Class B shares and Class C shares of each Fund, KDI receives
a Rule 12b-1 distribution fee of 0.75% of average daily net assets of each such
class. The table provided in Appendix 7 sets forth for each Fund (or class
thereof, where appropriate) 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. Also set
forth in Appendix 7 as to each Fund during its most recent fiscal year is
information regarding the commissions retained by KDI and allowed by KDI as
commissions to financial services firms affiliated with KDI.
KSC and KDI will continue to provide transfer agency 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.)
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
To the maximum extent feasible, Scudder Kemper or, where applicable, a
sub-adviser to a Fund, 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. In selecting brokers and
dealers with which to place portfolio transactions for a Fund, Scudder Kemper
(or a sub-adviser) 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 (or a sub-adviser) may place such orders
with brokers and dealers who supply research, market and statistical information
to a Fund or to Scudder Kemper. SIS does not receive any commissions, fees or
other remuneration from the Funds for this service. Allocation of portfolio
transactions is supervised by Scudder Kemper.
THE BOARD MEMBERS OF EACH TRUST/CORPORATION RECOMMEND THAT THE
SHAREHOLDERS OF EACH FUND VOTE IN FAVOR OF THIS PROPOSAL 1.
<PAGE> 26
PROPOSAL 2: APPROVAL OF NEW
SUB-ADVISORY AGREEMENT
(FOR SHAREHOLDERS OF KEF, KGIF, KIF, KWF, KDFSF AND KVS-B ONLY)
KEF, KGIF, KIF and KWF each uses the investment management services of
Scudder Investments (U.K.) Limited ("SIL"), 1 Fleet Place, London, UK, ECM4 7RQ,
a subsidiary of Scudder Kemper, with respect to investments in foreign
securities pursuant to the sub-advisory agreements between Scudder Kemper and
SIL described below.
Immediately prior to the consummation of the Scudder-Zurich Transaction,
Zurich Investment Management Limited ("ZIML"), which was an indirect subsidiary
of Zurich and an affiliate of Kemper, provided the sub-advisory services now
provided by SIL to each of KEF, KGIF, KIF and KWF, pursuant to sub-advisory
agreements dated December 1, 1996. Subsequent to the execution of the
transaction agreement relating to the Scudder-Zurich Transaction, Zurich agreed
to cause ownership of ZIML to be transferred by Zurich to Scudder Kemper (the
"Transfer"). Prior to the consummation of the Scudder-Zurich Transaction,
shareholders of each of KEF, KGIF, KIF and KWF approved two new sub-advisory
agreements relating to their Fund: (a) a sub-advisory agreement between Scudder
Kemper and ZIML, to be dated as of the date of the consummation of the
Scudder-Zurich Transaction, (the "First Sub-Advisory Agreement") to replace the
Fund's current sub-advisory agreement upon its termination as a result of the
Scudder-Zurich Transaction, and (b) a sub-advisory agreement between Scudder
Kemper and the successor to ZIML resulting from the Transfer (which is SIL), to
be dated as of the date of the Transfer, to replace the Fund's First
Sub-Advisory Agreement upon its termination as a result of the Transfer. The
Transfer occurred on May 21, 1998. The sub-advisory agreements between SIL and
Scudder Kemper applicable to each of KEF, KGIF, KIF and KWF that were in effect
immediately prior to the Transaction (the "Former SIL Sub-Advisory Agreements")
were dated May 21, 1998.
Each of KDFSF and KVS-b uses the investment management services of Dreman
Value Management, L.L.C. ("DVM"), Three Harding Road, Red Bank, New Jersey
07701, pursuant to the sub-advisory agreements between Scudder Kemper and DVM
described below. DVM was formed in April 1997 and is controlled by David N.
Dreman. Prior to the consummation of the Scudder-Zurich Transaction, DVM
provided investment management services for KVS-b pursuant to a sub-advisory
agreement with Zurich Kemper Value Advisors, Inc. ("ZKVA"), a former
wholly-owned subsidiary of Kemper, which agreement terminated upon the
consummation of the Scudder-Zurich Transaction. Prior to such termination, the
Board of Kemper Value Series, Inc. and the shareholders of KVS-b each approved a
sub-advisory agreement between Scudder Kemper and DVM (a "Former DVM
Sub-Advisory Agreement"), which became effective on December 31, 1997. DVM
commenced providing sub-advisory services for KDFSF when the Fund commenced
operations, which occurred after the consummation of the Scudder-Zurich
Transaction, pursuant to a sub-advisory
<PAGE> 27
agreement between Scudder Kemper and DVM, approved by the Board of Kemper Equity
Trust on January 21, 1998 and dated March 2, 1998 (also a "Former DVM
Sub-Advisory Agreement").
Each Former SIL Sub-Advisory Agreement and each Former DVM Sub-Advisory
Agreement provides that such agreement shall automatically terminate in the
event of the termination (due to assignment or otherwise) of the Fund's
currently effective investment management agreement. As discussed in Proposal 1,
consummation of the 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 and may therefore have caused a termination of
each Former SIL Sub-Advisory Agreement and each Former DVM Sub-Advisory
Agreement. (See Proposal 1 for more information regarding each Former Investment
Management Agreement.) Accordingly, a new sub-advisory agreement between SIL and
Scudder Kemper, with respect to each of KEF, KGIF, KIF and KWF, (each a "New SIL
Sub-Advisory Agreement" and, together with the Former SIL Sub-Advisory
Agreements, the "SIL Sub-Advisory Agreements") and between DVM and Scudder
Kemper, with respect to each of KDFSF and KVS-b, (each a "New DVM Sub-Advisory
Agreement" and, together with the Former DVM Sub-Advisory Agreements, the "DVM
Sub-Advisory Agreements") was approved by the Board members of each applicable
Trust/ Corporation and are now being proposed for approval by shareholders of
each of KEF, KGIF, KIF, KWF, KDFSF and KVS-b, respectively.
As with the New Investment Management Agreements, prior to approval by
shareholders of each applicable New SIL Sub-Advisory Agreement or New DVM
Sub-Advisory Agreement, any payments otherwise due under such sub-advisory
agreements will be held in escrow subject to shareholder approval.
EACH NEW SIL SUB-ADVISORY AGREEMENT AND NEW DVM SUB-ADVISORY AGREEMENT IS
SUBSTANTIALLY IDENTICAL TO ITS CORRESPONDING FORMER AGREEMENT, EXCEPT FOR THE
DATES OF EXECUTION AND, IN THE CASE OF THE SIL SUB-ADVISORY AGREEMENTS,
TERMINATION. The material terms of each SIL Sub-Advisory Agreement and DVM Sub-
Advisory Agreement are fully described under "The SIL Sub-Advisory Agreements"
and "The DVM Sub-Advisory Agreements," respectively, below. A form of New SIL
Sub-Advisory Agreement is attached hereto as Exhibit C. A form of New DVM
Sub-Advisory Agreement is attached hereto as Exhibit D.
The Board of each applicable Trust/Corporation met on either July 17, 1998
or July 21, 1998 and each Board, including a majority of its Non-Interested
Trustees/Directors, voted to approve the corresponding New SIL Sub-Advisory
Agreement or New DVM Sub-Advisory Agreement. In considering whether to approve
such agreements, each Board considered similar factors to those it considered in
approving the applicable Fund's New Investment Management Agreement, to the
extent applicable. (See Proposal 1 for more information regarding each Board's
Evaluation.)
<PAGE> 28
DESCRIPTION OF THE SIL SUB-ADVISORY AGREEMENTS
Under the terms of each SIL Sub-Advisory Agreement, SIL renders investment
advisory and management services with regard to that portion of the Fund's
portfolio as may be allocated to SIL by Scudder Kemper from time to time for
management of foreign securities, including foreign currency transactions and
related investments. For its services, SIL receives from Scudder Kemper (not
from the Funds) a monthly fee at the annual rate of .35%, in the case of KIF,
KEF and KWF, and .30%, in the case of KGIF, on the portion of the average daily
net assets allocated by Scudder Kemper to SIL for management. Scudder Kemper (or
its predecessor) paid to SIL (or its predecessor) during the fiscal year ended
July 31, 1998 for KWF, October 31, 1997 for KIF, November 30, 1997 for KEF and
December 31, 1997 for KGIF, $ , $ , $ and $ ,
respectively, for its sub-advisory services to each Fund.
Each SIL Sub-Advisory Agreement provides that SIL will not be liable for
any error of judgment or mistake of law or for any loss suffered by any Fund in
connection with matters to which the SIL Sub-Advisory Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross negligence on the
part of SIL in the performance of its duties or from reckless disregard by SIL
of its obligations and duties under the SIL Sub-Advisory Agreement.
Each SIL Sub-Advisory Agreement continues in effect from year to year so
long as its continuation is approved at least annually (a) by a majority of the
Board members who are not parties to such agreement or interested persons of any
such party except in their capacity as Board members of the applicable Trust and
(b) by the shareholders of the applicable Fund or the applicable Board. Each SIL
Sub-Advisory Agreement may be terminated at any time for a Fund upon 60 days'
notice by Scudder Kemper, SIL or the applicable Board or by a majority vote of
the outstanding voting securities of the applicable Fund, and will terminate
automatically upon assignment or upon the termination of the Fund's investment
management agreement.
THE NEW SIL SUB-ADVISORY AGREEMENTS
The New SIL Sub-Advisory Agreement for each of KEF, KGIF, KIF and KWF is
dated the date of the consummation of the Transaction, which occurred on
September 7, 1998. Each New SIL Sub-Advisory Agreement will be in effect for an
initial term ending on April 1, 1999 for each of KEF and KWF and March 1, 1999
for each of KGIF and KIF, and may continue in effect from year to year
thereafter, but only as long as such continuance is specially approved at least
annually by the vote of a "majority of the outstanding voting securities" of the
applicable Fund, or the applicable Board, including, in either event, the vote
of a majority of the applicable Board's Trustees who are not parties to the
agreement or interested persons of any such party, cast in person at a meeting
called for such a purpose. At meetings held on September 18, 1998 and September
22, 1998, the Board of each applicable Fund, including a majority of the Non-
Interested Trustees, approved the continuance of each New SIL Sub-Advisory
<PAGE> 29
Agreement through September 30, 1999. In the event that shareholders of KEF,
KGIF, KIF or KWF do not approve such Fund's New SIL Sub-Advisory Agreement, it
will terminate. In such event, each applicable Board will take such action as it
deems to be in the best interests of the Fund and its shareholders.
DIFFERENCES BETWEEN THE FORMER AND NEW SIL SUB-ADVISORY AGREEMENTS
The New SIL Sub-Advisory Agreements are substantially the same as the
Former SIL Sub-Advisory Agreements, except for the dates of execution and, in
the case of the SIL Sub-Advisory Agreements, termination.
DESCRIPTION OF DVM SUB-ADVISORY AGREEMENTS
Each DVM Sub-Advisory Agreement provides that DVM shall manage the
investment and reinvestment of the applicable Fund's assets in accordance with
the investment objectives, policies and limitations and subject to the
supervision of Scudder Kemper and the applicable Board. In connection therewith,
each DVM Sub-Advisory Agreement provides that DVM will furnish related office
facilities and equipment and clerical, bookkeeping and administrative services
for the applicable Fund. Under each DVM Sub-Advisory Agreement, DVM agrees to
assume and pay all costs and expenses of performing its obligations under the
agreement, and Scudder Kemper agrees to pay to DVM a monthly fee at the annual
rates described in the form of New DVM Sub-Advisory Agreement attached hereto as
Exhibit D applied to the average daily net assets of the applicable Fund.
Scudder Kemper (or its predecessor or its predecessor's affiliate) paid to DVM
during the fiscal year ended November 30, 1997 $ for the sub-advisory
services it provided to KVS-b during that period. KDFSF did not commence
operations until March 9, 1998.
In addition, Scudder Kemper has guaranteed minimum payments to DVM during
certain calendar years, also as described in the form of New DVM Sub-Advisory
Agreement attached hereto as Exhibit D.
Each DVM Sub-Advisory Agreement may be terminated at any time without the
payment by the applicable Fund of any penalty, by the applicable Board or by
vote of a majority of the outstanding voting securities of the applicable Fund,
or by Scudder Kemper, in each case upon sixty (60) days' written notice; and it
automatically terminates in the event of its assignment or in the event of the
termination of the applicable Fund's investment management agreement. Scudder
Kemper also has the right to terminate each DVM Sub-Advisory Agreement upon
immediate notice if DVM becomes statutorily disqualified from performing its
duties under the DVM Sub-Advisory Agreement or otherwise is legally prohibited
from operating as an investment adviser. DVM may not terminate any DVM
Sub-Advisory Agreement prior to the third anniversary of the date of the
Agreement, with respect to KDFSF, or July 30, 2000, with respect to KVS-b, and
thereafter termination requires ninety (90) days' written notice.
<PAGE> 30
Each DVM Sub-Advisory Agreement provides that DVM shall not be liable for
any error of judgment or of law or for any loss suffered by Kemper Equity Trust
or Kemper Value Series, Inc., as applicable, or the applicable Fund in
connection with the matters to which the DVM Sub-Advisory Agreement relates,
except loss resulting from willful misfeasance, bad faith or gross negligence on
the part of DVM in the performance of its obligations and duties under the DVM
Sub-Advisory Agreement.
THE NEW DVM SUB-ADVISORY AGREEMENTS
The New DVM Sub-Advisory Agreement for each of KDFSF and KVS-b is dated the
date of the consummation of the Transaction, which occurred on September 7,
1998. The New DVM Sub-Advisory Agreement applicable to KDFSF will be in effect
until February 1, 2003 and the New DVM Sub-Advisory Agreement applicable to
KVS-b will be in effect until December 31, 2002, in each case unless sooner
terminated or not annually approved as described above. Notwithstanding the
foregoing, each New DVM Sub-Advisory Agreement shall continue in effect through
February 1, 2003, with respect to KDFSF, and December 31, 2002, with respect to
KVS-b, and year to year thereafter, but only as long as such continuance is
specifically approved at least annually and in the manner required by the 1940
Act and the rules and regulations thereunder with the first annual renewal to be
coincident with the next renewal of the applicable Fund's investment management
agreement. In the event that shareholders of either of KDFSF or KVS-b do not
approve such Fund's New DVM Sub-Advisory Agreement, it will terminate. In such
event, each applicable Board will take such action as it deems to be in the best
interests of the Fund and its shareholders.
DIFFERENCES BETWEEN THE FORMER AND NEW DVM SUB-ADVISORY AGREEMENTS
The New DVM Sub-Advisory Agreements are substantially the same as the
Former DVM Sub-Advisory Agreements, except for the dates of execution.
THE BOARD MEMBERS OF EACH APPLICABLE TRUST/CORPORATION RECOMMEND THAT
THE SHAREHOLDERS OF EACH APPLICABLE FUND VOTE IN FAVOR OF THIS PROPOSAL 2.
PROPOSAL 3: APPROVAL OF THE MODIFICATION OR ELIMINATION OF
CERTAIN POLICIES AND THE ELIMINATION OF THE SHAREHOLDER
VOTING 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 is 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.
<PAGE> 31
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.
This Proposal is sub-divided into the following three sections:
(1) Elimination of Shareholder Approval Requirement to Amend Investment
Objectives and Unidentified 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 vote requirement for amending (a) "investment
objectives," and (b) "policies" which are not otherwise specifically identified
as fundamental. Eliminating the shareholder vote 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. 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 to Change Other Identified
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 E.
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
<PAGE> 32
Fund's Prospectus and other disclosure documents. Any change in the method of
operation of a Fund will require prior Board approval.
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
shareholder approval requirement as to a matter, the current such policy or
voting requirement will remain in effect.
ELIMINATION OF SHAREHOLDER APPROVAL TO AMEND INVESTMENT OBJECTIVES AND
UNIDENTIFIED POLICIES
PROPOSAL 3.1(a):
All Funds
IF THIS ITEM IS APPROVED BY THE SHAREHOLDERS, THE INVESTMENT OBJECTIVE(S) OF
EACH FUND WILL NOT BE CLASSIFIED AS FUNDAMENTAL.
Management believes that leaving the power to modify investment objectives
up to the discretion of the Boards 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 such changes
to applicable shareholders by amending the particular Fund's Prospectus and
Statement of Additional Information.
PROPOSAL 3.1(b):
KAGGF
KCATF
KFLTF
KHYF
KIMBF
KNJTF
KPATF
KSIGF
KTXTF
KARGF
KCRF
KGF
KHYOF
KMBF
KNYTF
KQEF
KTEC
KUSMF
KBCF
KDIF
KGSF
KICPF
KMITF
KOHTF
KSCF
KTRF
KVGF
The following statement currently contained in the Funds' Prospectuses --
"Certain fundamental restrictions have been adopted for each Fund, which are
presented in the Statement of Additional Information and that, together with the
investment objective and POLICIES of each Fund, cannot be changed without
approval by holders of a majority of outstanding voting shares." (emphasis
supplied) -- is to be replaced by -- "CERTAIN FUNDAMENTAL POLICIES HAVE BEEN
ADOPTED FOR EACH FUND, WHICH ARE PRESENTED IN THE FUND'S STATEMENT OF ADDITIONAL
INFORMATION [AND THAT, TOGETHER WITH THE INVESTMENT OBJECTIVE OF EACH FUND,]
CANNOT BE CHANGED WITHOUT APPROVAL BY HOLDERS OF A MAJORITY OF OUTSTANDING
VOTING SHARES."
<PAGE> 33
This proposal is intended to provide the Funds with the investment
flexibility necessary to respond to changing circumstances by eliminating the
shareholder vote requirement for amending "policies" which are not otherwise
identified as fundamental. Management believes that the current statement is
vague and 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 operating 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.
IF ITEM 3.1(a) IS APPROVED BY THE SHAREHOLDERS OF A FUND, THE BRACKETED PORTION
OF THE PROPOSED STATEMENT OF THIS ITEM 3.1(b) WILL ALSO BE ELIMINATED FOR THAT
FUND.
REVISION OF FUNDAMENTAL POLICIES
Diversification
PROPOSAL 3.2(a):
KCRF
KEF
KGSF
KHF-c
KICPF
KIMBF
KRFS I
KRFS IV
KRFS VII
KSIGF
KUSGIF
KVS-a
KWF
KARGF
KDFSF
KGBCF
KHF-a
KHYF
KIF
KMBF
KRFS II
KRFS V
KSCF
KTEC
KUSMF
KVS-b
KBCF
KDIF
KGF
KHF-b
KHYOF
KIGIF
KQEF
KRFS III
KRFS VI
KSCRVF
KTRF
KVGF
KVS-c
THE FUND HAS ELECTED TO BE CLASSIFIED AS A DIVERSIFIED OPEN-END INVESTMENT
COMPANY, OR AS A DIVERSIFIED SERIES OF AN OPEN-END INVESTMENT COMPANY, AS
APPLICABLE.
Each Fund's policy currently states that it is a "diversified" fund under
the 1940 Act and also sets forth separate diversification policies. Each of
KVS-a, KVS-c, KEF, KAGF and KSCRVF, with respect to 75% of the value of its
total assets, may not invest more than 5% of the value of its total assets in
the securities of any one issuer, and with respect to 100% of the value of its
total
<PAGE> 34
assets, may not purchase more than 10% of the voting securities of any one
issuer. Each of KDIF, KHYF and KHYOF, with respect to 75% of the value of its
total assets, may not purchase more than 10% of the voting securities of any one
issuer or invest more than 5% of the value of its total assets in the securities
of any one issuer. Each of the Funds' policies includes an exception for U.S.
Government securities and the policy for each of KAGF, KAGGF, KBCF, KGF, KGIF,
KGSF, KHYOF, KIMBF, KMBF, KQEF, KSCF, KTEC, KTRF and KVGF also includes an
exception for investments in a master fund within a master/feeder fund
structure.
These provisions are substantially identical to the definition of a
diversified fund under the 1940 Act except that the definition applies to only
75% of the value of a fund's total assets. Accordingly, the proposed statement
that each Fund has elected to be classified as a diversified fund to replace the
current diversification policy for such Fund represents no substantive change in
the current diversification policy for any of these Funds.
Under their current diversification policies, KBCF, KCRF, KGF, KGSF, KHF-a,
KHF-b, KHF-c, KICPF, KIF KARGF, KIMBF, KMBF, KQEF, KRFS I, KRFS II, KRFS III,
KRFS IV, KRFS V, KRFS VI, KRFS VII, KSCF, KSIGF, KTEC, KTRF, KUSMF, KVGF and
KWF, each may not invest more than 5% of its total assets in the securities of
any one issuer. Except for KIMBF, KMBF and KGSF, each of these Funds' policies
also contain a separate restriction prohibiting the purchase of more than 10% of
the voting securities of any one issuer. Accordingly, these provisions are more
restrictive than the definition of a diversified fund under the 1940 Act because
they apply to 100% of the value of the applicable Fund's assets. If shareholders
of a Fund approve the proposed statement, that Fund would have a less
restrictive fundamental diversification policy than is currently the case, while
remaining a diversified fund.
PROPOSAL 3.2(b):
KAGGF
KEMIF
KLAF
KNYTF
KTXTF
KCATF
KFLTF
KMITF
KOHTF
KEMGF
KGIF
KNJTF
KPATF
THE FUND HAS ELECTED TO BE CLASSIFIED AS A NON-DIVERSIFIED OPEN-END INVESTMENT
COMPANY, OR AS A NON-DIVERSIFIED SERIES OF AN OPEN-END INVESTMENT COMPANY, AS
APPLICABLE.
Each of these Funds currently is non-diversified. Additionally, KAGGF,
KGIF, KCATF, KFLTF, KMITF, KNJTF, KNYTF, KOHTF, KPATF and KTXTF each may not,
with respect to 50% of the value of its total assets, invest 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, invest more than 25% of the value of its
total assets in the securities of any one issuer. The policies of KAGGF, KGIF,
KCATF,
<PAGE> 35
KFLTF, KMITF, KNJTF, KNYTF, KOHTF, KPATF and KTXTF reflect the requirements of
the Internal 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 meet these
requirements.
Borrowing
PROPOSAL 3.3:
All Funds (except for KEMGF, KEMIF, KGBCF, KIGIF, KLAF, KDFSF and KUSGIF, which
currently have the proposed fundamental policy set forth immediately below)
THE 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.
The current policy of each Fund prohibits borrowing money, except as a
temporary measure for extraordinary or emergency purposes, in which case KAGF,
KAGGF, KARGF, KBCF, KCRF, KEF, KFLTF, KGIF, KHF-a, KHF-b, KHF-c, KHYOF, KMITF,
KNJTF, KNYTF, KOHTF, KPATF, KRFS I, KRFS II, KRFS III, KRFS IV, KRFS V, KRFS VI,
KRFS VII, KSCRVF, KSIGF, KTXTF, KUSMF and KWF, may each borrow up to one-third
of the value of its total assets; KHYOF may borrow up to 20% of the value of its
total assets; KVS-a, KVS-b, KVS-c and KCATF may borrow up to 10% of the value of
its total assets; and KDIF, KGF, KGSF, KHYF, KICPF, KIF, KIMBF, KMBF, KQEF,
KTEC, KSCF, KTRF, and KVGF may each borrow up to 5% of the value of its total
assets. Additionally, KAGF, KAGGF, KARGF, KBCF, KCRF, KEF, KGIF, KRFS I, KRFS
II, KRFS III, KRFS IV, KRFS V, KRFS VI, KRFS VII, KSIGF, KUSMF and KWF are
restricted from borrowing for leverage or from making investments while
borrowings are outstanding. Each of KHF-a, KHF-b and KHF-c may not make
investments while borrowings are in excess of 5% of its total assets. KHYOF may
borrow for leverage but not in excess of 20% of its total assets including the
amount borrowed.
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.
<PAGE> 36
Senior Securities
PROPOSAL 3.4:
All Funds
THE 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.
The current policy of each Fund prohibits the issuance of senior securities
(i.e., securities which are obligations or instruments evidencing indebtedness)
except as permitted under the 1940 Act. The proposed policy re-words the current
policy without making any material changes.
Concentration
PROPOSAL 3.5(a):
All Funds
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.
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 exceptions for U.S.
Government securities, state securities, 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 promulgated 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.
Additionally, KSIGF currently may not concentrate more than 10% of the
Fund's net assets in any one industry. Under the proposed policy, KSIGF will be
authorized to concentrate not more than 25% of the Fund's net assets in any
industry; however, if this Proposal is approved by shareholders, management
<PAGE> 37
intends to recommend to the Board of KSIGF the adoption of the 10% restriction
as a non-fundamental policy.
PROPOSAL 3.5(b):
KCRF
THE FUND WILL 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.
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 3.6:
All Funds
THE FUND MAY NOT ENGAGE IN THE BUSINESS OF UNDERWRITING SECURITIES ISSUED BY
OTHERS, EXCEPT TO THE EXTENT THAT A FUND MAY BE DEEMED TO BE AN UNDERWRITER IN
CONNECTION WITH THE DISPOSITION OF PORTFOLIO SECURITIES.
The proposed underwriting policy has been re-worded without making any
material changes.
Investment In Real Estate
PROPOSAL 3.7:
All Funds
THE 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.
The proposed real estate policy re-words the current policies without
making any material changes. The policies of KAGGF, KBCF, KGIF, KGSF, KHF-a,
KHF-b, KHF-c, KRFS I, KRFS II, KRFS III, KRFS IV, KRFS V, KRFS VI, KRFS VII and
KWF currently also prohibit investment in real estate limited partnerships.
Additionally, the policies of KSCRVF, KVS-a, KVS-b and KVS-c currently prohibit
investment in mortgage loans. Management intends to recommend to the Boards of
the Funds the adoption of each of the foregoing policies as non-fundamental
policies.
<PAGE> 38
Purchase of Commodities
PROPOSAL 3.8:
All Funds (except KDFSF, KEMGF, KEMIF, KGBCF, KIGIF, KLAF, KUSGIF and
KSCRVF, which currently have the proposed fundamental policy set forth
immediately below).
THE FUND MAY NOT PURCHASE PHYSICAL COMMODITIES OR CONTRACTS RELATING TO PHYSICAL
COMMODITIES.
The Funds' current policies prohibit the purchase or sale of commodities or
commodity contracts. These policies may contain exceptions for financial futures
contracts and options on such contracts, foreign currency transactions, and, in
the case of KVS-a, KVS-b, KVS-c and KSCRVF, investments in oil, gas or mineral
exploration or development programs. Under the proposed policy, each Fund would
be prohibited from purchasing only physical commodities or contracts relating to
physical commodities.
Lending
PROPOSAL 3.9:
All Funds
THE 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.
Each Fund's current lending policy prohibits making loans to others. There
may be no exceptions to this restriction, as is the case with KCATF, or there
may be exceptions for loans of portfolio securities and to the extent the entry
into repurchase agreements, the purchase of debt securities or interests in
indebtedness and/or the making of time or demand deposits with banks in
accordance with the Fund's investment objectives and policies are deemed to be
loans. The proposed policy, unlike the current 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.
<PAGE> 39
ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO CHANGE
OTHER IDENTIFIED 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 Voting Securities, Investment in Issuers with
Short History and Investment in 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.
Margin Purchases and Short Sales
PROPOSAL 3.10:
KAGF
KBCF
KDIF
KGF
KHF-b
KHYOF
KIMBF
KNJTF
KPATF
KRFS II
KRFS V
KSCF
KTEC
KUSMF
KVS-b
KAGGF
KCATF
KEF
KGIF
KHF-c
KICPF
KMBF
KNYTF
KQEF
KRFS III
KRFS VI
KSCRVF
KTRF
KVGF
KVS-c
KARGF
KCRF
KFLTF
KHF-a
KHYF
KIF
KMITF
KOHTF
KRFS I
KRFS IV
KRFS VII
KSIGF
KTXTF
KVS-a
KWF
Each Fund is currently either prohibited from (1) making purchases on
margin and/or making short sales, unless the Fund has the right to obtain
securities equivalent in kind and amount to those sold and unless not more than
10% of the Fund's total assets is held as collateral for such sales at any one
time, or (2) making margin purchases and short sales, except to obtain
short-term credits necessary for clearance of transactions, and in the case of
margin deposits, in connection with financial futures and options transactions.
If elimination of this restriction is approved by shareholders, each Fund's
potential use of margin transactions beyond transactions in futures and options
and for the clearance of purchases and sales of securities, including the use of
margin in ordinary securities 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
<PAGE> 40
senior securities. "Margin transactions" 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 3.11:
KAGGF
KRFS II
KRFS V
KUSMF
KCRF
KRFS III
KRFS VI
KRFS I
KRFS IV
KSCF
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 or 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 3.12
KAGF
KBCF
KEF
KGIF
KHF-b
KICPF
KMBF
KNYTF
KQEF
KRFS III
KRFS VI
KSCRVF
KTXTF
KVS-b
KAGGF
KCATF
KFLTF
KGSF
KHF-c
KIF
KMITF
KOHTF
KRFS I
KRFS IV
KRFS VII
KTEC
KVGF
KVS-c
KARGF
KDIF
KGF
KHF-a
KHYF
KIMBF
KNJTF
KPATF
KRFS II
KRFS V
KSCF
KTRF
KVS-a
KWF
Each Fund is currently prohibited from pledging, mortgaging or
hypothecating assets, except in order to secure borrowings. Funds may pledge
securities having a market value not exceeding 7 1/2%, 10%, 15% or up to the
amount of the borrowing of the value of a Fund's assets and, in certain cases,
except in connection with writing covered call options and the purchase or sale
of futures contracts and options on futures contracts.
<PAGE> 41
Restricted and Illiquid Securities
PROPOSAL 3.13:
KAGGF, KBCF, KCRF, KUSMF, KVS-a, KVS-b, KVS-c
Each Fund is currently prohibited from entering into repurchase agreements
or purchasing securities if, as a result, more than 10% of the Fund's total
assets would be invested in illiquid securities, restricted securities or
repurchase agreements maturing in more than seven days. KCRF and KUSMF is each
also prohibited from investing more than 5% of its total assets in securities
restricted as to disposition under the federal securities laws, except for
commercial paper exempt from registration under Section 4(2) of the Securities
Act of 1933. 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.
Purchases of Voting Securities
PROPOSAL 3.14:
KAGF
KBCF
KGF
KHF-b
KQEF
KRFS III
KRFS VI
KSIGF
KUSMF
KAGGF
KCRF
KGIF
KHF-c
KRFS I
KRFS IV
KRFS VII
KTEC
KVGF
KARGF
KEF
KHF-a
KICPF
KRFS II
KRFS V
KSCF
KTRF
Each Fund is prohibited with respect to 100% of its assets from purchasing
more than 10% of the voting securities of a single issuer. Additionally, each
Fund (except for KAGGF and KGIF) 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.
<PAGE> 42
Purchases of Options and Warrants
PROPOSAL 3.15:
KAGF
KBCF
KDIF
KGF
KHYF
KIMBF
KNJTF
KPATF
KRFS II
KRFS V
KSIGF
KTXTF
KWF
KAGGF
KCATF
KEF
KGIF
KICPF
KMBF
KNYTF
KQEF
KRFS III
KRFS VI
KTEC
KUSMF
KARGF
KCRF
KFLTF
KGSF
KIF
KMITF
KOHTF
KRFS I
KRFS IV
KSCF
KTRF
KVGF
The Funds are currently prohibited from or limited in writing, purchasing
or selling options. Some Funds are prohibited from writing, purchasing or
selling options on more than 25% of a Fund's net assets and are restricted from
investing more than 5% of the Fund's net assets on premiums on put and call
options. Some Funds' policies contain exceptions for purchases and sales of
options on financial contracts. Several Funds have absolute restrictions on such
transactions. KAGGF contains a policy prohibiting investment in warrants in
excess of 5% of the Fund's net assets.
Repurchase Agreements
PROPOSAL 3.16
KUSMF KCRF
The Funds are currently prohibited from entering into repurchase agreements
in excess of 10% of each Fund's net assets. The 1940 Act limits a fund's ability
to invest in other investment companies.
Investment for the Purpose of Exercising Control or Management
PROPOSAL 3.17:
KCRF
KRFS III
KRFS VI
KRFS I
KRFS IV
KUSMF
KRFS II
KRFS V
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.
<PAGE> 43
Investment in Mineral Exploration
PROPOSAL 3.18:
KAGGF
KRFS II
KRFS V
KVS-a
KCRF
KRFS III
KRFS VI
KVS-b
KRFS I
KRFS IV
KUSMF
KVS-c
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.
Investment in Issuers With Short Histories
PROPOSAL 3.19:
KAGGF, KBCF, KCRF, KUSMF
The 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 Non-US Denominated Securities
PROPOSAL 3.20:
KHYF
The Fund is currently prohibited as a fundamental policy from investing
more than 25% of its assets in fixed income securities which are payable in
currencies other than U.S. dollars. Management intends to recommend to the Board
the adoption of this policy as non-fundamental.
Investment in other Investment Companies
PROPOSAL 3.21:
KCRF KUSMF
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 other than in Accordance with Objectives and Policies
PROPOSAL 3.22:
KCATF
KICPF
KMITF
KOHTF
KUSMF
KCRF
KIMBF
KNJTF
KPATF
KFLTF
KMBF
KNYTF
KTXTF
<PAGE> 44
The Funds are currently prohibited from purchasing securities or from the
making of investments other than in accordance with their respective investment
objectives and policies. Management believes that this policy is not meaningful.
THE BOARD MEMBERS OF EACH TRUST/CORPORATION RECOMMEND THAT THE SHAREHOLDERS OF
EACH FUND VOTE IN FAVOR OF THIS PROPOSAL 3.
<PAGE> 45
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/Corporation,
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/Directors 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 1-800-733-8481, ext. 429. Any
proxy given by a shareholder, whether in writing or by telephone, is revocable
until voted at the Special Meeting.
<PAGE> 46
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/Corporation, c/o Scudder
Kemper Investments, Inc., at the address for each Trust/Corporation shown at the
beginning of this Proxy Statement, 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 the 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/Corporation 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/Directors,
Philip J. Collora
Secretary
<PAGE> 47
EXHIBIT A
MASTER FORM OF
NEW INVESTMENT MANAGEMENT AGREEMENT
(Underscored items in brackets are applicable to Massachusetts
business trusts only.)
(Items in brackets that are not underscored are applicable to
Maryland corporations only.)
(BOLD ITEMS IN BRACKETS APPLY TO ALL FUNDS OTHER THAN KAGGF AND KSCF)
(BOLD AND UNDERSCORED ITEMS IN BRACKETS APPLY TO KAGGF AND KSCF ONLY)
(Name of Trust)(Name of Corporation)
222 SOUTH RIVERSIDE PLAZA/TWO INTERNATIONAL PLACE/345 PARK AVENUE
CHICAGO, ILLINOIS 60606/BOSTON, MASSACHUSETTS 02110/
NEW YORK, NEW YORK 10154
SEPTEMBER 7, 1998
Scudder Kemper Investments, Inc.
Two International Place/345 Park Avenue
Boston, Massachusetts 02110/New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF SERIES, IF ANY]
Ladies and Gentlemen:
[Name of (Trust)(Corporation)] (the ("Trust")("Corporation")) has been
established as a (Massachusetts business trust)(Maryland corporation) to engage
in the business of an investment company. Pursuant to the
(Trust's)(Corporation's)(Declaration of Trust)(Articles of Incorporation), as
amended from time-to-time (the ("Declaration")("Articles")), the Board of
(Trustees)(Directors) is authorized to issue the (Trust's shares of beneficial
interest)(Corporation's shares of common stock), par value $ per share, (the
"Shares"), in separate series, or funds. The Board of (Trustees)(Directors) has
authorized [NAME OF FUND] (the "Fund"). Series may be abolished and dissolved,
and additional series established, from time to time by action of the
(Trustees)(Directors).
The (Trust)(Corporation), on behalf of the Fund, has selected you to act as
the investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
A-1
<PAGE> 48
conditions hereinafter set forth. Accordingly, the (Trust)(Corporation) on
behalf of the Fund agrees with you as follows:
1. Delivery of Documents. The (Trust)(Corporation) engages in the
business of investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and restrictions
specified in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information (the "SAI") relating to the Fund
included in the (Trust's)(Corporation's) Registration Statement on Form
N-1A, as amended from time to time, (the "Registration Statement") filed by
the (Trust)(Corporation) 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)(Corporation). The (Trust)(Corporation) has
also furnished you with copies properly certified or authenticated of each
of the following additional documents related to the Trust and the Fund:
(a) The (Declaration)(Articles), 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)(Directors) of the
(Trust)(Corporation) and the shareholders of the Fund selecting you as
investment manager and approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
(Beneficial Interest)(Common Stock) relating to the Fund, as applicable.
The (Trust)(Corporation) will furnish you from time to time with
copies, properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus, the SAI
and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund, you shall provide continuing investment management of the assets of
the Fund in accordance with the investment objectives, policies and
restrictions set forth in the Prospectus and SAI; the applicable provisions
of the 1940 Act and the Internal Revenue Code of 1986, as amended, (the
"Code") relating to regulated investment companies and all rules and
regulations thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to policies and
instructions adopted by the (Trust's)(Corporation's) Board of (Trustees)
(Directors). In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company
under Subchapter M of the Code and regulations issued thereunder. The Fund
shall have the benefit of the investment analysis and research, the
A-2
<PAGE> 49
review of current economic conditions and trends and the consideration of
long-range investment policy generally available to your investment
advisory clients. In managing the Fund in accordance with the requirements
set forth in this section 2, you shall be entitled to receive and act upon
advice of counsel to the (Trust)(Corporation). You shall also make
available to the (Trust)(Corporation) promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist the
(Trust)(Corporation) in complying with the requirements of the 1940 Act and
other applicable laws. To the extent required by law, you shall furnish to
regulatory authorities having the requisite authority any information or
reports in connection with the services provided pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the
(Trust)(Corporation) 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 the Fund
and place orders with broker-dealers, foreign currency dealers, futures
commission merchants or others pursuant to your determinations and all in
accordance with Fund policies as expressed in the Registration Statement.
You shall determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should be held
uninvested.
You shall furnish to the (Trust's)(Corporation's) Board of (Trustees)
(Directors) periodic reports on the investment performance of the Fund and
on the performance of your obligations pursuant to this Agreement, and you
shall supply such additional reports and information as the
(Trust's)(Corporation's) officers or Board of (Trustees)(Directors) shall
reasonably request.
3. Administrative Services. In addition to the portfolio management
services specified above in section 2, you shall furnish at your expense
for the use of the Fund such office space and facilities in the United
States as the Fund may require for its reasonable needs, and you (or one or
more of your affiliates designated by you) shall render to the
(Trust)(Corporation) administrative services on behalf of the Fund
necessary for operating as an open end investment company and not provided
by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the (Trust's)(Corporation's)
Board of (Trustees)(Directors) 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
A-3
<PAGE> 50
definitive proxy materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant to Rule
24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the
Fund's federal, state and local tax returns; preparing and filing the
Fund's federal excise tax return pursuant to Section 4982 of the Code;
providing assistance with investor and public relations matters; monitoring
the valuation of portfolio securities and the calculation of net asset
value; monitoring the registration of Shares of the Fund under applicable
federal and state securities laws; maintaining or causing to be maintained
for the Fund all books, records and reports and any other information
required under the 1940 Act, to the extent that such books, records and
reports and other information are not maintained by the Fund's custodian or
other agents of the Fund; assisting in establishing the accounting policies
of the Fund; assisting in the resolution of accounting issues that may
arise with respect to the Fund's operations and consulting with the Fund's
independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the
payment of bills that have been approved by an authorized person; assisting
the Fund in determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and arranging for the
printing of dividend notices to shareholders, and providing the transfer
and dividend paying agent, the custodian, and the accounting agent with
such information as is required for such parties to effect the payment of
dividends and distributions; and otherwise assisting the
(Trust)(Corporation) as it may reasonably request in the conduct of the
Fund's business, subject to the direction and control of the
(Trust's)(Corporation's) Board of (Trustees)(Directors). Nothing in this
Agreement shall be deemed to shift to you or to diminish the obligations of
any agent of the Fund or any other person not a party to this Agreement
which is obligated to provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the compensation and
expenses of all (Trustees)(Directors), officers and executive employees of
the (Trust)(Corporation) (including the Fund's share of payroll taxes) who
are affiliated persons of you, and you shall make available, without
expense to the Fund, the services of such of your directors, officers and
employees as may duly be elected officers of the (Trust)(Corporation),
subject to their individual consent to serve and to any limitations imposed
by law. You shall provide at your expense the portfolio management services
described in section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 4. In particular, but
without limiting the generality of the foregoing, you shall not be
responsible, except to the extent of the reasonable compensation of such of
the Fund's (Trustees)
A-4
<PAGE> 51
(Directors) and officers as are directors, officers or employees of you
whose services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out-of-pocket expenses, but
not including your overhead or employee costs); fees payable to you and to
any other Fund advisors or consultants; legal expenses; auditing and
accounting expenses; maintenance of books and records which are required to
be maintained by the Fund's custodian or other agents of the
(Trust)(Corporation); telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and
expenses incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's accounting
agent for which the (Trust)(Corporation) 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 the Fund; expenses
relating to investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond premiums
and other insurance expense; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; the
compensation and all expenses (specifically including travel expenses
relating to (Trust)(Corporation) business) of (Trustees)
(Directors), officers and employees of the (Trust)(Corporation) who are not
affiliated persons of you; brokerage commissions or other costs of
acquiring or disposing of any portfolio securities of the Fund; expenses of
printing and distributing reports, notices and dividends to shareholders;
expenses of printing and mailing Prospectuses and SAIs of the Fund and
supplements thereto; costs of stationery; any litigation expenses;
indemnification of (Trustees)(Directors) and officers of the
(Trust)(Corporation); and costs of shareholders' and other meetings.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the
extent that (i) such expenses are required to be borne by a principal
underwriter which acts as the distributor of the Fund's Shares pursuant to
an underwriting agreement which provides that the underwriter shall assume
some or all of such expenses, or (ii) the (Trust)(Corporation) on behalf of
the Fund shall have adopted a plan in conformity with Rule 12b-1 under the
1940 Act providing that the Fund (or some other party) shall assume some or
all of such expenses. You shall be required to pay such of the foregoing
sales expenses as are not required to be paid by the principal underwriter
pursuant to the underwriting agreement or are not permitted to be paid by
the Fund (or some other party) pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments to be
made and costs to be assumed by you as provided in sections 2, 3, and 4
A-5
<PAGE> 52
hereof, the (Trust)(Corporation) on behalf of the Fund shall pay you in
United States Dollars (ON THE LAST DAY OF EACH MONTH THE UNPAID BALANCE OF
A FEE EQUAL TO THE EXCESS OF OVER) (A BASE ANNUAL INVESTMENT
MANAGEMENT FEE, PAYABLE MONTHLY, AT THE RATE OF .65 OF 1% OF THE AVERAGE
DAILY NET ASSETS OF THE FUND. THIS BASE FEE IS SUBJECT TO UPWARD OR
DOWNWARD ADJUSTMENT ON THE BASIS OF THE INVESTMENT PERFORMANCE OF THE CLASS
A SHARES OF THE FUND AS COMPARED WITH THE PERFORMANCE OF THE STANDARD &
POOR'S 500 STOCK INDEX (THE "INDEX"). THE TRUST WILL PAY AN ADDITIONAL
MONTHLY FEE AT AN ANNUAL RATE OF % OF SUCH AVERAGE DAILY NET ASSETS
FOR EACH PERCENTAGE POINT (FRACTIONS TO BE PRORATED) BY WHICH THE
PERFORMANCE OF THE CLASS A SHARES OF THE FUND EXCEEDS THAT OF THE INDEX FOR
THE IMMEDIATELY PRECEDING TWELVE MONTHS; PROVIDED THAT SUCH ADDITIONAL
MONTHLY FEE SHALL NOT EXCEED 1/12 OF % OF THE AVERAGE DAILY NET
ASSETS. CONVERSELY, THE COMPENSATION PAYABLE BY THE TRUST WILL BE REDUCED
BY AN ANNUAL RATE OF % OF SUCH AVERAGE DAILY NET ASSETS FOR EACH
PERCENTAGE POINT (FRACTIONS TO BE PRORATED) BY WHICH THE PERFORMANCE OF THE
CLASS A SHARES OF THE FUND FALLS BELOW THAT OF THE INDEX, PROVIDED THAT
SUCH REDUCTION IN THE MONTHLY FEE SHALL NOT EXCEED 1/12 OF % OF THE
AVERAGE NET ASSETS. THE TOTAL FEE ON AN ANNUAL BASIS CAN RANGE FROM %
TO % OF AVERAGE DAILY NET ASSETS. THE TRUST'S INVESTMENT PERFORMANCE
DURING ANY TWELVE MONTH PERIOD IS MEASURED BY THE PERCENTAGE DIFFERENCE
BETWEEN (a) THE OPENING NET ASSET VALUE OF ONE CLASS A SHARE OF THE FUND
AND (b) THE SUM OF THE CLOSING NET ASSET VALUE OF ONE CLASS A SHARE OF THE
FUND PLUS THE VALUE OF ANY INCOME AND CAPITAL GAIN DIVIDENDS ON SUCH SHARE
DURING THE PERIOD TREATED AS IF REINVESTED IN CLASS A SHARES OF THE FUND AT
THE TIME OF DISTRIBUTION. THE PERFORMANCE OF THE INDEX IS MEASURED BY THE
PERCENTAGE CHANGE IN THE INDEX BETWEEN THE BEGINNING AND THE END OF THE
TWELVE MONTH PERIOD WITH CASH DISTRIBUTIONS ON THE SECURITIES WHICH
COMPRISE THE INDEX BEING TREATED AS REINVESTED IN THE INDEX AT THE END OF
EACH MONTH FOLLOWING THE PAYMENT OF THE DIVIDEND. EACH MONTHLY CALCULATION
OF THE INCENTIVE PORTION OF THE FEE MAY BE ILLUSTRATED AS FOLLOWS: IF OVER
THE PRECEDING TWELVE MONTH PERIOD THE TRUST'S ADJUSTED NET ASSET VALUE
APPLICABLE TO ONE CLASS A SHARE WENT FROM $10.00 TO $ ( %
APPRECIATION), AND THE INDEX, AFTER ADJUSTMENT, WENT FROM 100 TO 104 (OR
ONLY 4%), THE ENTIRE INCENTIVE COMPENSATION WOULD HAVE BEEN EARNED BY YOU.
ON THE OTHER HAND, IF THE INDEX ROSE FROM 100 TO ( %),
NO INCENTIVE FEE WOULD HAVE BEEN PAYABLE. A RISE IN THE INDEX FROM 100 TO
( %) WOULD HAVE RESULTED IN THE MINIMUM MONTHLY FEE OF
1/12 OF %. SINCE THE COMPUTATION IS NOT CUMULATIVE FROM YEAR TO YEAR,
AN ADDITIONAL MANAGEMENT FEE MAY BE PAYABLE WITH RESPECT TO A PARTICULAR
YEAR, ALTHOUGH THE TRUST'S PERFORMANCE OVER SOME LONGER PERIOD OF TIME MAY
BE LESS FAVORABLE THAN THAT OF THE INDEX. CONVERSELY, A LOWER MANAGEMENT
FEE MAY BE PAYABLE IN A YEAR IN WHICH THE PERFORMANCE OF THE FUND'S CLASS A
SHARES IS LESS FAVORABLE THAN THAT OF THE INDEX, ALTHOUGH THE PERFORMANCE
OF THE FUND'S CLASS A SHARES OVER A LONGER PERIOD OF TIME MIGHT BE BETTER
THAN THAT OF THE INDEX. THESE MANAGEMENT FEES WILL BE
A-6
<PAGE> 53
REDUCED BY) any compensation waived by you from time to time (as more fully
described below). You shall be entitled to receive during any month such
interim payments of your fee hereunder as you shall request, provided that
no such payment shall exceed 75 percent of the amount of your fee then
accrued on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time)
on each day on which the net asset value of the Fund is determined
consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the
Fund lawfully determines the value of its net assets as of some other time
on each business day, as of such time. The value of the net assets of the
Fund shall always be determined pursuant to the applicable provisions of
the (Declaration)(Articles) and the Registration Statement. If the
determination of net asset value does not take place for any particular
day, then for the purposes of this section 5, the value of the net assets
of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the
value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its
portfolio more than once on any day, then the last such determination
thereof on that day shall be deemed to be the sole determination thereof on
that day for the purposes of this section 5.
[FOR KMBF, KCATF AND KGSF 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, shall cause the aggregate expenses of the
Fund to equal % of average daily net assets. [KMBF and KGSF: 1% of
average daily net assets; KCATF: 1.5% of average daily net assets up to $30
million and 1% of average daily net assets over $30 million.] Except to the
extent that such amount has been reflected in reduced payments to you, you
shall refund to the Fund the amount of any payment received in excess of
the limitation pursuant to this section 5 as promptly as practicable after
the end of such fiscal year, provided that you shall not be required to pay
the Fund an amount greater than the fee paid to you in respect of such year
pursuant to this Agreement. As used in this section 5, "expenses" shall
mean those expenses included in the applicable expense limitation having
the broadest specifications thereof, and "expense limitation" means a limit
on the maximum annual expenses which may be incurred by an investment
company determined (i) by multiplying a fixed percentage by the average, or
by multiplying more than one such percentage by different specified amounts
of the average, of the values of an investment company's net assets for a
fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year.]
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your
A-7
<PAGE> 54
services. You shall be contractually bound hereunder by the terms of any
publicly announced waiver of your fee, or any limitation of the Fund's
expenses, as if such waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other
investments for the account of the Fund, neither you nor any of your
directors, officers or employees shall act as a principal or agent or
receive any commission. You or your agent shall arrange for the placing of
all orders for the purchase and sale of portfolio securities and other
investments for the Fund's account with brokers or dealers selected by you
in accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act solely as
investment counsel for such clients and not in any way on behalf of the
Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement,
you shall be an independent contractor and not an agent of the
(Trust)(Corporation). Whenever the Fund and one or more other accounts or
investment companies advised by you have available funds for investment,
investments suitable and appropriate for each shall be allocated in
accordance with procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in a manner
believed by you to be equitable. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the
(Trust)(Corporation) agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, provided that nothing in this Agreement shall be deemed to protect
or purport to protect you against any liability to the
(Trust)(Corporation), the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder.
8. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1999, and continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually (a) by the vote of a majority of the (Trustees)
(Directors) 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
A-8
<PAGE> 55
(Trust)(Corporation), or by the vote of a majority of the outstanding
voting securities of the Fund. The aforesaid requirement that continuance
of this Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Fund or by the
(Trust's)(Corporation's) Board of (Trustees)(Directors) on 60 days' written
notice to you, or by you on 60 days' written notice to the
(Trust)(Corporation). This Agreement shall terminate automatically in the
event of its assignment.
This Agreement may be terminated with respect to the Fund at any time
without the payment of any penalty by the Board of (Trustees) (Directors)
or by vote of a majority of the outstanding voting securities of the Fund
in the event that it shall have been established by a court of competent
jurisdiction that you or any of your officers or directors has taken any
action which results in a breach of your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved in a manner consistent
with the 1940 Act and rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
(10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of
the Secretary of the Commonwealth of Massachusetts, provides that the name
"[Name of Trust]" refers to the Trustees under the Declaration collectively
as Trustees and not as individuals or personally, and that no shareholder
of the Fund, or Trustee, officer, employee or agent of the Trust, shall be
subject to claims against or obligations of the Trust or of the Fund to any
extent whatsoever, but that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability
as set forth in the Declaration and you agree that the obligations assumed
by the Trust on behalf of the Fund pursuant to this Agreement shall be
limited in all cases to the Fund and its assets, and you shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Fund or any other series of the Trust, or from any
Trustee, officer, employee or agent of the Trust. You understand that the
rights and obligations of each Fund, or series, under the Declaration are
separate and distinct from those of any and all other series.)
(11)(10). Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any
A-9
<PAGE> 56
of the provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the (Trust)(Corporation) on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the (Trust)(Corporation), whereupon this letter shall become a
binding contract effective as of the date of this Agreement.
Yours very truly,
[NAME OF (TRUST)(CORPORATION)], on behalf of
[NAME OF FUND]
By:
------------------------------------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
------------------------------------------------------------
President
A-10
<PAGE> 57
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 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, exempt from federal
income tax.
TAX FREE FUNDS
Scudder California Tax Free To provide California 0.625% to $200 million $ 324,448,844
Fund taxpayers with income exempt 0.600% thereafter
from both California personal
income tax and regular federal
income tax primarily through
investment in California
municipal securities.
</TABLE>
B-1
<PAGE> 58
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
Scudder High Yield Tax Free High level of income, exempt 0.650% to $300 million $ 336,690,734
Fund from regular federal income 0.600% thereafter
tax, from an actively managed
portfolio consisting primarily
of investment-grade municipal
securities.
Scudder Limited Term Tax Free As high a level of income 0.600% of net assets++ $ 116,876,371
Fund exempt from regular federal
income tax as is consistent
with a high degree of
principal stability.
Scudder Managed Municipal Income exempt from regular 0.550% to $200 million $ 728,308,005
Bonds federal income tax primarily 0.500% next $500 million
through investments in high- 0.475% thereafter
grade, long term municipal
securities.
Scudder Massachusetts Limited As high a level of income 0.600% of net assets++ $ 79,526,656
Term Tax Free Fund exempt from Massachusetts
state personal income tax and
regular federal income tax as
is consistent with a high
degree of price stability
through investments primarily
in investment-grade municipal
securities.
Scudder Massachusetts Tax To provide Massachusetts 0.600% to $400 million $ 373,905,826
Free Fund taxpayers income exempt from 0.525% thereafter*
both Massachusetts personal
income tax and regular federal
income tax through investment
primarily in investment-grade
municipal securities with long
term maturities.
Scudder Medium Term Tax Free High level of income free from 0.600% to $500 million $ 656,951,039
Fund regular federal income taxes 0.500% thereafter
and limited principal
fluctuation through investment
primarily in high-grade,
intermediate term municipal
bonds.
Scudder New York Tax Free To provide New York taxpayers 0.625% to $200 million $ 195,731,396
Fund income exempt from New York 0.600% thereafter
state and New York City
personal income taxes and
regular federal income tax
through investment primarily
in New York municipal
securities.
Scudder Ohio Tax Free Fund To provide Ohio taxpayers 0.600% of net assets++ $ 94,450,782
income exempt from both Ohio
personal income tax and
regular federal income tax
through investment primarily
in investment-grade municipal
securities.
</TABLE>
B-2
<PAGE> 59
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
Scudder Pennsylvania Tax Free To provide Pennsylvania 0.600% of net assets++ $ 78,695,405
Fund taxpayers income exempt from
both Pennsylvania personal
income tax and regular federal
income tax through investment
primarily in investment-grade
municipal securities.
TAX MANAGED FUNDS
Scudder Tax Managed Growth Long term growth of capital on 0.800% of net assets N/A**
Fund an after-tax basis primarily
through equity investment in
established, medium- to large-
sized U.S. companies with
leading competitive positions.
Scudder Tax Managed Small Long term capital growth on an 0.900% of net assets N/A**
Company Fund after-tax basis primarily
through investment primarily
in undervalued stocks of small
U.S. companies.
U.S. INCOME FUNDS
Scudder Corporate Bond Fund A high level of current income 0.650% of net assets N/A**
through investment primarily
in investment-grade corporate
debt securities.
Scudder GNMA Fund High current income primarily 0.650% to $200 million $ 392,444,820
from U.S. Government 0.600% next $300 million
guaranteed mortgage-backed 0.550% thereafter
Ginnie Mae securities.
Scudder High Yield Bond Fund A high level of current income 0.700% of net assets++ $ 176,221,237
and, secondarily, capital
appreciation through
investment primarily in below
investment-grade domestic debt
securities.
Scudder Income Fund A high level of income, 0.650% to $200 million $ 695,255,717
consistent with the prudent 0.600% next $300 million
investment of capital, through 0.550% thereafter
a flexible investment program
emphasizing high-grade bonds.
Scudder Short Term Bond Fund High level of income 0.600% to $500 million $1,165,531,162
consistent with a high degree 0.500% next $500 million
of principal stability by 0.450% next $500 million
investing primarily in high 0.400% next $500 million
quality short-term bonds 0.375% next $1 billion
0.350% thereafter
Scudder Zero Coupon 2000 Fund As high an investment return 0.600% of net assets++ $ 20,453,972
over a selected period as is
consistent with investment in
U.S. Government securities and
the minimization of
reinvestment risk.
</TABLE>
B-3
<PAGE> 60
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
GLOBAL INCOME FUNDS
Scudder Emerging Markets High current income and, 1.000% of net assets $ 323,628,082
Income Fund secondarily, long term capital
appreciation by investing
primarily in high-yielding
debt securities issued by
governments and corporations
in emerging markets.
Scudder Global Bond Fund Total return with an emphasis 0.750% to $1 billion $ 135,113,465
on current income by investing 0.700% thereafter++
primarily in high-grade bonds
denominated in foreign
currencies and the U.S.
dollar. As a secondary
objective, the Fund will seek
capital appreciation.
Scudder International Bond Income primarily by investing 0.850% to $1 billion $ 145,818,767
Fund in a managed portfolio of 0.800% thereafter++
high-grade international bonds
and, secondarily, protection
and possible enhancement of
principal value by actively
managing currency, bond market
and maturity exposure and by
security selection.
ASSET ALLOCATION FUNDS
Scudder Pathway Balanced Balance of growth and income There will be no fee as $ 192,145,173
Portfolio by investing in a mix of the Manager will receive
Scudder money market, bond and a fee from the
equity mutual funds. underlying funds.
Scudder Pathway Conservative Current income and, There will be no fee as $ 16,971,681
Portfolio secondarily, long term growth the Manager will receive
of capital by investing a fee from the
substantially in Scudder bond underlying funds.
mutual funds, but will have
some exposure to Scudder
equity mutual funds.
Scudder Pathway Growth Long term growth of capital by There will be no fee as $ 49,574,256
Portfolio investing predominantly in the Manager will receive
Scudder equity mutual funds a fee from the
designed to provide long term underlying funds.
growth.
Scudder Pathway International Maximize total return, There will be no fee as $ 11,728,045
Portfolio consisting of capital the Manager will receive
appreciation plus dividend a fee from the
income and interest by underlying funds.
investing in a select mix of
established international and
global Scudder Funds.
U.S. GROWTH AND INCOME FUNDS
Scudder Balanced Fund A balance of growth and income 0.700% of net assets++ $ 158,711,908
from a diversified portfolio
of equity and fixed-income
securities and long term
preservation of capital
through a quality-oriented
investment approach designed
to reduce risk.
</TABLE>
B-4
<PAGE> 61
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
Scudder Dividend & Growth High current income and long 0.750% of net assets N/A**
Fund term growth of capital through
investment in income paying
equity securities.
Scudder Growth and Income Long term growth of capital, 0.600% to $500 million $6,833,584,122
Fund current income and growth of 0.550% next $500 million
income. 0.500% next $500 million
0.475% next $500 million
0.450% next $1 billion
0.425% next $1.5 billion
0.405% next $1.5 billion
0.3875% next $4 billion
0.370% over $10 billion*
U.S. GROWTH FUNDS
Classic Growth Fund Long term growth of capital 0.700% of net assets++ $ 53,225,783
with reduced share price
volatility compared to other
growth mutual funds.
Scudder 21st Century Growth Long term growth of capital by 1.000% of net assets++ $ 23,296,176
Fund investing primarily in the
securities of emerging growth
companies poised to be leaders
in the 21st century.
Scudder Development Fund Long term growth of capital by 1.000% to $500 million $ 845,405,075
investing primarily in 0.950% next $500 million
securities of small and medium 0.900% thereafter
size growth companies.
Scudder Financial Services Long term growth of capital by 0.750% of net assets++ $ 36,926,469@
Fund investing primarily in common
stocks and other equity
securities of companies in a
group of related industries.
Scudder Health Care Fund Long term growth of capital by 0.850% of next assets++ $ 40,923,873@
investing primarily in common
stocks and other equity
securities of companies in a
group of related industries.
Scudder Large Company Growth Long term growth of capital 0.700% of net assets $ 288,064,975
Fund (formerly Scudder through investment primarily
Quality Growth Fund) in the equity securities of
seasoned, financially strong
U.S. growth companies.
Scudder Large Company Value Maximize long term capital 0.750% to $500 million $2,212,733,138
Fund (formerly Scudder appreciation through a value 0.650% next $500 million
Capital Growth Fund) driven investment program. 0.600% next $500 million
0.550% next $500 million
0.500% next $1.0
billion*
Scudder Micro Cap Fund Long term growth of capital by 0.750% of net assets $ 91,627,404
investing primarily in a
diversified portfolio of U.S.
micro-cap common stocks.
Scudder Real Estate Long term capital growth and 0.800% of net assets++ $ 20,435,489
Investment Fund current income by investing
primarily in equity securities
of companies in the real
estate industry.
</TABLE>
B-5
<PAGE> 62
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
Scudder S&P 500 Index Fund Investment results that, 0.100% of net assets++ $ 16,912,276
before expenses, correspond to
the total return of common
stocks publicly traded in the
United States, as represented
by the Standard & Poor's 500
Composite Stock Price Index.
Scudder Small Company Value Long term growth of capital by 0.750% of net assets $ 123,398,822
Fund investing primarily in
undervalued stocks of small
U.S. companies.
Scudder Technology Fund Long term growth of capital by 0.850% of net assets++ $ 37,159,344@
investing primarily in common
stocks and other equity
securities of companies in a
group of related industries.
Value Fund Long term growth of capital 0.700% to $500 million $ 297,979,779
through investment in 0.650% over $500
undervalued equity securities. million*
GLOBAL GROWTH FUNDS
Global Discovery Fund Above-average capital 1.100% of net assets $ 349,121,954
appreciation over the long
term by investing primarily in
the equity securities of small
companies located throughout
the world.
Scudder Emerging Markets Long term growth of capital 1.25% of net assets++ $ 219,624,481
Growth Fund primarily through equity
investment in emerging markets
around the globe.
Scudder Global Fund Long term growth of capital 1.000% to $500 million $1,766,207,742
through a diversified 0.950% next $500 million
portfolio of marketable 0.900% next $500 million
securities, primarily equity 0.850% over $1.5 billion
securities, including common
stock, preferred stocks and
debt securities convertible
into common stocks.
Scudder Gold Fund Maximum return (principal 1.000% of net assets $ 132,131,545
change and income) consistent
with investing in a portfolio
of gold-related equity
securities and gold.
Scudder Greater Europe Growth Long term growth of capital 1.00% to $1 billion $ 195,514,335
Fund through investments primarily 0.90% thereafter*
in the equity securities of
European companies.
Scudder International Fund Long term growth of capital 0.900% to $500 million $2,884,919,345
primarily from foreign equity 0.850% next $500 million
securities. 0.800% next $1 billion
0.750% next $1 billion
0.700% thereafter
Scudder International Growth Long term growth of capital 1.000% of net assets++ $ 48,880,164
and Income Fund and current income primarily
from foreign equity
securities.
</TABLE>
B-6
<PAGE> 63
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
Scudder International Growth Long term capital appreciation 1.000% of net assets N/A**
Fund through investment primarily
in the equity securities of
foreign companies with high
growth potential.
Scudder International Value Long term capital appreciation 1.000% of net assets N/A**
Fund through investment primarily
in undervalued foreign equity
securities.
Scudder Latin America Fund Long term capital appreciation 1.250% to $1 billion $ 882,555,049
through investment primarily 1.150% thereafter
in the securities of Latin
American issuers.
Scudder Pacific Opportunities Long term growth of capital 1.100% of net assets $ 147,276,692
Fund primarily through investment
in the equity securities of
Pacific Basin companies,
excluding Japan.
The Japan Fund, Inc. Long term capital appreciation 0.850% to $100 million $ 265,181,931
through investment primarily 0.750% next $200 million
in equity securities, 0.700% next $300 million
(including American Depository 0.650% thereafter
Receipts of Japanese
companies).
CLOSED-END FUNDS
The Argentina Fund, Inc. Long term capital appreciation Adviser: $ 135,327,320
through investment primarily 1.100% of net assets
in equity securities of Sub-Adviser:
Argentine issuers. Paid by Adviser. 0.100%
of net assets
The Brazil Fund, Inc. Long term capital appreciation 1.200% to $150 million $ 429,429,751
through investment primarily 1.050% next $150 million
in equity securities of 1.000% next $200 million
Brazilian issuers. 0.900% thereafter
Administrator: Receives
an annual fee of $50,000
The Korea Fund, Inc. Long term capital appreciation Adviser: $ 406,244,000
through investment primarily 1.150% to $50 million
in equity securities of Korean 1.100% next $50 million
companies. 1.000% next $250 million
0.950% next $400 million
0.900% thereafter
Sub-Adviser -- Daewoo:
Paid by Adviser.
0.2875% to $50 million
0.275% next $50 million
0.250% next $250 million
0.2375% next $400
million
0.225% thereafter
Montgomery Street Income High level of current income 0.500% to $150 million $ 207,315,702
Securities, Inc. consistent with prudent 0.450% next $50 million
investment risks through a 0.400% thereafter
diversified portfolio
primarily of debt securities.
</TABLE>
B-7
<PAGE> 64
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
Scudder Global High Income High level of current income 1.200% of net assets $ 80,721,844
Fund, Inc. (formerly The and, secondarily, capital
Latin America Dollar Income appreciation through
Fund, Inc.) investment principally in
dollar-denominated Latin
American debt instruments.
Scudder New Asia Fund, Inc. Long term capital appreciation 1.250% to $75 million $ 98,866,168
through investment primarily 1.150% next $125 million
in equity securities of Asian 1.100% thereafter
companies.
Scudder New Europe Fund, Inc. Long term capital appreciation 1.250% to $75 million $ 320,293,393
through investment primarily 1.150% next $125 million
in equity securities of 1.100% thereafter
companies traded on smaller or
emerging European markets and
companies Inc. that are viewed
as likely to benefit from
changes and developments
throughout Europe.
Scudder Spain and Portugal Long term capital appreciation Adviser: $ 112,909,567
Fund, Inc. through investment primarily 1.000% of net assets
in equity securities of Administrator:
Spanish & Portuguese issuers. 0.200% of net assets
INSURANCE PRODUCTS
Scudder Variable Life Balance of growth and income, 0.475% of net assets $ 118,373,215
Investment Fund Balanced as well as long term
Portfolio preservation of capital, from
a diversified portfolio of
equity and fixed income
securities.
Scudder Variable Life High level of income from a 0.475% of net assets $ 81,387,032
Investment Fund Bond high quality portfolio of
Portfolio bonds.
Scudder Variable Life Maximize long term capital 0.475% to $500 million $ 676,317,582
Investment Fund Capital growth from a portfolio 0.450% thereafter
Growth Portfolio consisting primarily of equity
securities.
Scudder Variable Life Above-average capital 0.975% of net assets++ $ 20,115,141
Investment Fund Global appreciation over the long
Discovery Portfolio term by investing primarily in
the equity securities of small
companies located throughout
the world.
Scudder Variable Life Long term growth of capital, 0.475% of net assets $ 163,603,606
Investment Fund Growth and current income and growth of
Income Portfolio income from a portfolio
consisting primarily of common
stocks and securities
convertible into common
stocks.
Scudder Variable Life Long term growth of capital 0.875% to $500 million $ 427,237,880
Investment Fund principally from a diversified 0.725% thereafter
International Portfolio portfolio of foreign equity
securities.
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-8
<PAGE> 65
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
AARP FUNDS
AARP Balanced Stock and Bond Long term capital growth and 0.350% to $2 billion $ 638,356,257
Fund income, consistent with a 0.330% next $2 billion
share price more stable than 0.300% next $2 billion
other balanced mutual funds, 0.280% next $2 billion
through investment in a 0.260% next $3 billion
combination of stocks, bonds 0.250% next $3 billion
and cash reserves. 0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of net assets
AARP Bond Fund for Income High level of current income, 0.350% to $2 billion $ 58,324,146
consistent with greater share 0.330% next $2 billion
price stability than other 0.300% next $2 billion
long term bond mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in investment-grade debt 0.250% next $3 billion
securities. 0.240% thereafter++
INDIVIDUAL FUND FEE
0.280% of net assets
AARP Capital Growth Fund Long term capital growth, 0.350% to $2 billion $1,228,379,954
consistent with a share price 0.330% next $2 billion
more stable than other growth 0.280% next $2 billion
funds, through investment in a 0.260% next $3 billion
combination of common stocks 0.250% next $3 billion
and securities convertible 0.240% thereafter
into common stocks. INDIVIDUAL FUND FEE
0.320% of net assets
AARP Diversified Growth Long term growth of capital There will be no fee as $ 61,796,818
Portfolio through investment primarily the manager will receive
in AARP stock mutual funds. a fee
AARP Diversified Income with Current income with modest There will be no fee as $ 43,446,418
Growth Portfolio long term appreciation through the manager will receive
investment primarily in AARP a fee
bond mutual funds.
AARP Global Growth Fund Long term capital growth, 0.350% to $2 billion $ 148,029,373
consistent with a share price 0.330% next $2 billion
more stable than other global 0.300% next $2 billion
funds, through investment 0.280% next $2 billion
primarily in common stocks of 0.260% next $3 billion
established corporations in a 0.250% next $3 billion
wide variety of developed 0.240% thereafter
countries. INDIVIDUAL FUND FEE
0.550% of net assets
AARP GNMA and U.S. Treasury High level of current income, 0.350% to $2 billion $4,583,980,460
Fund consistent with greater share 0.330% next $2 billion
price stability than other 0.300% next $2 billion
GNMA mutual funds, through 0.280% next $2 billion
investment primarily in high 0.260% next $3 billion
quality U.S. Government- 0.250% next $3 billion
guaranteed GNMA securities and 0.240% thereafter
U.S. Treasury obligations. INDIVIDUAL FUND FEE
0.120% of net assets
</TABLE>
B-9
<PAGE> 66
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
AARP Growth and Income Fund Long term capital growth and 0.350% to $2 billion $6,606,012,897
income, consistent with a 0.330% next $2 billion
share price more stable than 0.300% next $2 billion
other growth and income mutual 0.280% next $2 billion
funds, through investment 0.260% next $3 billion
primarily in common stocks 0.250% next $3 billion
with above-average dividend 0.240% thereafter
yields and securities INDIVIDUAL FUND FEE
convertible into common 0.190% of net assets
stocks.
AARP High Quality Short Term High level of current income, 0.350% to $2 billion $ 454,869,518
Bond Fund consistent with greater share 0.330% next $2 billion
price stability than other 0.300% next $2 billion
short-term bond mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in a portfolio of high 0.250% next $3 billion
quality, short-term 0.240% thereafter
securities. INDIVIDUAL FUND FEE
0.190% of net assets
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.
AARP Insured Tax Free General High level of current income 0.350% to $2 billion $1,712,008,168
Bond Fund free from federal income 0.330% next $2 billion
taxes, consistent with greater 0.300% next $2 billion
share price stability than 0.280% next $2 billion
other insured tax-free general 0.260% next $3 billion
bond mutual funds, through 0.250% next $3 billion
investment primarily in high 0.240% thereafter
quality municipal securities INDIVIDUAL FUND FEE
covered by insurance. 0.190% of net assets
</TABLE>
B-10
<PAGE> 67
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
AARP International Growth and Long term capital growth, 0.350% to $2 billion $ 20,259,062
Income Fund consistent with a share price 0.330% next $2 billion
more stable than other 0.300% next $2 billion
international mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in a diversified portfolio of 0.250% next $3 billion
foreign common stocks with 0.240% thereafter++
above-average dividend yields INDIVIDUAL FUND FEE
and foreign securities 0.600% of net assets
convertible into common
stocks.
AARP Small Company Stock Fund Long term growth of capital, 0.350% to $2 billion $ 50,271,473
consistent with a share price 0.330% next $2 billion
more stable than other small 0.300% next $2 billion
company stock mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in common stocks of small U.S. 0.250% next $3 billion
companies. 0.240% thereafter++
INDIVIDUAL FUND FEE
0.550% of net assets
AARP U.S. Stock Index Fund Long term capital growth and 0.350% to $2 billion $ 38,085,073
income, consistent with 0.330% next $2 billion
greater share price stability 0.300% next $2 billion
than an S&P 500 Index mutual 0.280% next $2 billion
fund, by taking an indexing 0.260% next $3 billion
approach to investing in 0.250% next $3 billion
common stocks, emphasizing 0.240% thereafter++
higher dividend stocks while INDIVIDUAL FUND FEE
maintaining investment 0.000% of net assets
characteristics otherwise
similar to the S&P 500 Index.
</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 expense limitations.
* The addition of this breakpoint is effective 9/30/98.
** Fee information is not available for Scudder Dividend & Growth Fund, which
commenced operations on June 1, 1998; Scudder Tax Managed Growth Fund and
Scudder Tax Managed Small Company Fund, each of which commenced operations
on July 31, 1998; Scudder Corporate Bond Fund, which commenced operations on
August 31, 1998; or Scudder International Growth Fund and Scudder
International Value Fund, each of which commenced operations on September 1,
1998.
@ Net asset information is provided for the semi-annual period ended May 31,
1998.
B-11
<PAGE> 68
KEMPER FUNDS+
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS
---------- --------- -------- ------
<S> <C> <C> <C>
INCOME FUNDS
Kemper Adjustable Rate U.S. High current income consistent 0.550% to $250 million $ 81,967,000
Government Fund with low volatility of 0.520% next $750 million
principal. 0.500% next $1.5 billion
0.480% next $2.5 billion
0.450% next $2.5 billion
0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
Kemper Short-Intermediate High current income and 0.550% to $250 million $ 171,400,000
Government Fund preservation of capital, with 0.520% next $750 million
equal emphasis, from a 0.500% next $1.5 billion
portfolio primarily consisting 0.480% next $2.5 billion
of short-and intermediate-term 0.450% next $2.5 billion
U.S. Government securities. 0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
CLOSED-END FUNDS
The Growth Fund of Spain, Long-term capital appreciation 1.000% of net assets $ 315,059,000
Inc. by investing primarily in
equity securities of Spanish
companies.
Kemper High Income Trust Highest current income 0.850% of net assets $ 222,919,000
obtainable consistent with
reasonable risk with capital
gains secondary.
Kemper Intermediate High current income consistent 0.800% of net assets(1) $ 267,218,000
Government Trust with preservation of capital
by investing in U.S. and
foreign government securities.
Kemper Multi-Market Income High current income consistent 0.850% of net assets(2) $ 217,508,000
Trust with prudent total return
asset management by investing
in a diversified portfolio of
investment grade tax-exempt
securities.
Kemper Municipal Income Trust High level of current income 0.550% of net assets(2) $ 686,179,000
exempt from federal income
tax.
Kemper Strategic Income Fund High current income by 0.850% of net assets(2) $ 53,129,000
investing its assets in a
combination of lower-rated
corporate fixed-income
securities, fixed-income
securities of emerging market
and other foreign issuers and,
fixed-income securities of the
U.S. Government and its
agencies and instrumentalities
and private mortgage-backed
issuers.
</TABLE>
B-12
<PAGE> 69
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS
---------- --------- -------- ------
<S> <C> <C> <C>
Kemper Strategic Municipal High level of current income 0.600% of net assets(2) $ 130,895,000
Income Trust exempt from federal income tax
by investing in a diversified
portfolio of tax-exempt
municipal securities.
ANNUITY PRODUCTS
Kemper Blue Chip Portfolio Growth of capital and income. 0.650% of net assets $ 18,421,000
Kemper Contrarian Value High rate of return. 0.750% of net assets $ 162,380,000
Portfolio
Kemper Global Blue Chip Long-term growth of capital 1.000% to $250 million N/A*
Portfolio through diversified worldwide 0.950% next $750 million
portfolio of marketable 0.900% thereafter
securities, primarily equity
securities.
Kemper Global Income High current income consistent 0.750% of net assets $ 2,145,000
Portfolio with prudent total return
asset management.
Kemper Government Securities High current income consistent 0.550% of net assets $ 86,682,000
Portfolio with preservation of capital
from a portfolio consisting
primarily of U.S. Government
securities.
Kemper Growth Portfolio Maximum appreciation of 0.600% of net assets $ 563,016,000
capital.
Kemper High Yield Portfolio High level of current income 0.600% of net assets $ 391,664,000
by investing in fixed income
securities.
Kemper Horizon 10+ Portfolio A balance between growth of 0.600% of net assets $ 22,553,000
capital and income consistent
with moderate risk.
Kemper Horizon 20+ Portfolio Growth of capital and, 0.600% of net assets $ 16,659,000
secondarily, income.
Kemper Horizon 5 Portfolio Income consistent with 0.600% of net assets $ 14,258,000
preservation of capital, and
secondarily, growth.
Kemper International Growth Long-term growth of capital 1.000% of net assets N/A*
and Income Portfolio and current income, primarily
from foreign equity
securities.
Kemper International Total return, a combination of 0.750% of net assets $ 200,046,000
Portfolio capital growth and income,
principally through an
internationally diversified
portfolio of equity
securities.
Kemper Investment Grade Bond High current income by 0.600% of net assets $ 15,504,000
Portfolio investing primarily in a
diversified portfolio of
investment grade debt
securities.
Kemper Money Market Portfolio Maximum current income to the 0.500% of net assets $ 100,143,000
extent consistent with
stability of principal from a
portfolio of high quality
money market instruments.
</TABLE>
B-13
<PAGE> 70
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS
---------- --------- -------- ------
<S> <C> <C> <C>
Kemper Small Cap Growth Maximum capital appreciation 0.650% of net assets $ 137,415,000
Portfolio from a portfolio primarily
consisting of growth stocks of
small companies.
Kemper Small Cap Value Long-term capital appreciation 0.750% of net assets $ 76,108,000
Portfolio from a portfolio primarily of
value stocks of smaller
companies.
Kemper Total Return Portfolio High total return through a 0.550% of net assets $ 786,996,000
combination of income and
capital appreciation.
Kemper Value+Growth Portfolio Growth of capital through 0.750% of net assets $ 69,094,000
professional management of a
portfolio of growth and value
stocks.
Kemper-Dreman Financial Long-term capital appreciation 0.750% to $250 million N/A*
Services Portfolio by investing primarily in 0.720% next $750 million
common stocks and other equity 0.700% next $1.5 billion
securities of companies in the 0.680% next $2.5 billion
financial services industry 0.650% next $2.5 billion
believed by the investment 0.640% next $2.5 billion
manger to be undervalued. 0.630% next $2.5 billion
0.620% thereafter
Kemper-Dreman High Return High rate of total return. 0.750% to $250 million N/A*
Equity Portfolio 0.720% next $750 million
0.700% next $1.5 billion
0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
MONEY MARKET FUNDS
Government Securities Maximum current income to the 0.220% to $500 million $ 810,001,000
Portfolio (Cash Account extent consistent with 0.200% next $500 million
Trust) stability of capital from a 0.175% next $1 billion
portfolio of U.S. Government 0.160% next $1 billion
obligations. 0.150% thereafter(1)**
Government Securities Maximum current income to the 0.220% to $500 million $ 391,861,000
Portfolio (Cash Equivalent extent consistent with 0.200% next $500 million
Fund) stability of capital from a 0.175% next $1 billion
portfolio of U.S. Government 0.160% next $1 billion
obligations. 0.150% thereafter(1)
Government Securities Maximum current income to the 0.150% of net $ 312,194,000
Portfolio (Investors Cash extent consistent with assets(1)**
Trust) stability of capital by
investing in U.S. Government
obligations and repurchase
agreements.
Investors Florida Municipal Maximum current income exempt 0.220% to $500 million $ 7,611,000
Cash Fund from federal income taxes to 0.200% next $500 million
the extent consistent with 0.175% next $1 billion
stability of capital. 0.160% next $1 billion
0.150% thereafter(1)**
</TABLE>
B-14
<PAGE> 71
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS
---------- --------- -------- ------
<S> <C> <C> <C>
Investors Michigan Municipal Maximum current income exempt 0.22% to $500 million N/A*
Cash Fund from federal and Michigan 0.20% next $500 million
income taxes to the extent 0.175% next $1 billion
consistent with stability of 0.16% next $1 billion
capital 0.15% thereafter
Investors New Jersey Maximum current income exempt 0.220% to $500 million $ 4,665,000
Municipal Cash Fund from federal and New Jersey 0.200% next $500 million
income taxes to the extent 0.175% next $1 billion
consistent with stability of 0.160% next $1 billion
capital. 0.150% thereafter(3)**
Investors Pennsylvania Maximum current income exempt 0.220% to $500 million $ 3,195,000
Municipal Cash Fund from federal and Pennsylvania 0.200% next $500 million
income taxes to the extent 0.175% next $1 billion
consistent with stability of 0.160% next $1 billion
capital. 0.150% thereafter(3)**
Money Market Portfolio (Cash Maximum current income to the 0.220% to $500 million $2,004,420,000
Account Trust) extent consistent with 0.200% next $500 million
stability of capital from a 0.175% next $1 billion
portfolio primarily of 0.160% next $1 billion
commercial paper and bank 0.150% thereafter(1)**
obligations.
Money Market Portfolio (Cash Maximum current income to the 0.220% to $500 million $ 851,592,000
Equivalent Fund) extent consistent with 0.200% next $500 million
stability of capital from a 0.175% next $1 billion
portfolio primarily of 0.160% next $1 billion
commercial paper and bank 0.150% thereafter(4)
obligations.
Tax-Exempt Portfolio (Cash Maximum current income exempt 0.220% to $500 million $ 370,036,000
Account Trust) from federal income taxes to 0.200% next $500 million
the extent consistent with 0.175% next $1 billion
stability of capital from a 0.160% next $1 billion
portfolio of municipal 0.150% thereafter(1)**
securities.
Tax-Exempt Portfolio (Cash Maximum current income that is 0.220% to $500 million $ 333,427,000
Equivalent Fund) exempt from federal income 0.200% next $500 million
taxes to the extent consistent 0.175% next $1 billion
with stability of capital from 0.160% next $1 billion
a portfolio of municipal 0.150% thereafter
securities.
Treasury Portfolio (Investors Maximum current income to the 0.150% of net $ 74,290,000
Cash Trust) extent consistent with assets(5)**
stability of capital by
investing in U.S. Government
obligations and repurchase
agreements.
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(6)
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 consisting 0.250% thereafter(6)
of commercial paper and bank
obligations.
</TABLE>
B-15
<PAGE> 72
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS
---------- --------- -------- ------
<S> <C> <C> <C>
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(6)
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
Tax-Exempt New York Money Maximum current income exempt 0.220% to $500 million $ 104,198,000
Market Fund from federal, New York State 0.200% next $500 million
and New York City income taxes 0.175% next $1 billion
to the extent consistent with 0.160% next $1 billion
stability of capital. 0.150% thereafter(3)**
Tax-Exempt California Money Maximum current income exempt 0.220% to $500 million $ 117,432,000
Market Fund from federal and California 0.200% next $500 million
income taxes to the extent 0.175% next $1 billion
consistent with stability of 0.160% next $1 billion
capital. 0.150% thereafter
</TABLE>
- ------------------------------
+ The information provided below is shown as of the end of each Fund's last
fiscal year, unless otherwise noted.
* Fee information is not available for Investors Michigan Municipal Cash Fund,
which commenced operations on April 6, 1998; Kemper-Dreman High Return
Equity Portfolio, which commenced operations on May 1, 1998; Kemper-Dreman
Financial Services Portfolio, which commenced operations on May 4, 1998; or
Kemper Global Blue Chip Portfolio and Kemper International Growth and Income
Portfolio, each of which commenced operations on May 5, 1998.
** Subject to waivers and/or reimbursements.
(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) Based on average weekly net assets.
(3) 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 Fund series of
Investors Municipal Cash Fund.
(4) Payable in the aggregate for each of the Government Securities Portfolio
and Money Market Portfolio series of Cash Equivalent Fund.
(5) Payable in the aggregate for each of the Government Securities Portfolio
and Treasury Portfolio series of Investors Cash Trust.
(6) 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-16
<PAGE> 73
EXHIBIT C
FORM OF NEW SIL
SUB-ADVISORY AGREEMENT
[BOLDED LANGUAGE IN BRACKETS APPLIES TO KWF ONLY]
[underlined language in brackets applies to each Fund, other than KWF.]
AGREEMENT made this 7th day of September, 1998, by and between SCUDDER KEMPER
INVESTMENTS, INC., a Delaware corporation (the "Adviser") and SCUDDER
INVESTMENTS (U.K.) LIMITED, an English corporation (the "Sub-Adviser").
WHEREAS, KEMPER FUND, a Massachusetts business trust (the
"Fund") is a management investment company registered under the Investment
Company Act of 1940;
[WHEREAS, THE FUND IS AUTHORIZED TO ISSUE SHARES IN A SEPARATE SERIES WITH
EACH REPRESENTING THE INTERESTS IN A SEPARATE PORTFOLIO OF SECURITIES AND OTHER
ASSETS;]
WHEREAS, the Fund has retained the Adviser to render to it investment
advisory and management services with regard to the [Fund's sole series][SERIES
OF THE FUND KNOWN AS THE KEMPER WORLDWIDE 2004 FUND] (the "initial series")
pursuant to an Investment Management Agreement (the "Management Agreement"); and
WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to
render investment advisory and management services with respect to that portion
of the portfolio of the Fund's initial series allocated to the Sub-Adviser by
the Adviser for management, including services related to foreign securities,
foreign currency transactions and related investments, and the Sub-Adviser is
willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Adviser hereby employs the Sub-Adviser to manage the
investment and reinvestment of the assets of the initial series of the Fund
allocated by the Adviser in its sole discretion to the Sub-Adviser for
management, including services related to foreign securities, foreign
currency transactions and related investments, in accordance with the
applicable investment objectives, policies and limitations and subject to
the supervision of the Adviser and the Board of Trustees of the Fund for
the period and upon the terms herein set forth, and to place orders for the
purchase or sale of portfolio securities for the Fund's account with
brokers or dealers selected by the Sub-Adviser; and, in connection
therewith, the Sub-Adviser is authorized as the agent of the Fund to give
instructions to the
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Custodian of the Fund as to the deliveries of securities and payments of
cash for the account of the Fund. In connection with the selection of such
brokers or dealers and the placing of such orders, the Sub-Adviser is
directed to seek for the Fund best execution of orders. Subject to such
policies as the Board of Trustees of the Fund determines and subject to
satisfying the requirements of Section 28(e) of the Securities Exchange Act
of 1934, the Sub-Adviser shall not be deemed to have acted unlawfully or to
have breached any duty, created by this Agreement or otherwise, solely by
reason of its having caused the Fund to pay a broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount
of commission another broker or dealer would have charged for effecting
that transaction, if the Sub-Adviser determined in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the clients of the Sub-Adviser as to which
the Sub-Adviser exercises investment discretion. The Adviser recognizes
that all research services and research that the Sub-Adviser receives are
available for all clients of the Sub-Adviser, and that the Fund and other
clients of the Sub-Adviser may benefit thereby. The investment of funds
shall be subject to all applicable restrictions of the Agreement and
Declaration of Trust and By-Laws of the Fund as may from time to time be in
force.
The Sub-Adviser accepts such employment and agrees during such period
to render such investment management services, to furnish related office
facilities and equipment and clerical, bookkeeping and administrative
services for the Fund, to permit any of its officers or employees to serve
without compensation as trustees or officers of the Fund if elected to such
positions and to assume the obligations herein set forth for the
compensation herein provided. The Sub-Adviser shall for all purposes herein
provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund or the Adviser in any way or otherwise be deemed an
agent of the Fund or the Adviser. It is understood and agreed that the Sub-
Adviser, by separate agreements with the Fund, may also serve the Fund in
other capacities.
The Sub-Adviser will keep the Fund and the Adviser informed of
developments materially affecting the Fund and shall, on the Sub-Adviser's
own initiative and as reasonably requested by the Adviser or the Fund,
furnish to the Fund and the Adviser from time to time whatever information
the Adviser reasonably believes appropriate for this purpose. The Sub-
Adviser agrees that, in the performance of the duties required of it by
this Agreement, it will comply with the Investment Advisers Act of 1940 and
the Investment Company Act of 1940, and all rules and regulations
thereunder, and all applicable laws and regulations and with any applicable
procedures
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adopted by the Fund's Board of Trustees and identified in writing to the
Sub-Adviser.
The Sub-Adviser shall provide the Adviser with such investment
portfolio accounting and shall maintain and provide such detailed records
and reports as the Adviser may from time to time reasonably request,
including without limitation, daily processing of investment transactions
and cash positions, periodic valuations of investment portfolio positions
as required by the Adviser, monthly reports of the investment portfolio and
all investment transactions and the preparation of such reports and
compilation of such data as may be required by the Adviser to comply with
the obligations imposed upon it under the Management Agreement.
The Sub-Adviser shall provide adequate security with respect to all
materials, records, documents and data relating to any of its
responsibilities pursuant to this Agreement including any means for the
effecting of securities transactions.
The Sub-Adviser agrees that it will make available to the Adviser and
the Fund promptly upon their request copies of all of its investment
records and ledgers with respect to the Fund to assist the Adviser and the
Fund in monitoring compliance with the Investment Company Act of 1940 and
the Investment Advisers Act of 1940, as well as other applicable laws. The
Sub-Adviser will furnish the Fund's Board of Trustees such periodic and
special reports with respect to the Fund's portfolio as the Adviser or the
Board of Trustees may reasonably request.
In compliance with the requirements of Rule 31a-3 under the Investment
Company Act of 1940, the Sub-Adviser hereby agrees that any records that it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund copies of any such records upon the Fund's
request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the Investment Company Act of 1940 any
records with respect to the Sub-Adviser's duties hereunder required to be
maintained by Rule 31a-1 under such Act to the extent that the Sub-Adviser
prepares and maintains such records pursuant to this Agreement and to
preserve the records required by Rule 204-2 under the Investment Advisers
Act of 1940 for the period specified in that Rule.
The Sub-Adviser agrees that it will immediately notify the Adviser and
the Fund in the event that the Sub-Adviser: (i) becomes subject to a
statutory disqualification that prevents the Sub-Adviser from serving as an
investment adviser pursuant to this Agreement; or (ii) is or expects to
become the subject of an administrative proceeding or enforcement action by
the United States Securities and Exchange Commission, the Investment
Management Regulatory Organization ("IMRO") or other regulatory authority.
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The Sub-Adviser represents that it is an investment adviser registered
under the Investment Advisers Act of 1940 and other applicable laws and it
is regulated by IMRO and will treat the Fund as a Non-Private Customer as
defined by IMRO. The Sub-Adviser agrees to maintain the completeness and
accuracy of its registration on Form ADV in accordance with all legal
requirements relating to that Form. The Sub-Adviser acknowledges that it is
an "investment adviser" to the Fund within the meaning of the Investment
Company Act of 1940 and the Investment Advisers Act of 1940.
The Sub-Adviser shall be responsible for maintaining an appropriate
compliance program to ensure that the services provided by it under this
Agreement are performed in a manner consistent with applicable laws and the
terms of this Agreement. Furthermore, the Sub-Adviser shall maintain and
enforce a Code of Ethics that is in form and substance satisfactory to the
Adviser. Sub-Adviser agrees to provide such reports and certifications
regarding its compliance program as the Adviser or the Fund shall
reasonably request from time to time.
2. In the event that there are, from time to time, one or more
additional series of the Fund with respect to which the Adviser desires to
retain the Sub-Adviser to render investment advisory and management
services hereunder, the Adviser shall notify the Sub-Adviser in writing. If
the Sub-Adviser is willing to render such services, it shall notify the
Adviser in writing whereupon such additional series shall become subject to
this Agreement.
3. For the services and facilities described in Section 1, the
Adviser will pay to the Sub-Adviser, at the end of each calendar month, a
sub-advisory fee computed at an annual rate of % of that portion of
the average daily net assets of the initial series of the Fund that is
allocated by the Adviser to the Sub-Adviser for management.
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the
number of days that the Agreement is in effect during the month and year,
respectively.
4. The services of the Sub-Adviser under this Agreement are not to be
deemed exclusive, and the Sub-Adviser shall be free to render similar
services or other services to others so long as its services hereunder are
not impaired thereby.
5. The Sub-Adviser shall arrange, if desired by the Fund, for
officers or employees of the Sub-Adviser to serve, without compensation
from the Fund, as trustees, officers or agents of the Fund if duly elected
or appointed to such positions and subject to their individual consent and
to any limitations imposed by law.
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6. The net asset value for each series of the Fund subject to this
Agreement shall be calculated as the Board of Trustees of the Fund may
determine from time to time in accordance with the provisions of the
Investment Company Act of 1940. On each day when net asset value is not
calculated, the net asset value of a series shall be deemed to be the net
asset value of such series as of the close of business on the last day on
which such calculation was made for the purpose of the foregoing
computations.
7. Subject to applicable statutes and regulations, it is understood
that certain trustees, officers or agents of the Fund are or may be
interested in the Sub-Adviser as officers, directors, agents, shareholders
or otherwise, and that the officers, directors, shareholders and agents of
the Sub-Adviser may be interested in the Fund otherwise than as a trustee,
officer or agent.
8. The Sub-Adviser shall not be liable for any error of judgment or
of law or for any loss suffered by the Fund or the Adviser in connection
with the matters to which this Agreement relates, except loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Sub-Adviser in the performance of its obligations and duties or by reason
of its reckless disregard of its obligations and duties under this
Agreement.
9. This Agreement shall become effective with respect to the initial
series of the Fund on the date hereof and shall remain in full force until
, unless sooner terminated as hereinafter provided. This
Agreement shall continue in force from year to year thereafter with respect
to each such series, but only as long as such continuance is specifically
approved for each series at least annually in the manner required by the
Investment Company Act of 1940 and the rules and regulations thereunder;
provided, however, that if the continuation of this Agreement is not
approved for a series, the Sub-Adviser may continue to serve in such
capacity for such series in the manner and to the extent permitted by the
Investment Company Act of 1940 and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Management Agreement
and may be terminated at any time with respect to any series subject to
this Agreement without the payment of any penalty by the Adviser or by the
Sub-Adviser on sixty (60) days' written notice to the other party. The Fund
may effect termination with respect to any such series without payment of
any penalty by action of the Board of Trustees or by vote of a majority of
the outstanding voting securities of such series on sixty (60) days'
written notice to the Adviser and the Sub-Adviser.
This Agreement may be terminated with respect to any series at any
time without the payment of any penalty by the Board of Trustees of the
Fund, by vote of a majority of the outstanding voting securities of such
series or by the Adviser in the event that it shall have been established
by a
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<PAGE> 78
court of competent jurisdiction that the Sub-Adviser or any officer or
director of the Sub-Adviser has taken any action which results in a breach
of the covenants of the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment
Company Act of 1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Sub-
Adviser to receive payments on any unpaid balance of the compensation
described in Section 3 earned prior to such termination.
10. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder shall not be
thereby affected.
11. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
12. This Agreement shall be construed in accordance with applicable
federal law and the laws of the Commonwealth of Massachusetts.
13. This Agreement is the entire contract between the parties
relating to the subject matter hereof and supersedes all prior agreements
between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of the day and year first above written.
SCUDDER KEMPER INVESTMENTS, INC.
------------------------------------------------
By:
Title:
SCUDDER INVESTMENTS (U.K.) LIMITED
------------------------------------------------
By:
Title:
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<PAGE> 79
EXHIBIT D
FORM OF
NEW DVM SUB-ADVISORY AGREEMENT
[underlined language in brackets applies to Kemper-Dreman Financial Services
Fund only]
[language in plain text and in brackets applies to Kemper-Dreman High Return
Equity Fund only]
AGREEMENT made this 7th day of September, 1998, by and between SCUDDER
KEMPER INVESTMENTS, INC., a Delaware corporation (the "Adviser"), and Dreman
Value Management, L.L.C., formerly known as Contrarian Investment Management,
L.L.C., a Delaware limited liability company (the "Sub-Adviser").
WHEREAS, [KEMPER EQUITY TRUST, a Massachusetts business trust,]
[KEMPER VALUE FUND, INC., formerly known as KEMPER-DREMAN FUND, INC., a Maryland
corporation,] (the "Fund") is a management investment company registered under
the Investment Company Act of 1940 ("the Investment Company Act");
WHEREAS, the Fund has retained the Adviser to render to it investment
advisory and management services with regard to the Fund, including the series
known as the [Kemper-Dreman Financial Services Fund (the "Financial Services
Series")][Kemper-Dreman High Return Equity Fund (the "[High Return Series")],
pursuant to an Investment Management Agreement (the "Management Agreement"); and
WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to
render investment advisory and management services for the [Financial Services
Series][High Return Series] and the Sub-Adviser is willing to render such
services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Appointment of Sub-Adviser.
(a) The Adviser hereby employs the Sub-Adviser to manage the
investment and reinvestment of the assets of the [Financial Services
Series][High Return Series] in accordance with the applicable investment
objectives, policies and limitations and subject to the supervision of the
Adviser and the Board of [Trustees][Directors] of the Fund for the period
and upon the terms herein set forth, and to place orders for the purchase
or sale of portfolio securities for the [Financial Services Series][High
Return Series] account with brokers or dealers selected by the Sub-Adviser;
and, in connection therewith, the Sub-Adviser is authorized as the agent of
the [Financial Services Series][High Return Series] to give instructions to
the
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<PAGE> 80
Custodian [and Accounting Agent] of the Fund as to the deliveries of
securities and payments of cash for the account of the [Financial Services
Series][High Return Series]. In connection with the selection of such
brokers or dealers and the placing of such orders, the Sub-Adviser is
directed to seek for the [Financial Services Series][High Return Series]
best execution of orders. Subject to such policies as the Board of
[Trustees][Directors] of the Fund determines and subject to satisfying the
requirements of Section 28(e) of the Securities Exchange Act of 1934, the
Sub-Adviser shall not be deemed to have acted unlawfully or to have
breached any duty, created by this Agreement or otherwise, solely by reason
of its having caused the [Financial Services Series][High Return Series] to
pay a broker or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction, if the Sub-Adviser
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of either that particular transaction
or the Sub-Adviser's overall responsibilities with respect to the clients
of the Sub-Adviser as to which the Sub-Adviser exercises investment
discretion. The Adviser recognizes that all research services and research
that the Sub-Adviser receives are available for all clients of the
Sub-Adviser, and that the [Financial Services Series][High Return Series]
and other clients of the Sub-Adviser may benefit thereby. The investment of
funds shall be subject to all applicable restrictions of the [Agreement and
Declaration of Trust][Articles of Incorporation] and By-Laws of the Fund as
may from time to time be in force [to the extent the same are provided the
Sub-Adviser].
(b) The Sub-Adviser accepts such employment and agrees during the
period of this Agreement to render such investment management services [in
accordance with the applicable investment objectives, policies and
limitations set out in the Fund's prospectus and Statement of Additional
Information, as amended from time to time, to the extent the same are
provided the Sub-Adviser], to furnish related office facilities and
equipment and clerical, bookkeeping and administrative services for the
[Financial Services Series][High Return Series], and to assume the other
obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall assume and pay all of the costs and expenses of
performing its obligations under this Agreement. The Sub-Adviser shall for
all purposes herein provided be deemed to be an independent contractor and,
unless otherwise expressly provided or authorized, shall have no authority
to act for or represent the Fund, the [Financial Services Series][High
Return Series] or the Adviser in any way or otherwise be deemed an agent of
the Fund, the [Financial Services Series][High Return Series] or the
Adviser.
(c) The Sub-Adviser will keep the Adviser, for itself and on behalf of
the Fund, informed of developments materially affecting the Fund or the
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<PAGE> 81
[Financial Services Series][High Return Series] and shall, on the Sub-
Adviser's own initiative and as reasonably requested by the Adviser, for
itself and on behalf of the Fund, furnish to the Adviser from time to time
whatever information the Adviser reasonably believes appropriate for this
purpose.
(d) The Sub-Adviser shall provide the Adviser with such investment
portfolio accounting and shall maintain and provide such detailed records
and reports as the Adviser may from time to time reasonably request,
including without limitation, daily processing of investment transactions
and periodic valuations of investment portfolio positions as required by
the Adviser, monthly reports of the investment portfolio and all investment
transactions and the preparation of such reports and compilation of such
data as may be required by the Adviser to comply with the obligations
imposed upon it under the Management Agreement. Sub-Adviser agrees to
install in its offices computer equipment or software, as provided by the
Adviser, for use by the Sub-Adviser in performing its duties under this
Sub-Advisory Agreement, including inputting on a daily basis that day's
portfolio transactions in the [Financial Services Series][High Return
Series].
(e) The Sub-Adviser shall maintain and enforce adequate security
procedures with respect to all materials, records, documents and data
relating to any of its responsibilities pursuant to this Agreement
including all means for the effecting of securities transactions.
(f) The Sub-Adviser agrees that it will provide to the Adviser or the
Fund promptly upon request reports and copies of such of its investment
records and ledgers with respect to the [Financial Services Series][High
Return Series] as appropriate to assist the Adviser and the Fund in
monitoring compliance with the Investment Company Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other applicable
laws. The Sub-Adviser will furnish the Fund's Board of
[Trustees][Directors] such periodic and special reports with respect to the
[Financial Services Series][High Return Series] as the Adviser or the Board
of [Trustees][Directors] may reasonably request, including statistical
information with respect to the [Financial Services Series's][High Return
Series's] securities.
(g) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Sub-Adviser hereby agrees that any records that
it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly any such records upon the Fund's or the Adviser's
request, although the Sub-Adviser may, at the Sub-Adviser's own expense,
make and retain copies of such records. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the Investment
Company Act any records with respect to the Sub-Adviser's duties hereunder
required to be maintained by Rule 31a-1 under the Investment Company Act to
the extent that the Sub-Adviser prepares and
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<PAGE> 82
maintains such records pursuant to this Agreement and to preserve the
records required by Rule 204-2 under the Advisers Act for the period
specified in that Rule.
(h) The Sub-Adviser agrees that it will immediately notify the Adviser
and the Fund in the event that the Sub-Adviser: (i) becomes subject to a
statutory disqualification that prevents the Sub-Adviser from serving as an
investment adviser pursuant to this Agreement; or (ii) is or expects to
become the subject of an administrative proceeding or enforcement action by
the United States Securities and Exchange Commission ("SEC") or other
regulatory authority.
(i) The Sub-Adviser agrees that it will immediately forward, upon
receipt, to the Adviser, for itself and as agent for the Fund, any
correspondence from the SEC or other regulatory authority that relates to
the [Financial Services Series][High Return Series].
(j) The Sub-Adviser acknowledges that it is an "investment adviser" to
the Fund within the meaning of the Investment Company Act and the Advisers
Act.
(k) The Sub-Adviser shall be responsible for maintaining an
appropriate compliance program to ensure that the services provided by it
under this Agreement are performed in a manner consistent with applicable
laws and the terms of this Agreement. Sub-Adviser agrees to provide such
reports and certifications regarding its compliance program as the Adviser
or the Fund shall reasonably request from time to time. Furthermore, the
Sub-Adviser shall maintain and enforce a Code of Ethics which in form and
substance is consistent with industry norms as changed from time to time.
Sub-Adviser agrees to allow the Board of [Trustees][Directors] of the Fund
to review its Code of Ethics upon request. Sub-Adviser agrees to report to
the Adviser on a quarterly basis any violations of the Code of Ethics of
which its senior management becomes aware.
2. Compensation.
For the services and facilities described herein, the Adviser will pay to
the Sub-Adviser, 15 days after the end of each calendar month [, a sub-advisory
fee computed by applying the annual rates set forth in Appendix A to the
applicable average daily net assets of the High Return Series.][the unpaid
balance of a fee equal to 1/12 of .240 of 1 percent of the average daily net
assets as defined below of the Fund for such month; provided that, for any
calendar month during which the average of such values exceeds $250,000,000, the
fee payable for that month based on the portion of the average of such values in
excess of $250,000,000 shall be 1/12 of .230 of 1 percent of such portion;
provided that, for any calendar month during which the average of such values
exceeds $1,000,000,000, the fee payable for that month based on the portion of
the average of such values in excess of $1,000,000,000 shall be 1/12 of .224 of
1 percent of such portion; provided that, for any calendar month during which
the
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<PAGE> 83
average of such values exceeds $2,500,000,000, the fee payable for that month
based on the portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .218 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds $5,000,000,000,
the fee payable for that month based on the portion of the average of such
values in excess of $5,000,000,000 shall be 1/12 of .208 of 1 percent of such
portion; provided that, for any calendar month during which the average of such
values exceeds $7,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $7,500,000,000 shall be 1/12
of .205 of 1 percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $10,000,000,000, the fee payable
for that month based on the portion of the average of such values in excess of
$10,000,000,000 shall be 1/12 of .202 of 1 percent of such portion; and provided
that, for any calendar month during which the average of such values exceeds
$12,500,000,000, the fee payable for that month based on the portion of the
average of such values in excess of $12,500,000,000 shall be 1/12 of .198 of 1
percent of such portion.]
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
[The Adviser further agrees that notwithstanding Appendix A the minimum
amounts payable to Sub-Adviser during the following calendar years that Sub-
Adviser serves under this Agreement shall be $1.0 million in 1997 and $8 million
in each of 2000, 2001, and 2002 for services rendered during each of those
years. The payments, if any, made under the foregoing sentence shall be made by
January 15 of the year immediately following the calendar year to which such
payment relates.]
3. Net Asset Value. The net asset value for the [Financial Services
Series][High Return Series] shall be calculated as the Board of
[Trustees][Directors] of the Fund may determine from time to time in accordance
with the provisions of the Investment Company Act. On each day when net asset
value is not calculated, the net asset value of the [Financial Services
Series][High Return Series] shall be deemed to be the net asset value as of the
close of business on the last day on which such calculation was made for the
purpose of the foregoing computations.
4. Duration and Termination.
(a) This Agreement shall become effective with respect to the
[Financial Services Series][High Return Series] on the date hereof and
shall remain in full force until [February 1, 2003][December 31, 2002],
unless sooner terminated or not annually approved as hereinafter provided.
Notwithstanding the foregoing, this Agreement shall continue in force
through [February 1, 2003][December 31, 2002], and from year to year
thereafter, only as long as such continuance is specifically approved at
least annually
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<PAGE> 84
and in the manner required by the Investment Company Act and the rules and
regulations thereunder, with the first annual renewal to be coincident with
the next renewal of the Management Agreement.
(b) This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Management Agreement.
In addition, the Adviser has the right to terminate this Agreement upon
immediate notice if the Sub-Adviser becomes statutorily disqualified from
performing its duties under this Agreement or otherwise is legally
prohibited from operating as an investment adviser.
(c) This Agreement may be terminated at any time, without the payment
by the Fund of any penalty, by the Board of [Trustees][Directors] of the
Fund, or by vote of a majority of the outstanding voting securities of the
[Financial Services Series][High Return Series], or by the Adviser. The
Fund may effect termination of this Agreement by action of the Board of
[Trustees][Directors] of the Fund or by vote of a majority of the
outstanding voting securities of the [Financial Services Series][High
Return Series] on sixty (60) days written notice to the Adviser and the
Sub-Adviser. The Adviser may effect termination of this Agreement on sixty
(60) days written notice to the Sub-Adviser.
(d) Sub-Adviser may not terminate this Agreement prior to [the third
anniversary of the date of this Agreement][July 30, 2000]. Sub-Adviser may
terminate this Agreement effective on or after [the third anniversary of
the date of this Agreement][July 30, 2000] upon ninety (90) days' written
notice to the Adviser.
(e) The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment
Company Act and the rules and regulations thereunder.
(f) [Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Section 2 earned prior to such termination.
(g) The provisions of Section 9 shall survive the termination of this
Agreement.]
5. Representations and Warranties. The Sub-Adviser hereby represents and
warrants as follows:
(a) The Sub-Adviser is registered with the SEC as an investment
adviser under the Advisers Act, and such registration is current, complete
and in full compliance with all material applicable provisions of the
Advisers Act and the rules and regulations thereunder;
(b) The Sub-Adviser has all requisite authority to enter into,
execute, deliver and perform the Sub-Adviser's obligations under this
Agreement;
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<PAGE> 85
(c) The Sub-Adviser's performance of its obligations under this
Agreement does not conflict with any law, regulation or order to which the
Sub-Adviser is subject; and
(d) The Sub-Adviser has reviewed the portion of (i) the registration
statement filed with the SEC, as amended from time to time for the Fund
("Registration Statement"), and (ii) the Fund's prospectus and supplements
thereto, in each case in the form received from the Adviser with respect to
the disclosure about the Sub-Adviser and the [Financial Services
Series][High Return Series] of which the Sub-Adviser has knowledge (the
"Sub-Adviser and [Financial Services][High Return] Information") and except
as advised in writing to the Adviser such Registration Statement,
prospectus and any supplement contain, as of its date, no untrue statement
of any material fact of which Sub-Adviser has knowledge and do not omit any
statement of a material fact of which Sub-Adviser has knowledge which was
required to be stated therein or necessary to make the statements contained
therein not misleading.
6. Covenants. The Sub-Adviser hereby covenants and agrees that, so long
as this Agreement shall remain in effect:
(a) The Sub-Adviser shall maintain the Sub-Adviser's registration as
an investment adviser under the Advisers Act, and such registration shall
at all times remain current, complete and in full compliance with all
material applicable provisions of the Advisers Act and the rules and
regulations thereunder;
(b) The Sub-Adviser's performance of its obligations under this
Agreement shall not conflict with any law, regulation or order to which the
Sub-Adviser is then subject;
(c) The Sub-Adviser shall at all times comply with the Advisers Act
and the Investment Company Act, and all rules and regulations thereunder,
and all other applicable laws and regulations, and the Registration
Statement, prospectus and any supplement and with any applicable procedures
adopted by the Fund's Board of [Trustees][Directors], provided that such
procedures are substantially similar to those applicable to similar funds
for which the Board of [Trustees][Directors] of the Fund is responsible and
that such procedures are identified in writing to the Sub-Adviser;
(d) The Sub-Adviser shall promptly notify Adviser and the Fund upon
the occurrence of any event that might disqualify or prevent the Sub-
Adviser from performing its duties under this Agreement. The Sub-Adviser
further agrees to notify Adviser of any changes that would cause the
Registration Statement or prospectus for the Fund to contain any untrue
statement of a material fact or to omit to state a material fact which is
required to be stated therein or is necessary to make the statements
contained therein not misleading, in each case relating to Sub-Adviser and
[Financial Services][High Return] Information; and
D-7
<PAGE> 86
(e) For the entire time this Agreement is in effect and for a period
of two years thereafter, the Sub-Adviser shall maintain a claims made bond
issued by a reputable fidelity insurance company against larceny and
embezzlement, covering each officer and employee of Sub-Adviser, at a
minimum level of $2 million which provide coverage for acts or alleged acts
which occurred during the period of this Agreement.
7. Use of Names.
(a) The Sub-Adviser acknowledges and agrees that the names [Kemper
Equity Trust][Kemper Value Fund], Kemper, and Zurich, and abbreviations or
logos associated with those names, are the valuable property of Adviser and
its affiliates; that the Fund, Adviser and their affiliates have the right
to use such names, abbreviations and logos; and that the Sub-Adviser shall
use the names [Kemper Equity Trust][Kemper Value Fund], Kemper and Zurich,
and associated abbreviations and logos, only in connection with the
Sub-Adviser's performance of its duties hereunder. Further, in any
communication with the public and in any marketing communications of any
sort, Sub-Adviser agrees to obtain prior written approval from Adviser
before using or referring to [Kemper Equity Trust][Kemper Value Fund],
Kemper, Zurich, or [Kemper-Dreman Financial Services Fund][Kemper-Dreman
High Return Equity Fund] or any abbreviations or logos associated with
those names; provided that nothing herein shall be deemed to prohibit the
Sub-Adviser from referring to the performance of the [Kemper-Dreman
Financial Services Fund][Kemper-Dreman High Return Equity Fund] in the
Sub-Adviser's marketing material as long as such marketing material does
not constitute "sales literature" or "advertising" for the [Financial
Services Series][High Return Series] , as those terms are used in the
rules, regulations and guidelines of the SEC and the National Association
of Securities Dealers, Inc.
(b) Adviser acknowledges that "Dreman" is distinctive in connection
with investment advisory and related services provided by the Sub-Adviser,
the "Dreman" name is a property right of the Sub-Adviser, and the "Dreman"
name as used in the name of the [Financial Services Series][High Return
Series] is understood to be used by the Fund upon the conditions
hereinafter set forth; provided that the Fund may use such name only so
long as the Sub-Adviser shall be retained as the investment sub-adviser of
the [Financial Services Series][High Return Series] pursuant to the terms
of this Agreement.
(c) Adviser acknowledges that the Fund and its agents may use the
"Dreman" name in the name of the [Financial Services Series][High Return
Series] for the period set forth herein in a manner not inconsistent with
the interests of the Sub-Adviser and that the rights of the Fund and its
agents in the "Dreman" name are limited to their use as a component of the
[Financial Services Series][High Return Series] name and in connection with
accurately describing the activities of the [Financial Services Se-
D-8
<PAGE> 87
ries][High Return Series] , including use with marketing and other
promotional and informational material relating to the [Financial Services
Series][High Return Series]. In the event that the Sub-Adviser shall cease
to be the investment sub-adviser of [Financial Services Series][High Return
Series], then the Fund at its own or the Adviser's expense, upon the Sub-
Adviser's written request: (i) shall cease to use the Sub-Adviser's name as
part of the name of the [Financial Services Series][High Return Series] or
for any other commercial purpose (other than the right to refer to the
[Financial Services Series's][High Return Series's] former name in the
Fund's Registration Statement, proxy materials and other Fund documents to
the extent required by law and, for a reasonable period the use of the name
in informing others of the name change); and (ii) shall use its best
efforts to cause the Fund's officers and [trustees][directors] to take any
and all actions which may be necessary or desirable to effect the foregoing
and to reconvey to the Sub-Adviser all rights which the Fund may have to
such name. Adviser agrees to take any and all reasonable actions as may be
necessary or desirable to effect the foregoing and Sub-Adviser agrees to
allow the Fund and its agents a reasonable time to effectuate the
foregoing.
(d) The Sub-Adviser hereby agrees and consents to the use of the Sub-
Adviser's name upon the foregoing terms and conditions.
8. Standard of Care. Except as may otherwise be required by law, and
except as may be set forth in paragraph 9, the Sub-Adviser shall not be liable
for any error of judgment or of law or for any loss suffered by the Fund, the
[Financial Services Series][High Return Series] or the Adviser in connection
with the matters to which this Agreement relates, except loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the
Sub-Adviser in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
9. Indemnifications.
(a) The Sub-Adviser agrees to indemnify and hold harmless Adviser and
the Fund against any losses, expenses, claims, damages or liabilities (or
actions or proceedings in respect thereof), to which Adviser or the Fund
may become subject arising out of or based on the breach or alleged breach
by the Sub-Adviser of any provisions of this Agreement; provided, however,
that the Sub-Adviser shall not be liable under this paragraph in respect of
any loss, expense, claim, damage or liability to the extent that a court
having jurisdiction shall have determined by a final judgment, or
independent counsel agreed upon by the Sub-Adviser and the Adviser or the
Fund, as the case may be, shall have concluded in a written opinion, that
such loss, expense, claim, damage or liability resulted primarily from the
Adviser's or the Fund's willful misfeasance, bad faith or gross negligence
or by reason of the reckless disregard by the Adviser or the Fund of its
duties. The foregoing indemnification shall be in addition to any rights
that the Adviser or the Fund may have at common law or otherwise. The
Sub-Adviser's agreements
D-9
<PAGE> 88
in this paragraph shall, upon the same terms and conditions, extend to and
inure to the benefit of each person who may be deemed to control the
Adviser or the Fund and their affiliates, [directors, trustees][directors],
officers, employees and agents. The Sub-Adviser's agreement in this
paragraph shall also extend to any of the Fund's, [Financial Services
Series's][High Return Series's], and Adviser's successors or the successors
of the aforementioned affiliates, directors, officers, employees or agents.
(b) The Adviser agrees to indemnify and hold harmless the Sub-Adviser
against any losses, expenses, claims, damages or liabilities (or actions or
proceedings in respect thereof), to which the Sub-Adviser may become
subject arising out of or based on the breach or alleged breach by the
Adviser of any provisions of this Agreement or the Management Agreement, or
any wrongful action or alleged wrongful action by the Adviser or its
affiliates in the distribution of the Fund's shares, or any wrongful action
or alleged wrongful action by the Fund other than wrongful action or
alleged wrongful action that was caused by the breach by Sub-Adviser of the
provisions of this Agreement; provided, however, that the Adviser shall not
be liable under this paragraph in respect of any loss, expense, claim,
damage or liability to the extent that a court having jurisdiction shall
have determined by a final judgment, or independent counsel agreed upon by
the Adviser and the Sub-Adviser shall have concluded in a written opinion,
that such loss, expense, claim, damage or liability resulted primarily from
the Sub-Adviser's willful misfeasance, bad faith or gross negligence or by
reason of the reckless disregard by the Sub-Adviser of its duties. The
foregoing indemnification shall be in addition to any rights that the
Sub-Adviser may have at common law or otherwise. The Adviser's agreements
in this paragraph shall, upon the same terms and conditions, extend to and
inure to the benefit of each person who may be deemed to control the
Sub-Adviser, be controlled by the Sub-Adviser or be under common control
with the Sub-Adviser and to each of the Sub-Adviser's and each such
person's respective affiliates, directors, officers, employees and agents.
The Adviser's agreements in this paragraph shall also extend to any of the
Sub-Adviser's successors or the successors of the aforementioned
affiliates, directors, officers, employees or agents.
(c) Promptly after receipt by a party indemnified under paragraphs
9(a) and 9(b) above of notice of the commencement of any action,
proceeding, or investigation for which indemnification will be sought, such
indemnified party shall promptly notify the indemnifying party in writing;
but the omission so to notify the indemnifying party shall not relieve it
from any liability which it may otherwise have to any indemnified party
unless such omission results in actual material prejudice to the
indemnifying party. In case any action or proceeding shall be brought
against any indemnified party, and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in and, individually or jointly with any other indemnifying
party, to assume the
D-10
<PAGE> 89
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of any action or proceeding, the
indemnifying party shall not be liable to the indemnified party for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. If the indemnifying party does not elect to assume the
defense of any action or proceeding, the indemnifying party on a monthly
basis shall reimburse the indemnified party for the reasonable legal fees
and other costs of defense thereof. Regardless of whether or not the
indemnifying party shall have assumed the defense of any action or
proceeding, the indemnified party shall not settle or compromise the action
or proceeding without the prior written consent of the indemnifying party,
which shall not be unreasonably withheld.
10. Survival. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
be thereby affected.
11. Notices. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
12. Governing Law. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of New York.
13. Miscellaneous.
(a) The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(b) Terms not defined herein shall have the meaning set forth in the
Fund's prospectus.
(c) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
D-11
<PAGE> 90
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of the day and year first above written.
SCUDDER KEMPER INVESTMENTS, INC.
By:
-----------------------------------
Title:
----------------------------------
DREMAN VALUE MANAGEMENT, L.L.C.
By:
-----------------------------------
Title:
----------------------------------
D-12
<PAGE> 91
[APPENDIX A
INVESTMENT MANAGEMENT SUBADVISORY FEE
<TABLE>
<CAPTION>
APPLICABLE AVERAGE
DAILY NET ASSETS
(THOUSANDS) ANNUAL RATE
------------------ -----------
<S> <C>
$0 - $250,000 .240 of 1%
$250,000 - $1,000,000 .230 of 1%
$1,000,000 - $2,500,000 .224 of 1%
$2,500,000 - $5,000,000 .218 of 1%
$5,000,000 - $7,500,000 .208 of 1%
$7,500,000 - $10,000,000 .205 of 1%
$10,000,000 - $12,500,000 .202 of 1%
Over $12,500,000 .198 of 1%]
</TABLE>
<PAGE> 92
APPENDIX 1
KEMPER TRUSTS/CORPORATIONS AND SERIES
KEMPER AGGRESSIVE GROWTH FUND ("KAGGF")
KEMPER ASIAN GROWTH FUND ("KAGF")
KEMPER DIVERSIFIED INCOME FUND ("KDIF")
KEMPER EQUITY TRUST ("KET")
Kemper-Dreman Financial Services Fund ("KDFSF")
KEMPER EUROPE FUND ("KEF")
KEMPER GLOBAL INCOME FUND ("KGIF")
KEMPER GLOBAL/INTERNATIONAL
SERIES, INC. ("KGIS")
Kemper Emerging Markets Growth Fund ("KEMGF")
Kemper Emerging Markets Income Fund ("KEMIF")
Kemper Global Blue Chip Fund ("KGBCF")
Kemper International Growth and Income Fund ("KIGIF")
Kemper Latin America Fund ("KLAF")
KEMPER GROWTH FUND ("KGF")
KEMPER HIGH YIELD SERIES ("KHYS")
Kemper High Yield Fund ("KHYF")
Kemper High Yield Opportunity Fund ("KHYOF")
KEMPER HORIZON FUND ("KHF")
Kemper Horizon 20+ Portfolio ("KHF-a")
Kemper Horizon 10+ Portfolio ("KHF-b")
Kemper Horizon 5 Portfolio ("KHF-c")
KEMPER INCOME AND CAPITAL
PRESERVATION FUND ("KICPF")
KEMPER INTERNATIONAL FUND ("KIF")
KEMPER NATIONAL TAX FREE
INCOME SERIES ("KNTFIS")
Kemper Intermediate Municipal Bond Fund ("KIMBF")
Kemper Municipal Bond Fund ("KMBF")
KEMPER PORTFOLIOS ("KP")
Kemper Cash Reserves Fund ("KCRF")
Kemper U.S. Mortgage Fund ("KUSMF")
KEMPER SECURITIES TRUST ("KST")
Kemper U.S. Growth and Income Fund ("KUSGIF")
Kemper Small Cap Relative Value Fund ("KSCRVF")
KEMPER SMALL CAPITALIZATION
EQUITY FUND ("KSCF")
KEMPER STATE TAX-FREE
INCOME SERIES ("KSTFIS")
Kemper California Tax-Free Income Fund ("KCATF")
Kemper Florida Tax-Free Income Fund ("KFLTF")
Kemper Michigan Tax-Free Income Fund ("KMITF")
Kemper New Jersey Tax-Free Income Fund ("KNJTF")
Kemper New York Tax-Free Income Fund ("KNYTF")
Kemper Ohio Tax-Free Income Fund ("KOHTF")
Kemper Pennsylvania Tax-Free Income Fund ("KPATF")
Kemper Texas Tax-Free Income Fund ("KTXTF")
KEMPER TARGET EQUITY FUND ("KTEF")
Kemper Retirement Fund -- Series I ("KRFS I")
Kemper Retirement Fund -- Series II ("KRFS II")
Kemper Retirement Fund -- Series III ("KRFS III")
Kemper Retirement Fund -- Series IV ("KRFS IV")
Kemper Retirement Fund -- Series V ("KRFS V")
Kemper Retirement Fund -- Series VI ("KRFS VI")
Kemper Retirement Fund -- Series VII ("KRFS VII")
Kemper Worldwide 2004 Fund ("KWF")
KEMPER TECHNOLOGY FUND ("KTEC")
KEMPER TOTAL RETURN FUND ("KTRF")
KEMPER U.S. GOVERNMENT
SECURITIES FUND ("KGSF")
KEMPER VALUE+GROWTH FUND ("KVGF")
KEMPER VALUE SERIES, INC. ("KVS")
Kemper Contrarian Fund ("KVS-a")
Kemper-Dreman High Return Equity Fund ("KVS-b")
Kemper Small Cap Value Fund ("KVS-c")
<PAGE> 93
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 AS OF JUNE 30, 1998
------------------------------------------------------------------
FUND CLASS A CLASS B CLASS C CLASS I
---- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Kemper Aggressive
Growth Fund 1,505,309.164 985,726.305 180,505.164 N/A
Kemper Asian Growth
Fund 741,114.075 547,943.980 55,026.761 N/A
Kemper California Tax-
Free Income Fund 128,536,592.867 4,508,136.864 429,874.133 N/A
Kemper Cash Reserves
Fund 73,317,872.156 N/A N/A N/A
Kemper Contrarian Fund 6,240,010.879 4,276,692.561 472,913.687 N/A
Kemper Diversified
Income Fund 97,210,232.721 49,567,594.098 4,410,150.291 N/A
Kemper Europe Fund 1,721,039.649 1,407,078.509 144,889.008 N/A
Kemper Florida Tax-
Free Income Fund 9,380,640.822 581,122.365 67,538.851 N/A
Kemper Global Income
Fund 8,202,069.457 1,778,625.974 169,699.109 N/A
Kemper Growth Fund 141,154,077.340 52,629,752.840 1,635,873.740 1,758,023.529
Kemper High Yield Fund 454,552,399.291 180,908,663.420 23,356,220.443 2,720,524.477
Kemper High Yield
Opportunity Fund 1,136,229.731 1,075,956.490 217,005.946 N/A
Kemper Horizon 10+
Portfolio 4,460,751.612 3,309,473.610 836,012.457 27,941.545
Kemper Horizon 20+
Portfolio 3,547,750.511 3,696,328.300 636,714.725 72,665.187
Kemper Horizon 5
Portfolio 2,198,974.587 2,062,686.007 437,288.281 18,247.254
Kemper Income and
Capital Preservation
Fund 63,328,558.017 10,822,458.273 1,552,931.652 726,694.970
Kemper Intermediate
Municipal Bond Fund 1,716,605.514 518,769.964 61,506.284 N/A
Kemper International
Fund 36,159,089.225 11,792,958.971 1,902,317.909 1,369,812.171
Kemper Michigan Tax-
Free Income Fund 200,084.723 171,570.314 14,316.346 N/A
Kemper Municipal Bond
Fund 294,653,815.182 6,824,679.677 652,394.912 9,382.941
Kemper New Jersey
Tax-Free Income Fund 172,242.524 382,917.427 11,844.159 N/A
Kemper New York Tax-
Free Income Fund 24,156,044.134 1,080,962.016 295,433.692 N/A
</TABLE>
<PAGE> 94
<TABLE>
<CAPTION>
NUMBER OF SHARES OUTSTANDING AS OF JUNE 30, 1998
------------------------------------------------------------------
FUND CLASS A CLASS B CLASS C CLASS I
---- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Kemper Ohio Tax-Free
Income Fund 3,012,200.369 1,035,194.605 88,448.619 N/A
Kemper Pennsylvania
Tax-Free Income Fund 311,951.875 295,706.699 102,370.385 N/A
Kemper Retirement Fund
I 9,979,164.523 N/A N/A N/A
Kemper Retirement Fund
II 12,903,472.306 N/A N/A N/A
Kemper Retirement Fund
III 11,346,741.185 N/A N/A N/A
Kemper Retirement Fund
IV 11,808,353.633 N/A N/A N/A
Kemper Retirement Fund
V 12,530,768.829 N/A N/A N/A
Kemper Retirement Fund
VI 6,321,422.386 N/A N/A N/A
Kemper Retirement Fund
VII 24,583,385.140 N/A N/A N/A
Kemper Small
Capitalization
Equity Fund 102,029,929.080 39,360,810.058 3,021,080.156 2,405,909.871
Kemper Small Cap
Relative Value Fund 56,277.921 16,610.922 17,148.825 N/A
Kemper Small Cap Value
Fund 27,493,408.692 22,927,558.405 5,712,515.014 593,582.832
Kemper Technology Fund 93,741,423.516 11,191,115.884 1,884,871.039 1,571,042.216
Kemper Texas Tax-Free
Income Fund 1,040,552.241 130,354.297 32,828.956 N/A
Kemper Total Return
Fund 224,444,217.524 91,769,156.579 2,275,135.772 1,147,064.023
Kemper U.S. Government
Securities Fund 373,237,426.430 9,726,900.254 1,520,165.483 572,234.527
Kemper U.S. Mortgage
Fund 253,227,099.653 61,189,419.722 490,941.010 N/A
Kemper Value + Growth
Fund 4,598,052.911 3,784,650.886 290,866.287 N/A
Kemper Worldwide 2004
Fund 2,852,584.520 N/A N/A N/A
Kemper-Dreman
Financial Services
Fund 9,594,290.159 8,524,191.412 1,254,232.669 N/A
Kemper-Dreman High
Return Equity Fund 63,293,869.329 58,546,099.212 11,207,327.755 932,299.872
</TABLE>
2
<PAGE> 95
APPENDIX 3
BENEFICIAL OWNERS OF 5% OR MORE OF FUND SHARES
As of June 30, 1998, no person is known to the Funds to own beneficially
more than five percent of the Shares of any class of any Fund except as shown
below.
As of June 30, 1998, 87,277 shares in the aggregate, 11.70% of the
outstanding shares of KAGF (A Shares) were held in the name of NFSC FEBO #
179-821748, FMT CO CUST IRA, FBO Burdett W. Helenius, 15990 Algoma Avenue Cedar
Springs, MI 49319, 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, 60,243 shares in the aggregate, 8.07% of the
outstanding shares of KAGF (A Shares) were held in the name of National City
Bank of PA, Trustee, Mckeesport Healthcare Pension Trust U/A 02/08/1984, Attn.:
Trust Mutual Funds, PO Box 94984, Cleveland, OH 44101, 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, 79,512 shares in the aggregate, 14.63% of the
outstanding shares of KAGF (B Shares) were held in the name of NFSC FEBO #
179-821748, FMT CO Custodianudoain IRA, FBO Burdett W. Helenius, 15990 Algoma
Avenue, Cedar Springs, MI 49319, 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, 5,774 shares in the aggregate, 10.44% of the
outstanding shares of KAGF (C Shares) were held in the name of A.G. Edwards &
Sons Inc. Custodian, FBO Julie M. Cobb IRA R/O, 5104 Chicago Street, Omaha, NE
68132, 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, 3,598 shares in the aggregate, 6.50% of the
outstanding shares of KAGF (C Shares) were held in the name of Coldstream
Capital LLC P/ S, P. Rader/R R Reinfrank, Trustees, FBO Stephen Rader, 865 S.
Figueroa Street, Suite 700, Los Angeles, CA 90017, 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, 85,649 shares in the aggregate, 5.66% of the
outstanding shares of KAGGF (A Shares) were held in the name of NFSC FEBO #
A8H-626155, AKE N Nystrom, 1016 Rue Grande Vue, Pittsburgh, PA 15220, 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, 71,507 shares in the aggregate, 7.26% of the
outstanding shares of KAGGF (B Shares) were held in the name of NFSC FEBO #
0EA-285072, George H. Pearce, Iride Pearce, 42 Mechanic Street, Danielson,
<PAGE> 96
CT 06239, 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, 51,534 shares in the aggregate, 5.23% of the
outstanding shares of KAGGF (B Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 8,630 shares in the aggregate, 5.08% of the
outstanding shares of KAGGF (C Shares) were held in the name of NFSC FEBO
#APX-151564, Rainbow Ponds Inc., 2904 Hwy. 8 West, Cleveland, MS 38732, 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, 8,800,401 shares in the aggregate, 6.82% of the
outstanding shares of KCATF (A Shares) were held in the name of Smith Barney
Inc., 00154613168, 388 Greenwich Street, New York, NY 10013, 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, 575,562 shares in the aggregate, 12.76% of the
outstanding shares of KCATF (B Shares) were held in the name of Josef Dittrich &
Maria Dittrich, Trustee, FBO Dittrich Family Trust, U/A 11/03/1998, 11373
Tortuga Street, Cypress, CA 90630, 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, 338,780 shares in the aggregate, 7.51% of the
outstanding shares of KCATF (B Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 267,029 shares in the aggregate, 5.92% of the
outstanding shares of KCATF (B Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn. Fund
Administration #97D69, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, 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, 53,562 shares in the aggregate, 6.67% of the
outstanding shares of KCATF (C Shares) were held in the name of Helena G. Hale,
Trustee, FBO Helena Hale Living Trust, U/A 11/13/1997, 803 Paseo Alicante, Santa
Barbara, CA 93103, 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, 61,513 shares in the aggregate, 7.66% of the
outstanding shares of KCATF (C Shares) were held in the name of Marilyn L.
Ginsburg-Kindler, Trustee, FBO Marilyn L. Ginsburg, Kindler Trust U/A
11/13/1997,
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<PAGE> 97
427 Beirut Avenue, Pacific Plsds, CA 90272, 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, 45,187 shares in the aggregate, 5.62% of the
outstanding shares of KCATF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn. Fund
Administration #97D72, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, 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, 44,532 shares in the aggregate, 5.54% of the
outstanding shares of KCATF (C Shares) were held in the name of Patricia Elliott
Apstein & Theodore Apstein, Trustee, FBO Apstein Family Trust, U/A 02/21/1989,
1000 N. Norman Place, Los Angeles, CA 90049, 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, 4,699,434 shares in the aggregate, 5.10% of the
outstanding shares of KCRF (A Shares) were held in the name of NFSC FEBO
#OR1-004359, Home Savings of America, Trustee, Tracy Shimura, 9144 Burnet
Avenue, #33, Sepulveda, CA 91343, 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, 6,838,077 shares in the aggregate, 7.42% of the
outstanding shares of KCRF (A Shares) were held in the name of CIBC Oppenheimer
Corp., FBO 320-18212-16, PO Box 3484, Church Street Station, New York, NY 10008,
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, 2,082,360 shares in the aggregate, 7.16% of the
outstanding shares of KCRF (C Shares) were held in the name of NFSC FEBO
#OSN-997943, Lyle Betsch, Virginia Bertsch, 2164 Falcon Ridge, Highlands, NC
28741, 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, 4,381,918 shares in the aggregate, 8.86% of the
outstanding shares of KDIF (B Shares) were held in the name of NFSC FEBO
#OGX-939595, NFSC/FMTC IRA, FBO Sherman B Kerbel, 3006 O'Hara Place, Olney, MD
20832, 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, 3,007,403 shares in the aggregate, 6.08% of the
outstanding shares of KDIF (B Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, who
may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
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<PAGE> 98
As of June 30, 1998, 475,596 shares in the aggregate, 10.91% of the
outstanding shares of KDIF (C Shares) were held in the name of NFSC FEBO
#APW-891444, Mary M Villageomez, 218 Tubing Road, Broussard, LA 70518, 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, 271,609 shares in the aggregate, 6.23% of the
outstanding shares of KDIF (C Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 938,478 shares in the aggregate, 21.53% of the
outstanding shares of KDIF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn. Fund
Administration (97D56), 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, 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, 136,415 shares in the aggregate, 8.08% of the
outstanding shares of KEF (A Shares) were held in the name of NFSC FEBO
#BRD-015881, Stephen J. Shive, Flora A. Shive, 921 Wiseburg Road, White Hall, MD
21161, 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, 91,824 shares in the aggregate, 5.44% of the
outstanding shares of KEF (A Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 93,800 shares in the aggregate, 5.55% of the
outstanding shares of KEF (A Shares) were held in the name of Charles Schwab &
Co. Inc., Special Custody Account for the Exclusive Benefit of Customers, Attn
Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104, 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, 125,322 shares in the aggregate, 9.01% of the
outstanding shares of KEF (B Shares) were held in the name of NFSC FEBO
#BRD-015881, Stephen J. Shive, Flora A. Shive, 921 Wiseburg Road, White Hall, MD
21161, 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, 13,204 shares in the aggregate, 9.10% of the
outstanding shares of KEF (C Shares) were held in the name of NFSC FEBO
#APX-726710, NFSC/FMTC IRA Rollover, FBO Carole Sue Crenshaw, 1604 Cherokee
Place, Bartlesville, OK 74003, who may be deemed to be the
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<PAGE> 99
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 9,271 shares in the aggregate, 6.39% of the
outstanding shares of KEF (C Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corp Inc., PO Box 2052, Jersey City, NJ 07303, 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, 15,413 shares in the aggregate, 10.62% of the
outstanding shares of KEF (C Shares) were held in the name of Sterling Trust
Company Custodian, FBO Sandra J. Sundeen IRA, #K00731, PO Box 2526, Waco, TX
76702, 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, 759,046 shares in the aggregate, 8.09% of the
outstanding shares of KFLTF (A Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn.: Fund
Administration 977L9, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, 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, 68,870 shares in the aggregate, 11.85% of the
outstanding shares of KFLTF (B Shares) were held in the name of NFSC FBO
#OK7-007390, Lola F. Benson, 2846 SE Evergreen Avenue, Stuart, FL 34997, 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, 59,958 shares in the aggregate, 10.31% of the
outstanding shares of KFLTF (B Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 101,823 shares in the aggregate, 17.52% of the
outstanding shares of KFLTF (B Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn.: Fund
Administration #97D73, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, 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, 29,233 shares in the aggregate, 5.03% of the
outstanding shares of KFLTF (B Shares) were held in the name of Albert J.
Thompson & Fern L. Thompson JT WROS, 526 Pendleton Drive, Venice, FL 34292, 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, 7,571 shares in the aggregate, 11.21% of the
outstanding shares of KFLTF (C Shares) were held in the name of NFSC FEBO
#BR5-453765, David I. Pinkham, Mary E. Pinkham, 10930 102nd Ave-
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<PAGE> 100
nue North, Seminole, FL 33778, 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, 3,874 shares in the aggregate, 5.73% of the
outstanding shares of KFLTF (C Shares) were held in the name of Wexford Clearing
Services Corp. FBO Marilyn Milbauer, Milton Milbauer, Co-Trustees, The Marilyn
Milbauer Trust, U/A DTD 11/30/93, Lake Worth, FL 33467, 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, 15,011 shares in the aggregate, 22.22% of the
outstanding shares of KFLTF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn.: Fund
Administration #97D74, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, 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, 6,122 shares in the aggregate, 9.06% of the
outstanding shares of KFLTF (C Shares) were held in the name of Susan H.
Wallace, 260 Rafael Boulevard NE, St. Petersburg FL 33704, 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, 27,349 shares in the aggregate, 40.49% of the
outstanding shares of KFLTF (C Shares) were held in the name of Southwest
Securities Inc. FBO, Patricia G. Kaighin, Box 509002, Dallas, TX 75250, 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, 119,492 shares in the aggregate, 7.28% of the
outstanding shares of KGF (C Shares) were held in the name of J.C. Bradford &
Co. Custodian FBO, RCIP Limited Partners I, 330 Commerce Street, Nashville, TN
37201, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
Certain accounts for which the Investment manager Acts as investment
adviser owned 1,213,812 shares in the aggregate, 67.85% of the outstanding
shares of KGF (I Shares) on June 30, 1998. The Investment Manager may be deemed
to be a beneficial owner of such shares but disclaims any beneficial ownership
in such shares.
As of June 30, 1998, 104,749 shares in the aggregate, 5.85% of the
outstanding shares of KGF (I Shares) were held in the name of ZKI INC. Non-Qua
DEF C, Lasalle National Bank, Trustee, 222 S Riverside Plaza, 24th Floor,
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, 504,896 shares in the aggregate, 6.15% of the
outstanding shares of KGIF (A Shares) were held in the name of NFSC FBO #
AC3-002321, NFSC/FMTC, FBO Roger T. Odegaard IRA, RR I Box 69,
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<PAGE> 101
Crookston, MN 67160, 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, 129,701 shares in the aggregate, 7.28% of the
outstanding shares of KGIF (B Shares) were held in the name of NFSC FEBO #
OC8-354236, Irene Simpson, Trustee, Irene B. Simpson Revoc Trust, U/A 11-20-91,
20 Hillsdale Street, Auburn, ME 04210, 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, 89,551 shares in the aggregate, 5.03% of the
outstanding shares of KGIF (B Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 237,511 shares in the aggregate, 13.34% of the
outstanding shares of KGIF (B Shares) were held in the name of Everen Clearing
Corp. Custodian, FBO Jack Ely Westin IRA, A/C 8285-1309, 513 Oak Mont Place,
Melbourne, FL 32940, 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, 18,349 shares in the aggregate, 11.01% of the
outstanding shares of KGIF (C Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 45,610 shares in the aggregate, 27.37% of the
outstanding shares of KGIF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn. Fund
Administration (97D79), 4800 Deer Lake Drive, East 3rd Floor, Jacksonville, FL
32246, 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, 14,714 shares in the aggregate, 8.83% of the
outstanding shares of KGIF (C Shares) were held in the name of WLN, Attn. Mary
Schroeder, PO Box 3888, Lacey, WA 98509, 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, 778,700 shares in the aggregate, 8.00% of the
outstanding shares of KGSF (B Shares) were held in the name of NFSC FEBO #
OR1-294403, Home Savings of America, Trustee, IRA of David V. White, 815 E 6th
Street, Ontario, CA 91764, 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, 539,944 shares in the aggregate, 5.55% of the
outstanding shares of KGSF (B Shares) were held in the name of BHC Securities
7
<PAGE> 102
Inc., FAO 25080444, Attn. Mutual Funds Dept., One Commerce Square, 2005 Market
Street Suite 1200, Philadelphia, PA 19103, 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, 80,806 shares in the aggregate, 5.39% of the
outstanding shares of KGSF (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 199,974 shares in the aggregate, 13.35% of the
outstanding shares of KGSF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn. Fund
Administration (97D94), 4800 Deer Lake Drive, East 2nd FL, Jacksonville, FL
32246, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 281,359 shares in the aggregate, 48.65% of the outstanding shares
of KGSF (I Shares) on June 30, 1998. The Investment Manager may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 237,900 shares in the aggregate, 6.42% of the
outstanding shares of KHF-a (B Shares) were held in the name of NFSC FBO #
E3N-002658, NFSC/FMTC IRA, FBO Robert Montgomery, 1220 Cottonwood Street, Grand
Forks, ND 58201, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 75,034 shares in the aggregate, 98.58% of the outstanding shares
of KHF-a (I Shares) on June 30, 1998. The Investment Manager may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 634,617 shares in the aggregate, 14.21% of the
outstanding shares of KHF-b (A Shares) were held in the name of Prudential
Trust, FBO Its Defined Contribution Plan Customers, 30 Scranton Office Park,
Scranton, PA 18507, 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, 349,459 shares in the aggregate, 10.63% of the
outstanding shares of KHF-b (B Shares) were held in the name of NFSC FBO #
APW-732176, NFSC/FMTC IRA Rollover, FBO Richard L. Johnson, 935 Trentle Court,
Charlotte, NC 28211, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
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<PAGE> 103
Certain accounts for which the Investment Manager acts as investment
adviser owned 14,669 shares in the aggregate, 50.06% of the outstanding shares
of KHF-b (I Shares) on June 30, 1998. The Investment Manager may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 3,240 shares in the aggregate, 11.06% of the
outstanding shares of KHF-b (I Shares) were held in the name of ZKDI Inc.
Non-QUA DEF C, Lasalle National Bank, Trustee, 222 S. Riverside Plaza 24th
Floor, 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, 11,182 shares in the aggregate, 38.16% of the
outstanding shares of KHF-b (I Shares) were held in the name of ZKI Inc. Non-QUA
DEF C, Lasalle National Bank, Trustee, 222 S. Riverside Plaza 24th Floor,
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, 108,983 shares in the aggregate, 5.20% of the
outstanding shares of KHF-c (A Shares) were held in the name of NFSC FEBO #
AC7-015628, Mildred L Burrack, Dixie Ghormley, Box 206 Feulner Street,
Strawberry Point, IA 52076, 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, 152,589 shares in the aggregate, 7.41% of the
outstanding shares of KHF-c (B Shares) were held in the name of NFSC FEBO #
A7L-685631, Gregg A. Albritton Custodian, Blake T. Albritton UTMA IL, 2519
Reduck Court, Decatur, IL 62521, 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, 26,564 shares in the aggregate, 6.08% of the
outstanding shares of KHF-c (C Shares) were held in the name of Investors
Fiduciary Trust Co-Trust, IRA R/O Micaela Delgado, 720 President St, Brooklyn,
NY 11215, 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, 32,419 shares in the aggregate, 7.42% of the
outstanding shares of KHF-c (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corp Inc., PO Box 2052, Jersey City, NJ 07303, 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, 29,044 shares in the aggregate, 6.65% of the
outstanding shares of KHF-c (C Shares) were held in the name of Rogers Petroleum
Company, 8511 141st Street CT W, Saint Paul, MN 55124, who may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 13,949 shares in the aggregate, 75.26% of the outstanding shares
9
<PAGE> 104
of KHF-c (I Shares) on June 30, 1998. The Investment Manager may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 4,577 shares in the aggregate, 24.70% of the
outstanding shares of KHF-c (I Shares) were held in the name of ZKI Inc. Non-QUA
DEF C, Lasalle National Bank, Trustee, 222 S. Riverside Plaza 24th Floor,
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, 10,164,062 shares in the aggregate, 5.62% of the
outstanding shares of KHYF (B Shares) were held in the name of NFSC FEBO #
ATL-216798, Mark F. Forward, 6140 Oram Street, Dallas, TX 75214, 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, 1,380,946 shares in the aggregate, 5.93% of the
outstanding shares of KHYF (C Shares) were held in the name of NFSC FEBO #
E49-005550, Susan A. Walters, 201 North Squirrel Road, Apt 309, Auburn Hills, MI
48326, 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, 1,232,092 shares in the aggregate, 5.29% of the
outstanding shares of KHYF (C Shares) were held in the name of Donaldson Lufkin
Jenrette, Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 2,307,171 shares in the aggregate, 9.92% of the
outstanding shares of KHYF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn. Fund
Administration # 97D59, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246 who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,584,828 shares in the aggregate, 57.30% of the outstanding
shares of KHYF (I Shares) on June 30, 1998. The Investment Manager may be deemed
to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 259,956 shares in the aggregate, 9.40% of the
outstanding shares of KHYF (I Shares) were held in the name of Patterson & Co.,
PNB Personal Trust Acctg., PO Box 7829, Philadelphia, PA 19101, 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, 145,469 shares in the aggregate, 5.26% of the
outstanding shares of KHYF (I Shares) were held in the name of State Street Bank
and Trust Co., NA Agent for the Salvation Army, A CA Corp. High Yield
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<PAGE> 105
Fund #FA2011, 101 California Street, Suite 1175, San Francisco, CA 94111, 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, 81,397 shares in the aggregate, 7.07% of the
outstanding shares of KHYOF (A Shares) were held in the name of NFSC FEBO # AK3-
347175, Kenneth R. Snowe, Ingrid Snowe, c/o Hearthstone Fin Pln., 36 Bartholf
Avenue, Pompton Lakes, NJ 07442, 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, 224,470 shares in the aggregate, 21.02% of the
outstanding shares of KHYOF (B Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., P.O. Box 2052, Jersey City, NJ 07303, 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, 23,717 shares in the aggregate, 10.92% of the
outstanding shares of KHYOF (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., P.O. Box 2052, Jersey City, NJ 07303, 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, 16,613 shares in the aggregate, 7.65% of the
outstanding shares of KHYOF (C Shares) were held in the name of Prudential
Securities Inc. FBO, Mr. Franklin O Bell, IRA Rollover DTD 09/16/96, 889 Summit
Pointe, Lewisville, TX 75077, 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, 16,575,703 shares in the aggregate, 26.19% of the
outstanding shares of KICPF (A Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith Custodian, FBO Helga Berger IRA, Attn.: Broker Transfer,
9601 S. Meridian Blvd., 3rd Floor, Englewood, CO 80112, 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, 692,617 shares in the aggregate, 6.40% of the
outstanding shares of KICPF (B Shares) were held in the name of NFSC FBO #
E47-001465, NFSC/FMTC IRA, FBO Joann Flaherty, 15018 Parkside Avenue, Oak
Forest, IL 60452, 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, 570,242 hares in the aggregate, 5.27% of the
outstanding shares of KICPF (B Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corp., PO Box 2052, Jersey City, NJ 07303, 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, 573,814 shares in the aggregate, 5.30% of the
outstanding shares of KICPF (B Shares) were held in the name of Merrill Lynch,
Pierce, Fenner and S Rennay L Fields, Attn: Fund Administration, 4800 Deer
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<PAGE> 106
Lake Drive East, 3rd Floor, Jacksonville, FL 32246-6484, 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, 645,943 shares in the aggregate, 5.96% of the
outstanding shares of KICPF (B Shares) were held in the name of BHC Securities,
Inc., FAO 73345883, Attn.: Mutual Funds, One Commerce Square, 2005 Market
Street, Suite 1200, Philadelphia, PA 19103, 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, 446,481 shares in the aggregate, 28.69% of the
outstanding shares of KICPF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn.: Fund
Administration (97D78), 4800 Deer Lake Drive, East 3rd Floor, Jacksonville, FL
32246, 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, 119,789 shares in the aggregate, 7.69% of the
outstanding shares of KICPF (C Shares) were held in the name of Paul K
Christoff, Trustee, Lindsay Concrete Prod Inc. PSP, DTD 10-1-89, Paul K
Christoff, Attorney, PO Box 578, Canal Fulton, OH 44614, who may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as Investment
Adviser owned 507,485 shares in the aggregate, 68.76% of the outstanding shares
of KICPF (I Shares) on June 30, 1998. The Investment Manager may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 94,955 shares in the aggregate, 5.34% of the
outstanding shares of KIF (C Shares) were held in the name of NFSC FEBO #
APO-961493, NFSC/FMTC IRA, FBO Paul L Beach, 4021 Silverlake Road, Bartlesville,
OK 74006, 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, 120,189 shares in the aggregate, 6.76% of the
outstanding shares of KIF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn. Fund
Administration (97D80), 4800 Deer Lake Drive, East 3rd Floor, Jacksonville, FL
32246, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 975,478 shares in the aggregate, 69.77% of the outstanding shares
of KIF (I Shares) on June 30, 1998. The Investment Manager may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
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<PAGE> 107
As of June 30, 1998, 85,781 shares in the aggregate, 5.01% of the
outstanding shares of KIMBF (A Shares) were held in the name of NFSC FEBO #
OKG-002402, William H. Twaddell, Trustee, William H. Twaddell, American
Embassy -- Lagos, Department of State, Washington, DC 20521, 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, 92,090 shares in the aggregate, 5.38% of the
outstanding shares of KIMBF (A Shares) were held in the name of ABN-AMRO
Incorporated, 392-00164-11, Attn. Mutual Fund Operations, PO Box 6108, Chicago,
IL 60680, 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, 106,050 shares in the aggregate, 6.20% of the
outstanding shares of KIMBF (A Shares) were held in the name of GK Management,
15700 Lathrop Avenue, Harvey, IL 60426, 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, 143,513 shares in the aggregate, 8.39% of the
outstanding shares of KIMBF (A Shares) were held in the name of Woodstock A
Partnership, c/o Wood County Trust Co., PO Box 800, Wisconsin Rapids, WI 54495,
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, 120,655 shares in the aggregate, 7.05% of the
outstanding shares of KIMBF (A Shares) were held in the name of Brian L. Johnson
& Joan M. Johnson JTWROS, PO Box 400, Spooner, WI 54801, 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, 29,406 shares in the aggregate, 5.66% of the
outstanding shares of KIMBF (B Shares) were held in the name of NFSC FBO #
APX-257117, Stan W. Daniel, 4198 Yatesville Highway., Thomaston, GA 30286, 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, 26,891 shares in the aggregate, 5.18% of the
outstanding shares of KIMBF (B Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 32,647 shares in the aggregate, 6.29% of the
outstanding shares of KIMBF (B Shares) were held in the name of Citicorp
Securities Services, I, 303-35713-28, 111 Wall Street, 11th Floor, New York, NY
10005, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
13
<PAGE> 108
As of June 30, 1998, 35,158 shares in the aggregate, 6.77% of the
outstanding shares of KIMBF (B Shares) were held in the name of Ronald Rach &
Marilyn Rach JTWROS, 2704 Old Woods Trail, Plainfield, IL 60544, 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, 30,722 shares in the aggregate, 5.92% of the
outstanding shares of KIMBF (B Shares) were held in the name of Donna Lee
Carkeet & Gary Dee Mall, Trustee, Mall Family 1993 Trust, U/A DTD 9/24/1993,
25000 Eastin Road, Newman, CA 95360, 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, 88,404 shares in the aggregate, 17.04% of the
outstanding shares of KIMBF (B Shares) were held in the name of Painewebber for
the Benefit of Granada Insurance Company, 3911 SW 67th Avenue, Miami, FL 33155,
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, 8,395 shares in the aggregate, 13.64% of the
outstanding shares of KIMBF (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey, NJ 07303, 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, 7,911 shares in the aggregate, 12.86% of the
outstanding shares of KIMBF (C Shares) were held in the name of Orsolina
Gigante, 232 Thayer Street, River Vale, NJ 07675, 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, 11,629 shares in the aggregate, 18.90% of the
outstanding shares of KIMBF (C Shares) were held in the name of Michael K.
Yannotta, 504 Donner Pass Apt B, Saint Peters, MO 63376, 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, 7,911 shares in the aggregate, 12.86% of the
outstanding shares of KIMBF (C Shares) were held in the name of Anthony B.
Gigante, 232 Thayer Street, River Vale, NJ 07675, 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, 3,853 shares in the aggregate, 6.26% of the
outstanding shares of KIMBF (C Shares) were held in the name of Painewebber for
the Benefit of G. Richard Matteucci and Linda R. Matteucci JTWROS, 4348
Prospect, Western Springs, IL 60558, 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, 3,158 shares in the aggregate, 5.13% of the
outstanding shares of KIMBF (C Shares) were held in the name of Charlene Michel,
23560 Western Avenue, Park Forest, IL 60466, who may be deemed to be the
14
<PAGE> 109
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 3,195 shares in the aggregate, 5.19% of the
outstanding shares of KIMBF (C Shares) were held in the name of Willam Denaer,
Trustee, FBO William Denaer Living Trust, U/A 07/18/1995, 11202 Mandel CT,
Westchester IL, 60154, 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, 634,279 shares in the aggregate, 9.31% of the
outstanding shares of KMBF (B Shares) were held in the name of NFSC FEBO #
AA6-043079, Rosemary W Potter, Michael Potter, 1762 Autumn Avenue, Memphis, TN
38112, 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, 57,221 shares in the aggregate, 7.20% of the
outstanding shares of KMBF (C Shares) were held in the name of NFSC FEBO #
BK5-454206, Joseph P. Checrallah Jr., Maria L. Checrallah, 3 Forest View Drive,
Hope, RI 02831, 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, 41,371 shares in the aggregate, 5.21% of the
outstanding shares of KMBF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of Its Customers, Attn.: Fund
Administration (97D83), 4800 Deer Lake Drive, East 3rd Floor, Jacksonville, FL
32246, 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, 39,763 shares in the aggregate, 5.00% of the
outstanding shares of KMBF (C Shares) were held in the name of Donald Isherwood
& Lynn Isherwood JTWROS, 5324 Birch Road, Plover, WI 54467, 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, 9,372 shares in the aggregate, 99.88% of the
outstanding shares of KMBF (I Shares) were held in the name of Salvation Army
Federal Tax-Free Trust Pool, One International Place, Boston, MA 02110, 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, 10,186 shares in the aggregate, 5.00% of the
outstanding shares of KMITF (A Shares) were held in the name of Jeanne M.
Pinardi, Trustee, U/A Dated 2/27/87, Jeanne M. Pinardi Rev Lgv Trust, 11034
Arden, Livonia, MI 48150, 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, 11,738 shares in the aggregate, 5.76% of the
outstanding shares of KMITF (A Shares) were held in the name of Lynda L. Ufer,
Trustee, FBO Lynda L. Ufer Liv Trust, U/A 08/27/1993, 25712 Graceland Circle,
15
<PAGE> 110
Dearborn Heights, MI 48125, 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, 14,592 shares in the aggregate, 7.16% of the
outstanding shares of KMITF (A Shares) were held in the name of Prudential
Securities FBO, Mr. Milton E. Muelder, 1133 Southlawn, East Lansing, MI 48823,
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, 14,184 shares in the aggregate, 6.96% of the
outstanding shares of KMITF (A Shares) were held in the name of Lloyd J.
McIntyre Inter-Vivos, Trustee, Lloyd J. McIntyre, Trustee, U/A DTD 1/6/84, As
amended, 1911 North Miller, Saginaw, MI 48609, 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, 9,551 shares in the aggregate, 5.56% of the
outstanding shares of KMITF (B Shares) were held in the name of Dorothy M.
Converse Trust, Dorothy M. Converse Trust, UA 11/07/90, 201 S. Mall Drive, Apt #
49, Lansing, MI 48917, 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, 9,666 shares in the aggregate, 5.63% of the
outstanding shares of KMITF (B Shares) were held in the name of Karen L. Pearce,
6484 Stonebrook Lane, Flushing, MI 48433, 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, 12,237 shares in the aggregate, 7.13% of the
outstanding shares of KMITF (B Shares) were held in the name of Cecile Bernath &
Janet A Kakela JTWROS, 104 E Oak Street, Mason, MI 48854, 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, 1,973 shares in the aggregate, 13.78% of the
outstanding shares of KMITF (C Shares) were held in the name of NFSC FBO # BXH-
101311, Krystyna S. Cavallo, Aurelia Waszak, Stanley Waszak, 8460 Hettenberger
Avenue, Warren, MI 48093, 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, 3,850 shares in the aggregate, 26.89% of the
outstanding shares of KMITF (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corp. Inc., PO Box 2052, Jersey City, NJ 07303, 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, 1,665 shares in the aggregate, 11.63% of the
outstanding shares of KMITF (C Shares) were held in the name of Daniel M.
Weikel, Trustee, FBO Daniel M. Weikel Trust, U/A DTD 07/13/93, 1221 Ruddiman,
Muskegon, MI 49445, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
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<PAGE> 111
As of June 30, 1998, 2,419 shares in the aggregate, 16.90% of the
outstanding shares of KMITF (C Shares) were held in the name of Alan R. Wolffis
& Sandra M Wolffis, Trustee, FBO Alan R and Sandra M. Wolffis Living Trust U/A,
09/15/1995, 1238 Timbertrail Road, Whitehall, MI 49461, 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, 2,495 shares in the aggregate, 17.43% of the
outstanding shares of KMITF (C Shares) were held in the name of Painewebber for
the Benefit of Mary Jane Fauls, Trustee, Mary Jane Fauls Rev Living Trust, UA
DTD 7/13/94, 22942 Playview Street, St. Clair Shores, MI 48082, 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, 747 shares in the aggregate, 5.21% of the outstanding
shares of KMITF (C Shares) were held in the name of James R. Volstromer & Diane
C. Volstromer, Trustees, FBO James R. & Diane C. Volstromer Rev Trust, U/A
11/01/1991, 145 Sunset Drive, Dowling, MI 49050, 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, 9,763 shares in the aggregate, 5.66% of the
outstanding shares of KNJTF (A Shares) were held in the name of Prudential
Securities Inc. FBO, John Giacopelli, 900 Palisades Avenue, Apt 2105, Ft Lee, NJ
07024, 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, 16,415 shares in the aggregate, 9.53% of the
outstanding shares of KNJTF (A Shares) were held in the name of Wheat First FBO
A/C 5946-7149, T. W. Nelson, 827 Highland Avenue, Westfield, NJ 07090, 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, 9,239 shares in the aggregate, 5.36% of the
outstanding shares of KNJTF (A Shares) were held in the name of Prudential
Securities Inc. FBO, Richard Giacopelli & Linda Giacopelli Joint Tenants, 16
Woodland Road, Woodcliff Lake, NJ 07675, 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, 11,720 shares in the aggregate, 6.80% of the
outstanding shares of KNJTF (A Shares) were held in the name of Philip C.
Gustafson & Elaine S. Gustafson JTWRS, 108 Meadow View Avenue, Linwood, NJ
08221, 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, 11,778 shares in the aggregate, 6.83% of the
outstanding shares of KNJTF (A Shares) were held in the name of BHC Securities,
Inc., FAO 76404058, Attn.: Mutual Funds, One Commerce Square, 2005 Market
Street, Suite 1200, Philadelphia, PA 19103, who may be deemed to be the
17
<PAGE> 112
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 10,760 shares in the aggregate, 6.24% of the
outstanding shares of KNJTF (A Shares) were held in the name of Robert L.
Vignolo, 842 Kimball Avenue, Westfield, NJ 07090, 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, 21,768 shares in the aggregate, 5.68% of the
outstanding shares of KNJTF (B Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & SMITH for the Sole Benefit of its Customers, Attn. Fund Adm.
(97GB9), 4800 Deer Lake Drive, E. Floor 2, Jacksonville, FL 32246, 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, 41,859 shares in the aggregate, 10.93% of the
outstanding shares of KNJTF (B Shares) were held in the name of Prudential
Securities Inc. FBO, Ruth G. Battel, 6 Willow Bank Court, Mahwah, NJ 07430, 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, 24,487 shares in the aggregate, 6.39% of the
outstanding shares of KNJTF (B Shares) were held in the name of Prudential
Securities Inc. FBO, Frank A Battel, 6 Willow Bank Court, Mahwah, NJ 07430, 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, 31,813 shares in the aggregate, 8.30% of the
outstanding shares of KNJTF (B Shares) were held in the name of Raymond S.
Anderson & Helen H. Anderson JTWROS, 249 Province Line Road, Allentown, NJ
08501, 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, 28,529 shares in the aggregate, 7.45% of the
outstanding shares of KNJTF (B Shares) were held in the name of John R.
Rosselli, PO Box 3056, Newton, NJ 07860, 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, 44,481 shares in the aggregate, 11.61% of the
outstanding shares of KNJTF (B Shares) were held in the name of BHC Securities,
Inc., FAO 76407797, Attn.: Mutual Funds Dept., One Commerce Square, 2005 Market
Street, Suite 1200, Philadelphia, PA 19103, 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, 1,595 shares in the aggregate, 13.46% of the
outstanding shares of KNJTF (C Shares) were held in the name of Smith Barney
Inc., 00163016276, 388 Greenwich Street, New York, NY 10013, who may be deemed
to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
18
<PAGE> 113
As of June 30, 1998, 3,550 shares in the aggregate, 29.67% of the
outstanding shares of KNJTF (C Shares) were held in the name of Philip I.
Evertz, 3B Pilgrim Court, Whiting, NJ 08759, 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, 653 shares in the aggregate, 5.51% of the outstanding
shares of KNJTF (C Shares) were held in the name of Lynn McGovern & Allison
McGovern JTWROS, 10 Arlington Drive, Sewell, NJ 08080, 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, 1,224 shares in the aggregate, 10.33% of the
outstanding shares of KNJTF (C Shares) were held in the name of Lisa R.
Caprioni, 22 Arlene Drive, W. Long Branch, NJ 07764, 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, 2,111 shares in the aggregate, 17.82% of the
outstanding shares of KNJTF (C Shares) were held in the name of Carol Leick &
Albert Leick JTWOS, 339 Willow Drive, Union, NJ 07083, 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, 1,100 shares in the aggregate, 9.28% of the
outstanding shares of KNJTF (C Shares) were held in the name of Allen Van Dusen
& Bonnie Van Dusen JTWOS, 961 Farmingdale Road, Jackson, NJ 08527 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, 1,165 shares in the aggregate, 9.83% of the
outstanding shares of KNJTF (C Shares) were held in the name of Painewebber for
the Benefit of ESDAEV LLC, 228 Johnson Avenue, # 8, Hackensack, NJ 07601, 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, 2,631,398 shares in the aggregate, 10.91% of the
outstanding shares of KNYTF (A Shares) were held in the name of ABN AMRO
Incorporated, 040-02860-19, Attn.: Mutual Fund Operations, PO Box 6108, Chicago,
IL 60680, 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, 338,057 shares in the aggregate, 31.22% of the
outstanding shares of KNYTF (B Shares) were held in the name of NFSC FEBO #
AAD-745286, Lorna Reiss, 53 Leibrock Avenue, Lindenhurst, NY 11757, 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, 37,350 shares in the aggregate, 12.84% of the
outstanding shares of KNYTF (C Shares) were held in the name of NFSC FEBO #
APW-938475, Augustino Biondi & Luciana Biondi JT TEN, 672 Byron Avenue,
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<PAGE> 114
Franklin Square, NY 11010, 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, 61,797 shares in the aggregate, 21.24% of the
outstanding shares of KNYTF (C Shares) were held in the name of Painewebber for
the Benefit of Mrs. Diana Riklis, 1020 Park Avenue, New York, NY 10028, 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, 28,475 shares in the aggregate, 9.78% of the
outstanding shares of KNYTF (C Shares) were held in the name Of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of ITS Customers, Attn.: Fund
Administration (97D86), 4800 Deer Lake Drive, East 3rd Floor, Jacksonville, FL
32246, 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, 439,915 shares in the aggregate, 14.58% of the
outstanding shares of KOHTF (A Shares) were held in the name of NFSC FEBO #
ASX-056944, Nancy C. Young, 2683 Leighton Road, Cleveland, OH 44120, 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, 198,145 shares in the aggregate, 6.56% of the
outstanding shares of KOHTF (A Shares) were held in the name of John M. Wilson &
Patricia W. Wilson, Trustee, FBO John M & Patricia Wilson Trust U/A, 07/02/1994,
PO Box 386, Aurora, OH 44202, 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, 179,869 shares in the aggregate, 5.96% of the
outstanding shares of KOHTF (A Shares) were held in the name of Everen Clearing
Corp., A/C 1509-4570, Patricia Mortley Bichsel, 111 East Kilborun Avenue,
Milwaukee, WI 53202, 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, 130,765 shares in the aggregate, 12.67% of the
outstanding shares of KOHTF (B Shares) were held in the name of NFSC FEBO #
ASX-038474, Leonard E. Drake & Ganelda E. Drake JT TEN, 2640 Oatis Avenue, #3,
Toledo, OH 43606, 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, 51,862 shares in the aggregate, 5.02% of the
outstanding shares of KOHTF (B Shares) were held in the name of Smith Barney
Inc., 00122421179, 388 Greenwich Street, New York, NY 10013, 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, 437,707 shares in the aggregate, 42.42% of the
outstanding shares of KOHTF (B Shares) were held in the name of BHC Securities
Inc., FAO 25043183, Attn. Mutual Funds Dept., One Commerce
20
<PAGE> 115
Square, 2005 Market Street, Suite 1200, Philadelphia, PA 19103, 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, 5,657 shares in the aggregate, 6.41% of the
outstanding shares of KOHTF (C Shares) were held in the name of Linda S. Deryck
GDN, for Shirley Y. De Ryck, c/o Stow-Glenn, 4285 Kent Road, Room 241, Stow, OH
44224, 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, 14,532 shares in the aggregate, 16.48% of the
outstanding shares of KOHTF (C Shares) were held in the name of Peter C.
McHowell, 15289 Russell Road, Chagrin Falls, OH 44022, 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, 12,547 shares in the aggregate, 14.23% of the
outstanding shares of KOHTF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the sole Benefit of its Customers, Attn. Fund
Administration (97D88), 4800 Deer Lake Drive, East 3rd Floor, Jacksonville, FL
32246, 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, 12,803 shares in the aggregate, 14.52% of the
outstanding shares of KOHTF (C Shares) were held in the name of Denise L. Glass,
1244 4th Street, NW, New Phila, OH 44663, 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, 5,642 shares in the aggregate, 6.40% of the
outstanding shares of KOHTF (C Shares) were held in the name of Jay M. Simpson &
Valerie Stocklin JTWROS, 7825 N. Dixie Suite A, Dayton, OH 45414, 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, 6,515 shares in the aggregate, 7.39% of the
outstanding shares of KOHTF (C Shares) were held in the name of Marjorie M.
Freytag, 02233 Street, Rt. 362, Minster, OH 45865, 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, 6,192 shares in the aggregate, 7.02% of the
outstanding shares of KOHTF (C Shares) were held in the name of Glass
Properties, c/o Thomas Glass, 1244 4th Street, NW, New Phila, OH 44663, 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, 111,015 shares in the aggregate, 35.58% of the
outstanding shares of KPATF (A Shares) were held in the name of NFSC FEBO #
ALW-296783, UHL Construction Co., PO Box 8, Allison Park, PA
21
<PAGE> 116
15101, 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, 67,348 shares in the aggregate, 22.77% of the
outstanding shares of KPATF (B Shares) were held in the name of NFSC FEBO #
OC8-440914, Gregory A. Croner, Trustee#, Gregory A. Croner Rev Trust, U/A
3/19/92, 126 Bronco Drive, Berlin, PA 15530, 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, 14,930 shares in the aggregate, 5.04% of the
outstanding shares of KPATF (B Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 15,679 shares in the aggregate, 5.30% of the
outstanding shares of KPATF (B Shares) were held in the name of Prudential
Securities Inc. FBO, Mr. Silvanus D. Stoner, T.O.D. Account, 564 Fishing Creek
Road, Lewisberry, PA 17339, 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, 30,441 shares in the aggregate, 10.29% of the
outstanding shares of KPATF (B Shares) were held in the name of Wheat First FBO
A/C 4388-3895, Olga Y. Hyde, 3300 Darby Road, Apt 4108, Haverford, PA 19041, 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, 44,694 shares in the aggregate, 15.11% of the
outstanding shares of KPATF (B Shares) were held in the name of BHC Securities,
Inc., FAO 76202395, Attn.: Mutual Funds Dept., One Commerce Square, 2005 Market
Street, Suite 1200, Philadelphia, PA 19103, 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, 65,896 shares in the aggregate, 64.37% of the
outstanding shares of KPATF (C Shares) were held in the name of NFSC FEBO #
ALW-363065, Raymond V. Magreni, Alfred Margreni, 70 West Manila Avenue,
Pittsburgh, PA 15220, 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, 22,554 shares in the aggregate, 22.03% of the
outstanding shares of KPATF (C Shares) were held in the name of Joseph C.
Ciccone & Margaret Ciccone JTWROS, 204 Westminister Drive, Coraopolis, PA 15108,
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, 601,751 shares in the aggregate, 6.03% of the
outstanding shares of KRFS I (A Shares) were held in the name of Donaldson
Lufkin & Jenrette SEC, Mutual Fds Dept 5th Floor, PO Box 2052, Jersey City, NJ
22
<PAGE> 117
07303, 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, 516,394 shares in the aggregate, 5.17% of the
outstanding shares of KRFS I (A Shares) were held in the name of Everen Clearing
Corp Custodian, FBO Clarke E Mc Dermed Sep IRA, A/C 5351-3402, 601 So Barnett
Street, Anaheim, CA 92805, 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, 646,904 shares in the aggregate, 5.70% of the
outstanding shares of KRFS III (A Shares) were held in the name of Donaldson
Lufkin Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303,
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, 683,288 shares in the aggregate, 5.78% of the
outstanding shares of KRFS IV (A Shares) were held in the name of NFSC FBO #
AA6-014710, NFSC/FMTC IRA, FBO Ricky Lee Mayes, 1307 E. Emory Road, Knoxville,
TN 37938, 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, 867,548 shares in the aggregate, 7.34% of the
outstanding shares of KRFS IV (A Shares) were held in the name of Donaldson
Lufkin Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303,
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, 1,023,352 shares in the aggregate, 8.16% of the
outstanding shares of KRFS V (A Shares) were held in the name of NFSC FEBO #A89
463400, Dime Savings Bank Custodian, IRA of Mitchell J. Darer, 28 Lawrence
Place, Chestnut Ridge, NY 10977, 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, 682,152 shares in the aggregate, 5.44% of the
outstanding shares of KRFS V (A Shares) were held in the name of Donaldson
Lufkin Jenrette Securities Corporation, PO Box 2052, Jersey City, NJ 07303, 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, 885,818 shares in the aggregate, 14.01% of the
outstanding shares of KRFS VI were held in the name of NFSC FEBO # E5D-00523,
Jane A. Dodge Custodian Anne Judith Dodge, c/o Singapore Amer School H S, 40
Woodlands Street 41, Dakota 738547, Singapore, 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, 326,060 shares in the aggregate, 5.15% of the
outstanding shares of KRFS VI were held in the name of Donaldson Lufkin
23
<PAGE> 118
Jenrette, PO Box 2052, Jersey City, NJ 07303, 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, 228,263 shares in the aggregate, 10.07% of the
outstanding shares of KRFS VII were held in the name of NFSC FEBO # OHE-889237,
NFSC/FMTC IRA, FBO Mary Lou Markley, 1515 Attleboro Ave., Springfield, OH 45503,
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, 122,755 shares in the aggregate, 5.41% of the
outstanding shares of KRFS VII were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., P.O. Box 2052, Jersey City, NJ 07303 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, 267,015 shares in the aggregate, 11.78% of the
outstanding shares of KRFS VII were held in the name of BHC Securities, Inc.,
FAO 62471137, Attn: Mutual Funds Dept, One Commerce Square, 2005 Market Street,
Suite 1200, Philadelphia, PA 19103, 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, 335,568 shares in the aggregate, 11.08% of the
outstanding shares of KSCF (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey, NJ 07303, 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, 931,647 shares in the aggregate, 30.76% of the
outstanding shares of KSCF (C Shares) were held in the name of J.C. Bradford &
Co. Custodian FBO, Bobby Hopper, 330 Commerce Street, Nashville, TN 37201, who
may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,742,834 shares in the aggregate, 71.05% of the outstanding
shares of KSCF (I Shares) on June 30, 1998. The Investment Manager may be deemed
to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 816,230 shares in the aggregate, 7.80% of the
outstanding shares of KSIGF (B Shares) were held in the name of National
Financial Svcs Corp., C/F Radha Kudchadker IRA, 200 Liberty Street, New York, NY
10281, 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, 183,845 shares in the aggregate, 28.02% of the
outstanding shares of KSIGF (C Shares) were held in the name of NFSC FEBO #
910-110486, Mutual Funds (Non Fidelity), Dividend Redemption Account,
24
<PAGE> 119
4th Floor, 200 Liberty Street, New York, NY 10281, 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, 41,066 shares in the aggregate, 6.25% of the
outstanding shares of KSIGF (C Shares) were held in the name of Painewebber for
the Benefit of Painewebber CDN FBO, David P. Otto, PO Box 3321, Weehawken, NJ
07087, 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, 196,623 shares in the aggregate, 10.43% of the
outstanding shares of KTEC (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 501,827 shares in the aggregate, 26.62% of the
outstanding shares of KTEC (C Shares) were held in the name of J.C. Bradford &
Co. Custodian FBO, Dwaine R Falls, 330 Commerce Street, Nashville, TN 37201, who
may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,124,314 shares in the aggregate, 70.13% of the outstanding
shares of KTEC (I Shares) on June 30, 1998. The Investment Manager may be deemed
to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 117,731 shares in the aggregate, 5.19% of the
outstanding shares of KTRF (C Shares) were held in the name of BT Alex Brown
Incorporated, FBO 711-03219-11, PO Box 1346, Baltimore, MD 21203, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 751,413 shares in the aggregate, 64.55% of the outstanding shares
of KTRF (I Shares) on June 30, 1998. The Investment Manager may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 7,004 shares in the aggregate, 5.37% of the
outstanding shares of KTXTF (B Shares) were held in the name of Prudential
Securities Inc. FBO, Jacques Martin Barzun, 18 Wolfeton Way, San Antonio, TX
78218, 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, 11,840 shares in the aggregate, 9.08% of the
outstanding shares of KTXTF (B Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn.: Fund
Administration 97D91, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, who may
25
<PAGE> 120
be deemed to be the beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
As of June 30, 1998, 44,622 shares in the aggregate, 34.23% of the
outstanding shares of KTXTF (B Shares) were held in the name of Everen Clearing
Corp., A/C 4979-1922, Jo Alice W. Tomforde, 111 East Kilbourn Avenue, Milwaukee,
WI 530202, 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, 7,286 shares in the aggregate, 5.58% of the
outstanding shares of KTXTF (B Shares) were held in the name of Painewebber for
the Benefit of Martin W. Spreen and Nora A. Spreen JTWROS, 9165 Westview,
Houston, TX 77055, 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, 18,204 shares in the aggregate, 13.96% of the
outstanding shares of KTXTF (B Shares) were held in the name of Charles D Hayes
& Gelinda Hayes JTWROSV 22503 Holly Creek Trail, Tomball, TX 77375, 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, 7,960 shares in the aggregate, 6.10% of the
outstanding shares of KTXTF (B Shares) were held in the name of Lobatco, FBO
Marjorie M. Nugent Marital, Deduction Trust, c/o Longview Bank & Trust, PO Box
3188, Longview, TX 75606, 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, 2,377 shares in the aggregate, 7.24% of the
outstanding shares of KTXTF (C Shares) were held in the name of NFSC FBO #
H7G-200654, David Douglas, Elsie A. Douglas, 1407 Westgreen Boulevard, Katy, TX
77450, 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, 3,525 shares in the aggregate, 10.74% of the
outstanding shares of KTXTF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn.: Fund
Administrative 97D92, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, 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, 9,717 shares in the aggregate, 29.59% of the
outstanding shares of KTXTF (C Shares) were held in the name of Don Freeman &
Lucille Freeman JTWROS, PO Box 472, Eden, TX 76837, 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, 15,553 shares in the aggregate, 47.37% of the
outstanding shares of KTXTF (C Shares) were held in the name of Billy R. Hefley,
6301 East Loop 335 North, Amarillo, TX 79107, who may be deemed to
26
<PAGE> 121
be the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 3,286,050 shares in the aggregate, 5.37% of the
outstanding shares of KUSMF (B Shares) were held in the name of Merrill Lynch
Pierce Fenner Custodian, FBO Millicent S. Kincaid IRA, 4800 Deer Lake Drive
East, Jacksonville, FL 32246,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, 93,354 shares in the aggregate, 19.01% of the
outstanding shares of KUSMF (C Shares) were held in the name of Painewebber for
the Benefit of Painewebber CDN FBO, Louis L. Parker, PO Box 3321, Weehawken, NJ
07087,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, 158,032 shares in the aggregate, 32.18% of the
outstanding shares of KUSMF (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn. Fund
Administration 97D98, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, NJ
07087, 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, 97,669 shares in the aggregate, 19.89% of the
outstanding shares of KUSMF (C Shares) were held in the name of Morongo Band of
Mission Indians Community Service Reserve Acct., 11581 Potrero Road, Banning, CA
92220, 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, 212,087 shares in the aggregate, 5.60% of the
outstanding shares of KVGF (B Shares) were held in the name of NFSC FEBO #
A2F-679410, NFSC/FMTC IRA, FBO Stanley Lander, 168 Sportsman Road, Rotonda West,
RL 33947, 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, 16,267 shares in the aggregate, 5.58% of the
outstanding shares of KVGF (C Shares) were held in the name of NFSC FEBO #
APX-734837, NFSC/FMTC IRA Rollover, FBO Loren S. Basler, 301 SE Morningside,
Bartlesville, OK 74006, 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, 354,884 shares in the aggregate, 5.68% of the
outstanding shares of KVS-a (A Shares) were held in the name of National
Financial Services Inc., For Exclusvie Benefit of our Customers Church Street
Station, PO Box 3730, New York, NY 10008, 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, 352,658 shares in the aggregate, 8.24% of the
outstanding shares of KVS-a (B Shares) were held in the name of NFSC FEBO #
OSN-624586, NFSC/FMTC IRA Rollover, FBO Marnette M. Johnson, 10333
27
<PAGE> 122
Lake Jackson Drive, Manassas, VA 20111 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, 27,020 shares in the aggregate, 5.71% of the
outstanding shares of KVS-a (C Shares) were held in the name of NFSC FEBO # OKA-
214116, NFSC/FMTC IRA Rollover, FBO John M. Vogel, 9620 S. Mansfield, Oak Lawn,
IL 60453, 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, 65,436 shares in the aggregate, 13.83% of the
outstanding shares of KVS-a (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn Fund
Administration 97EP6, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, 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, 7,386,807 shares in the aggregate, 11.70% of the
outstanding shares of KVS-b (A Shares) were held in the name of NFSC FEBO
179-561819, Shirley K. Hori 1-5-40, Takanawa Minato-K, Tokyo, Japan 108, 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, 4,076,887 shares in the aggregate, 6.45% of the
outstanding shares of KVS-b (A Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 6,762,884 shares in the aggregate, 11.58% of the
outstanding shares of KVS-b (B Shares) were held in the name of NFSC FEBO #
A1F-135720, Samuel P. Shaver, MSP/MPRI, Operation Constant Guard, APO AE 09780 -
NY, Saudi Arabia, 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, 4,111,042 shares in the aggregate, 7.04% of the
outstanding shares of KVS-b (B Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corporation Inc., PO Box 2052, Jersey City, NJ 07303, 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, 3,516,403 shares in the aggregate, 6.02% of the
outstanding shares of KVS-b (B Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn Fund Adm
(97HB6), 4800 Deer Lake Drive E Floor 2, Jacksonville, FL 32246, 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, 935,464 shares in the aggregate, 8.38% of the
outstanding shares of KVS-b (C Shares) were held in the name of NFSC FEBO
28
<PAGE> 123
# W19-213756, Gloria Montero, Gozzoli Norte 235, San Borja, Lima, Peru, 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, 915,449 shares in the aggregate, 8.20% of the
outstanding shares of KVS-b (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corp Inc., PO Box 2052, Jersey City, NJ 07303 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, 2,015,317 shares in the aggregate, 18.07% of the
outstanding shares of KVS-b (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn Fund
Administration, SEC # 97JS4, 4800 Deer Lake Drive, East 2rd Floor, Jacksonville,
FL 32246, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 770,215 shares in the aggregate, 70.27% of the outstanding shares
of KVS-b (I Shares) on June 30, 1998. The Investment Manager may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 2,110,876 shares in the aggregate, 7.68% of the
outstanding shares of KVS-c (A Shares) were held in the name of NFSC FEBO #
179-924164, FMT Co Custodian Sepp IRA, FBO Donald M. Garner, 9604 Rosevale
Street, Ft Washington, MD 20744, 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, 3,051,982 shares in the aggregate, 11.11% of the
outstanding shares of KVS-c (A Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corp. Inc., PO Box 2052, Jersey City, NJ 07303, 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, 2,648,299 shares in the aggregate, 11.55% of the
outstanding shares of KVS-c (B Shares) were held in the name of NFSC FEBO #
APW-037540, NFSC/FMTC IRA SEPP, FBO Peggy R. Sleeper, HCR 68, Box 61, Thomaston,
ME 04861, 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, 1,701,713 shares in the aggregate, 7.42% of the
outstanding shares of KVS-c (B Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corp. Inc., PO Box 2052, Jersey City, NJ 07303, 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, 2,520,570 shares in the aggregate, 11.00% of the
outstanding shares of KVS-c (B Shares) were held in the name of Merrill Lynch,
29
<PAGE> 124
Pierce, Fenner & Smith for the Sole Benefit of its Customer, Attn Fund ADM
(97HB5), 4800 Deer Lake Drive, E Fl 2, Jacksonville, FL 32246, 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, 460,713 shares in the aggregate, 8.07% of the
outstanding shares of KVS-c (C Shares) were held in the name of NFSC FEBO #
142-188093, FMT CO Custodian IRA, FBO James W. Weston, PO Box 21101, Sarasota,
FL 34276, 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, 456,976 shares in the aggregate, 8.01% of the
outstanding shares of KVS-c (C Shares) were held in the name of Donaldson Lufkin
Jenrette Securities Corp., PO Box 2052, Jersey City, NJ 07303, 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, 1,644,161shares in the aggregate, 28.83% of the
outstanding shares of KVS-c (C Shares) were held in the name of Merrill Lynch,
Pierce, Fenner & Smith for the Sole Benefit of its Customers, Attn Fund
Administration 97EP5, 4800 Deer Lake Drive, East 2nd Floor, Jacksonville, FL
32246, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 485,105 shares in the aggregate, 78.23% of the outstanding shares
of KVS-c (I Shares) on June 30, 1998.
As of June 30, 1998, 303,734 shares in the aggregate, 10.64% of the
outstanding shares of KWF-4 were held in the name of NFSC FEBO # A74-159255,
NFSC/FMTC IRA Rollover, FBO Barbara I. Gill, 4647 Anthony Wayne, Fairfield, OH
45014, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
30
<PAGE> 125
APPENDIX 4
FUND SHARES OWNED BY TRUSTEES/DIRECTORS
[TO BE PROVIDED]
<PAGE> 126
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>
Kemper Aggressive Growth 9/30/97 $ 11,609,000 Base investment management fee $ 37,000
Fund of 0.65 of 1% of average daily
net assets plus or minus an
incentive fee based upon the
investment performance of the
fund as compared with the
performance of the Standard &
Poor's 500 Stock Index, which
may result in a total fee
ranging from 0.45 of 1% to
0.85 of 1%
Kemper Asian Growth Fund 11/30/97 $ 6,398,000 0.85 of 1% of the first $250 $ 32,000
million of average daily net
assets; 0.82 of 1% of the next
$750 million; 0.80 of 1% of
the next $1.5 billion; 0.78 of
1% of the next $2.5 billion;
0.75 of 1% of the next $2.5
billion; 0.74 of 1% of the
next $2.5 billion; 0.73 of 1%
of the next $2.5 billion and
0.72 of 1% thereafter
Kemper California Tax- 8/31/97 $1,007,907,000 0.55 of 1% of the first $250 $ 5,417,000
Free Income Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper Cash Reserves Fund 9/30/97 $ 339,655,000 0.40 of 1% of the first $250 $ 1,059,000
million of average daily net
assets; 0.38 of 1% of the next
$750 million; 0.35 of 1% of
the next $1.5 billion; 0.32 of
1% of the next $2.5 billion;
0.30 of 1% of the next $2.5
billion; 0.28 of 1% of the
next $2.5 billion; 0.26 of 1%
of the next $2.5 billion and
0.25 of 1% thereafter
</TABLE>
<PAGE> 127
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID+
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Kemper Contrarian Fund 11/30/97 $ 178,115,000 0.75 of 1% of the first $250 $ 903,000
million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
Kemper Diversified Income 10/31/97 $ 861,543,000 0.58 of 1% of the first $250 $ 4,664,000
Fund million of average daily net
assets; 0.55 of 1% of the next
$750 million; 0.53 of 1% of
the next $1.5 billion; 0.51 of
1% of the next $2.5 billion;
0.48 of 1% of the next $2.5
billion; 0.46 of 1% of the
next $2.5 billion; 0.44 of 1%
of the next $2.5 billion and
0.42 of 1% thereafter
Kemper Emerging Markets 3/31/98 $ 1,147,000** 1.25% of average daily net $ 3,000#
Growth Fund assets
Kemper Emerging Markets 3/31/98 $ 5,616,000** 1.00% of average daily net $ 15,000#
Income Fund assets
Kemper Europe Fund 11/30/97 $ 23,910,000 0.75 of 1% of the first $250 $ 69,000
million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
Kemper Florida Tax-Free 8/31/97 $ 103,845,000 0.55 of 1% of the first $250 $ 587,000
Income Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper Global Blue Chip 3/31/98 $ 3,663,000** 0.75 of 1% of the first $250 $ 6,000#
Fund million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
</TABLE>
2
<PAGE> 128
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID+
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Kemper Global Income Fund 12/31/97 $ 99,054,000 0.75 of 1% of the first $250 $ 858,000
million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
Kemper Growth Fund 9/30/97 $2,827,565,000 0.58 of 1% of the first $250 $14,576,000
million of average daily net
assets; 0.55 of 1% of the next
$750 million; 0.53 of 1% of
the next $1.5 billion; 0.51 of
1% of the next $2.5 billion;
0.48 of 1% of the next $2.5
billion; 0.46 of 1% of the
next $2.5 billion; 0.44 of 1%
of the next $2.5 billion and
0.42 of 1% thereafter
Kemper High Yield Fund 9/30/97 $4,939,302,000 0.58 of 1% of the first $250 $23,419,000
million of average daily net
assets; 0.55 of 1% of the next
$750 million; 0.53 of 1% of
the next $1.5 billion; 0.51 of
1% of the next $2.5 billion;
0.48 of 1% of the next $2.5
billion; 0.46 of 1% of the
next $2.5 billion; 0.44 of 1%
of the next $2.5 billion and
0.42 of 1% thereafter
Kemper High Yield 3/31/98 $ 16,188,000** 0.75 of 1% of the first $250 $ 28,000
Opportunity Fund million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
Kemper Horizon 10+ 7/31/98 $ 111,687,000 0.58 of 1% of the first $250 $ 495,000
Portfolio million of average daily net
assets; 0.55 of 1% of the next
$750 million; 0.53 of 1% of
the next $1.5 billion; 0.51 of
1% of the next $2.5 billion;
0.48 of 1% of the next $2.5
billion; 0.46 of 1% of the
next $2.5 billion; 0.44 of 1%
of the next $2.5 billion and
0.42 of 1% thereafter
Kemper Horizon 20+ 7/31/98 $ 110,076,000 0.58 of 1% of the first $250 $ 495,000
Portfolio million of average daily net
assets; 0.55 of 1% of the next
$750 million; 0.53 of 1% of
the next $1.5 billion; 0.51 of
1% of the next $2.5 billion;
0.48 of 1% of the next $2.5
billion; 0.46 of 1% of the
next $2.5 billion; 0.44 of 1%
of the next $2.5 billion and
0.42 of 1% thereafter
</TABLE>
3
<PAGE> 129
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID+
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Kemper Horizon 5 Portfolio 7/31/98 $ 55,335,000 0.58 of 1% of the first $250 $ 242,000
million of average daily net
assets; 0.55 of 1% of the next
$750 million; 0.53 of 1% of
the next $1.5 billion; 0.51 of
1% of the next $2.5 billion;
0.48 of 1% of the next $2.5
billion; 0.46 of 1% of the
next $2.5 billion; 0.44 of 1%
of the next $2.5 billion and
0.42 of 1% thereafter
Kemper Income And Capital 10/31/97 $ 613,470,000 0.55 of 1% of the first $250 $ 3,162,000
Preservation Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper Intermediate 9/30/97 $ 21,889,000 0.55 of 1% of the first $250 $ 117,000++
Municipal Bond Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper International Fund 10/31/97 $ 588,069,000 0.75 of 1% of the first $250 $ 4,131,000
million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
Kemper International 3/31/98 $ 1,556,000** 1.00% of average daily net $ 3,000#
Growth and Income Fund assets
Kemper Latin America Fund 3/31/98 $ 1,441,000** 1.25% of the first $250 $ 4,000#
million of average daily net
assets; 1.20% of the next $750
million; 1.15% over $1 billion
Kemper Michigan Tax-Free 8/31/97 $ 3,091,000 0.55 of 1% of the first $250 $ 18,000++
Income Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
</TABLE>
4
<PAGE> 130
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID+
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Kemper Municipal Bond Fund 9/30/97 $3,216,221,000 0.45 of 1% of the first $250 $13,507,000
million of average daily net
assets; 0.43 of 1% of the next
$750 million; 0.41 of 1% of
the next $1.5 billion; 0.40 of
1% of the next $2.5 billion;
0.38 of 1% of the next $2.5
billion; 0.36 of 1% of the
next $2.5 billion; 0.34 of 1%
of the next $2.5 billion and
0.32 of 1% thereafter
Kemper New Jersey Tax- 8/31/97 $ 5,304,000 0.55 of 1% of the first $250 $ 25,000++
Free Income Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper New York Tax-Free 8/31/97 $ 285,934,000 0.55 of 1% of the first $250 $ 1,604,000
Income Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper Ohio Tax-Free 8/31/97 $ 39,468,000 0.55 of 1% of the first $250 $ 212,000
Income Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper Pennsylvania Tax- 8/31/97 $ 6,304,000 0.55 of 1% of the first $250 $ 28,000++
Free Income Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper Retirement 7/31/98 $ 106,339,000 0.50% of average daily net $ 560,000
Fund -- Series I assets
Kemper Retirement 7/31/98 $ 158,437,000 0.50% of average daily net $ 825,000
Fund -- Series II assets
Kemper Retirement 7/31/98 $ 118,084,000 0.50% of average daily net $ 615,000
Fund -- Series III assets
Kemper Retirement 7/31/98 $ 124,417,000 0.50% of average daily net $ 651,000
Fund -- Series IV assets
Kemper Retirement 7/31/98 $ 125,886,000 0.50% of average daily net $ 657,000
Fund -- Series V assets
</TABLE>
5
<PAGE> 131
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID+
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Kemper Retirement 7/31/98 $ 70,487,000 0.50% of average daily net $ 358,000
Fund -- Series VI assets
Kemper Retirement 7/31/98 $ 25,787,000 0.50% of average daily net $ 76,000
Fund -- Series VII assets
Kemper Small Cap Relative N/A N/A 0.75 of 1% of the first $250 N/A
Value Fund* million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
Kemper Small Cap Value 11/30/97 $1,263,144,000 0.75 of 1% of the first $250 $ 5,160,000
Fund million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
Kemper Small 9/30/97 $1,095,478,000 Base investment management fee $ 3,193,000
Capitalization Equity of .65 of 1% of average daily
Fund net assets plus or minus an
incentive fee based upon the
investment performance of the
fund as compared with the
performance of the Standard &
Poor's 500 Stock Index, which
may result in a total fee
ranging from .35 of 1% to .95
of 1% for the Small
Capitalization Equity Fund
Kemper Technology Fund 10/31/97 $1,209,723,000 0.58 of 1% of the first $250 $ 6,532,000
million of average daily net
assets; 0.55 of 1% of the next
$750 million; 0.53 of 1% of
the next $1.5 billion; 0.51 of
1% of the next $2.5 billion;
0.48 of 1% of the next $2.5
billion; 0.46 of 1% of the
next $2.5 billion; 0.44 of 1%
of the next $2.5 billion and
0.42 of 1% thereafter
</TABLE>
6
<PAGE> 132
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID+
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Kemper Texas Tax-Free 8/31/97 $ 12,469,000 0.55 of 1% of the first $250 $ 72,000
Income Fund million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper Total Return Fund 10/31/97 $3,241,383,000 0.58 of 1% of the first $250 $17,084,000
million of average daily net
assets; 0.55 of 1% of the next
$750 million; 0.53 of 1% of
the next $1.5 billion; 0.51 of
1% of the next $2.5 billion;
0.48 of 1% of the next $2.5
billion; 0.46 of 1% of the
next $2.5 billion; 0.44 of 1%
of the next $2.5 billion and
0.42 of 1% thereafter
Kemper U.S. Government 10/31/97 $3,642,027,000 0.45 of 1% of the first $250 $15,888,000
Securities Fund million of average daily net
assets; 0.43 of 1% of the next
$750 million; 0.41 of 1% of
the next $1.5 billion; 0.40 of
1% of the next $2.5 billion;
0.38 of 1% of the next $2.5
billion; 0.36 of 1% of the
next $2.5 billion; 0.34 of 1%
of the next $2.5 billion and
0.32 of 1% thereafter
Kemper U.S. Growth and 4/30/98 $ 3,864,000*** 0.600% of 1% of the first $250 $ 2,000#
Income Fund million of average daily net
assets; 0.570% of 1% of the
next $750 million; 0.550% of
1% of the next $1.5 billion;
0.530% of 1% thereafter.
Kemper U.S. Mortgage Fund 9/30/97 $2,497,825,000 0.55 of 1% of the first $250 $13,793,000
million of average daily net
assets; 0.52 of 1% of the next
$750 million; 0.50 of 1% of
the next $1.5 billion; 0.48 of
1% of the next $2.5 billion;
0.45 of 1% of the next $2.5
billion; 0.43 of 1% of the
next $2.5 billion; 0.41 of 1%
of the next $2.5 billion and
0.40 of 1% thereafter
Kemper Value+Growth Fund 11/30/97 $ 97,741,000 0.72 of 1% of the first $250 $ 474,000
million of average daily net
assets; 0.69 of 1% of the next
$750 million; 0.66 of 1% of
the next $1.5 billion; 0.64 of
1% of the next $2.5 billion;
0.60 of 1% of the next $2.5
billion; 0.58 of 1% of the
next $2.5 billion; 0.56 of 1%
of the next $2.5 billion and
0.54 of 1% thereafter
Kemper Worldwide 2004 Fund 7/31/98 $ 33,070,000 0.60% of average daily net $ 202,000
assets
</TABLE>
7
<PAGE> 133
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE PAID+
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Kemper-Dreman Financial N/A N/A 0.75 of 1% of the first $250 N/A
Services Fund* million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
Kemper-Dreman High Return 11/30/97 $2,931,721,000 0.75 of 1% of the first $250 $12,084,000
Equity Fund million of average daily net
assets; 0.72 of 1% of the next
$750 million; 0.70 of 1% of
the next $1.5 billion; 0.68 of
1% of the next $2.5 billion;
0.65 of 1% of the next $2.5
billion; 0.64 of 1% of the
next $2.5 billion; 0.63 of 1%
of the next $2.5 billion and
0.62 of 1% thereafter
</TABLE>
- ------------------------------
+ Aggregate management fees disclosed in this table may include fees paid to
successors and affiliates of Scudder Kemper Investments, Inc.
* Audited fee and net asset information is not available for Kemper-Dreman
Financial Services Fund, which commenced operations on March 9, 1998 and
Kemper Small Cap Relative Value Fund, which commenced operations on May 6,
1998.
** Net asset and management fee information is provided for the semi-annual
period ended March 31, 1998.
*** Net asset and management fee information is provided for the semi-annual
period ended April 30, 1998.
# The management fee was accrued but not paid as of the semi-annual period for
which the number is provided.
+ The management fee rates shown are for each Fund's most recently completed
fiscal year, unless otherwise noted.
++ After waiver and/or expense limitations.
8
<PAGE> 134
APPENDIX 6
DATES RELATING TO
FORMER AND NEW INVESTMENT MANAGEMENT AGREEMENTS
<TABLE>
<CAPTION>
FORMER TERMINATION
INVESTMENT NEW DATE
MANAGEMENT INVESTMENT (UNLESS
DATE OF AGREEMENT MANAGEMENT CONTINUED)
FORMER LAST AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT APPROVED BY LAST APPROVED INVESTMENT
OF MANAGEMENT SHAREHOLDERS/ BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT STOCKHOLDERS DIRECTORS AGREEMENT
---- ------------ ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Kemper Aggressive Growth Fund 12/31/96 12/31/97 12/3/97 9/18/98 9/30/99
Kemper Asian Growth Fund 10/21/96 12/31/97 12/3/97 9/18/98 9/30/99
Kemper California Tax-Free 2/17/83 12/31/97 12/3/97 9/18/98 9/30/99
Income Fund
Kemper Cash Reserves Fund 2/6/84 12/31/97 12/3/97 9/18/98 9/30/99
Kemper Contrarian Fund 8/24/95* 12/31/97 3/18/98 9/22/98 9/30/99
Kemper Diversified Income 6/23/77 12/31/97 12/3/97 9/18/98 9/30/99
Fund
Kemper Emerging Markets 1/9/98 12/31/97 12/23/97 9/22/98 9/30/99
Growth Fund
Kemper Emerging Markets 12/31/97 12/31/97 12/23/97 9/22/98 9/30/99
Income Fund
Kemper Europe Fund 5/1/96 12/31/97 12/3/97 9/22/98 9/30/99
Kemper Florida Tax-Free 4/25/91 12/31/97 12/3/97 9/18/98 9/30/99
Income Fund
Kemper Global Blue Chip Fund 12/31/97 12/31/97 12/23/97 9/22/98 9/30/99
Kemper Global Income Fund 10/1/89 12/31/97 12/3/97 9/18/98 9/30/99
Kemper Growth Fund 4/4/66 12/31/97 12/3/97 9/18/98 9/30/99
Kemper High Yield Fund 1/26/78 12/31/97 12/3/97 9/18/98 9/30/99
Kemper High Yield Opportunity 10/1/97 12/31/97 9/23/97 9/18/98 9/30/99
Fund
Kemper Horizon 10+ Portfolio 12/29/95 12/31/97 12/3/97 9/22/98 9/30/99
Kemper Horizon 20+ Portfolio 12/29/95 12/31/97 12/3/97 9/22/98 9/30/99
Kemper Horizon 5 Portfolio 12/29/95 12/31/97 12/3/97 9/22/98 9/30/99
Kemper Income And Capital 4/15/74 12/31/97 12/3/97 9/18/98 9/30/99
Preservation Fund
Kemper Intermediate Municipal 11/1/94 12/31/97 12/3/97 9/18/98 9/30/99
Bond Fund
Kemper International Fund 5/21/86 12/31/97 12/3/97 9/18/98 9/30/99
Kemper International Growth 12/31/97 12/31/97 12/23/97 9/22/98 9/30/99
and Income Fund
Kemper Latin America Fund 12/31/97 12/31/97 12/23/97 9/22/98 9/30/99
Kemper Michigan Tax-Free 3/15/95 12/31/97 12/3/97 9/18/98 9/30/99
Income Fund
Kemper Municipal Bond Fund 4/20/76 12/31/97 12/3/97 9/18/98 9/30/99
Kemper New Jersey Tax-Free 3/15/95 12/31/97 12/3/97 9/18/98 9/30/99
Income Fund
Kemper New York Tax-Free 12/31/85 12/31/97 12/3/97 9/18/98 9/30/99
Income Fund
</TABLE>
<PAGE> 135
<TABLE>
<CAPTION>
FORMER TERMINATION
INVESTMENT NEW DATE
MANAGEMENT INVESTMENT (UNLESS
DATE OF AGREEMENT MANAGEMENT CONTINUED)
FORMER LAST AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT APPROVED BY LAST APPROVED INVESTMENT
OF MANAGEMENT SHAREHOLDERS/ BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT STOCKHOLDERS DIRECTORS AGREEMENT
---- ------------ ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Kemper Ohio 3/22/93 12/31/97 12/3/97 9/18/98 9/30/99
Tax-Free
Income Fund
Kemper Pennsylvania Tax-Free 3/15/95 12/31/97 12/3/97 9/18/98 9/30/99
Income Fund
Kemper Retirement Fund -- 2/5/90 12/31/97 12/3/97 9/22/98 9/30/99
Series I
Kemper Retirement Fund -- 9/11/90 12/31/97 12/3/97 9/22/98 9/30/99
Series II
Kemper Retirement Fund -- 4/10/92 12/31/97 12/3/97 9/22/98 9/30/99
Series III
Kemper Retirement Fund -- 1/15/93 12/31/97 12/3/97 9/22/98 9/30/99
Series IV
Kemper Retirement Fund -- 11/15/93 12/31/97 12/3/97 9/22/98 9/30/99
Series V
Kemper Retirement Fund -- 5/1/95 12/31/97 12/3/97 9/22/98 9/30/99
Series VI
Kemper Retirement Fund -- 5/1/97 12/31/97 12/3/97 9/22/98 9/30/99
Series VII
Kemper Small Cap Relative 5/6/98 5/6/98 5/6/98 9/22/98 9/30/99
Value Fund
Kemper Small Cap Value Fund 8/24/95* 12/31/97 12/3/97 9/22/98 9/30/99
Kemper Small Capitalization 2/20/69 12/31/97 12/3/97 9/18/98 9/30/99
Equity Fund
Kemper Technology Fund 9/7/48 12/31/97 12/3/97 9/18/98 9/30/99
Kemper Texas Tax-Free Income 11/1/91 12/31/97 12/3/97 9/18/98 9/30/99
Fund
Kemper Total Return Fund 3/2/64 12/31/97 12/3/97 9/18/98 9/30/99
Kemper U.S. Government 10/1/79* 12/31/97 12/3/97 9/18/98 9/30/99
Securities Fund
Kemper U.S. Growth and Income 1/30/98 1/30/98 1/29/98 9/22/98 9/30/99
Fund
Kemper U.S. Mortgage Fund 10/26/84 12/31/97 12/3/97 9/18/98 9/30/99
Kemper Value+Growth Fund 10/16/95 12/31/97 12/3/97 9/18/98 9/30/99
Kemper Worldwide 2004 Fund 5/3/94 12/31/97 12/3/97 9/22/98 9/30/99
Kemper-Dreman Financial 3/9/98 3/2/98 2/26/98 9/22/98 9/30/99
Services Fund
Kemper-Dreman High Return 8/24/95* 12/31/97 12/3/97 9/22/98 9/30/99
Equity Fund
</TABLE>
- ------------------------------
* Date when Zurich Kemper Investments, Inc. assumed investment management
responsibilities.
2
<PAGE> 136
APPENDIX 7
FEES PAID TO KSC, SFAC AND KDI+
<TABLE>
<CAPTION>
COMMISSIONS
AGGREGATE FEE PAID BY
PAID TO KSC AGGREGATE FEE KDI TO
(REMITTED BY PAID TO KDI AGGREGATE FEE AGGREGATE FEE FINANCIAL
IFTC, WHERE (ADMINISTRATIVE PAID TO KDI PAID TO KDI SERVICES
FUND FISCAL YEAR APPLICABLE) Fees) (12B-1 FEES) (COMMISSIONS) FIRMS*
---- ----------- ------------- --------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kemper Aggressive 9/30/97 $ 13,000 $ 13,000 $ 19,000 $ 16,000 $ 138,000
Growth Fund
Kemper Asian Growth 11/30/97 $ 30,000 $ 7,000 $ 20,000 $ 7,000 $ 106,000
Fund
Kemper California 8/31/97 $ 359,000 $1,718,000 $ 176,000 $ 46,000 $ 376,000
Tax-Free Income Fund
Kemper Cash Reserves 9/30/97 $1,300,000 $ 648,000 $1,617,000 $ 824,000 $ 3,908,000
Fund
Kemper Contrarian 11/30/97 $ 386,000 $ 267,000 $ 382,000 $ 64,000 $ 1,027,000
Fund
Kemper Diversified 10/31/97 $1,681,000 $1,864,000 $2,231,000 $ 424,000 $ 3,017,000
Income Fund
Kemper Emerging 4/30/98+ $ 650 $ 0 $ 203 $ 20 $ 7,393
Markets Growth Fund
Kemper Emerging 4/30/98+ $ 4,509 $ 0 $ 224 $ 0 $ 4,800
Markets Income Fund
Kemper Europe Fund 11/30/97 $ 32,000 $ 20,000 $ 45,000 $ 15,000 $ 259,000
Kemper Florida Tax- 8/31/97 $ 44,000 $ 189,000 $ 30,000 $ 5,000 $ 87,000
Free Income Fund
Kemper Global Blue 4/30/98 $ 2,081 $ 0 $ 1,246 $ 26 $ 40,340
Chip Fund
Kemper Global Income 12/31/97 $ 217,000 $ 238,000 $ 279,000 $ 63,000 $ 155,000
Fund
Kemper Growth Fund 9/30/97 $7,398,000 $6,129,000 $6,536,000 $1,184,000 $ 3,316,000
Kemper High Yield 9/30/97 $4,802,000 $9,596,000 $9,582,000 $1,351,000 $17,522,000
Fund
Kemper High Yield 3/31/98
Opportunity Fund
Kemper Horizon 10+ 7/31/98
Portfolio
Kemper Horizon 20+ 7/31/98
Portfolio
Kemper Horizon 5 7/31/98
Portfolio
Kemper Income And 10/31/97 $ 937,000 $1,209,000 $ 653,000 $ 213,000 $ 648,000
Capital Preservation
Fund
Kemper Intermediate 9/30/97 $ 10,000 $ 49,000 $ 38,000 $ 22,000 $ 31,000
Municipal Bond Fund
Kemper International 10/31/97 $1,913,000 $1,280,000 $1,066,000 $ 230,000 $ 1,826,000
Fund
</TABLE>
<PAGE> 137
<TABLE>
<CAPTION>
COMMISSIONS
AGGREGATE FEE PAID BY
PAID TO KSC AGGREGATE FEE KDI TO
(REMITTED BY PAID TO KDI AGGREGATE FEE AGGREGATE FEE FINANCIAL
IFTC, WHERE (ADMINISTRATIVE PAID TO KDI PAID TO KDI SERVICES
FUND FISCAL YEAR APPLICABLE) Fees) (12B-1 FEES) (COMMISSIONS) FIRMS*
---- ----------- ------------- --------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kemper International 4/30/98+ $ 838 $ 0 $ 395 $ 0 $ 18,358
Growth and Income
Fund
Kemper Latin America 4/30/98+ $ 1,050 $ 0 $ 170 $ 0 $ 4,049
Fund
Kemper Michigan 8/31/97 $ 2,000 $ 8,000 $ 10,000 $ 3,000 $ 5,000
Tax-Free Income Fund
Kemper Municipal Bond 9/30/97 $1,585,000 $5,379,000 $ 428,000 $ 87,000 $ 672,000
Fund
Kemper New Jersey 8/31/97 $ 3,000 $ 11,000 $ 22,000 $ 1,000 $ 28,000
Tax-Free Income Fund
Kemper New York 8/31/97 $ 144,000 $ 519,000 $ 83,000 $ 9,000 $ 138,000
Tax-Free Income Fund
Kemper Ohio Tax-Free 8/31/97 $ 21,000 $ 82,000 $ 66,000 $ 29,000 $ 115,000
Income Fund
Kemper Pennsylvania 8/31/97 $ 3,000 $ 12,000 $ 22,000 $ 7,000 $ 43,000
Tax-Free Income Fund
Kemper Retirement 7/31/98 $ 0 $ 0 $ 0
Fund -- Series I
Kemper Retirement 7/31/98 $ 0 $ 0 $ 0
Fund -- Series II
Kemper Retirement 7/31/98 $ 0 $ 0 $ 0
Fund -- Series III
Kemper Retirement 7/31/98 $ 0 $ 0 $ 0
Fund -- Series IV
Kemper Retirement 7/31/98 $ 0 $ 0 $ 0
Fund -- Series V
Kemper Retirement 7/31/98 $ 0 $ 0 $ 0
Fund -- Series VI
Kemper Retirement 7/31/98 $ 0 $ 0 $ 0
Fund -- Series VII
Kemper Small Cap 11/30/97 $2,132,000 $1,643,000 $2,108,000 $ 243,000 $10,584,000
Value Fund
</TABLE>
2
<PAGE> 138
<TABLE>
<CAPTION>
COMMISSIONS
AGGREGATE FEE PAID BY
PAID TO KSC AGGREGATE FEE KDI TO
(REMITTED BY PAID TO KDI AGGREGATE FEE AGGREGATE FEE FINANCIAL
IFTC, WHERE (ADMINISTRATIVE PAID TO KDI PAID TO KDI SERVICES
FUND FISCAL YEAR APPLICABLE) Fees) (12B-1 FEES) (COMMISSIONS) FIRMS*
---- ----------- ------------- --------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kemper Small 9/30/97 $2,814,000 $2,029,000 $1,992,000 $ 419,000 $ 1,371,000
Capitalization
Equity Fund
Kemper Technology 10/31/97 $1,091,000 $1,927,000 $ 749,000 $ 182,000 $ 1,338,000
Fund
Kemper Texas Tax- 8/31/97 $ 7,000 $ 24,000 $ 7,000 $ 0 $ 23,000
Free Income Fund
Kemper Total Return 10/31/97 $7,212,000 $7,532,000 8,814,000 $1,384,000 $ 3,892,000
Fund
Kemper U.S. 10/31/97 $3,598,000 $7,013,000 $ 590,000 $ 235,000 $ 737,000
Government
Securities Fund
Kemper US Growth & 3/31/98++ $ 1,000 $ 0 $ 1,000 $ 0 $ 49,000
Income Fund**
Kemper U.S. Mortgage 9/30/97 $3,192,000 $6,498,000 $6,701,000 $1,363,000 $ 661,000
Fund
Kemper Value+Growth 11/30/97 $ 236,000 $ 148,000 $ 232,000 $ 0 $ 676,000
Fund
Kemper Worldwide 2004 7/31/98
Fund
Kemper-Dreman High 11/30/97 $4,150,000 $3,849,000 $6,378,000 $ 848,000 $31,289,000
Return Equity Fund
</TABLE>
- ------------------------------
+ The above information is not available for Kemper-Dreman Financial Services
Fund, which did not commence operations until March 9, 1998; and Kemper
Small Cap Relative Value Fund, which did not commence operations until May
6, 1998.
* None of the financial services firms to which KDI allowed any portion of
its commission during the relevant period were affiliated with KDI.
** Each of Kemper Emerging Markets Growth Fund, Kemper Emerging Markets Income
Fund, Kemper Global Blue Chip Fund, Kemper International Growth and Income
Fund, Kemper Latin America Fund and Kemper U.S. Growth and Income Fund paid
fees to SFAC during the relevant period of $16,666, $16,666, $16,666,
$16,666, $16,666 and $6,000. The other Funds currently do not pay fees to
SFAC.
+ Fee information is provided for the semi-annual period ended April 30,
1998.
++ Fee information is provided for the semi-annual period ended March 31, 1998.
3
<PAGE> 139
For more information, please call Shareholder Communications Corporation,
your Fund's information agent, at 1-800-733-8481, ext. 429.
<PAGE> 140
PROXY [NAME OF FUND] PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF YOUR FUND
SPECIAL MEETING OF SHAREHOLDERS -- DECEMBER 16, 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 Wednesday, December 16,
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 or Scudder Kemper Investments, Inc., 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. [For KEF, KIF, KGIF, KWF, KDFSF and KDHREF only] To approve the New
[SIL][DVM] Sub-Advisory Agreement between Scudder Kemper Investments, Inc.
and [Scudder Investment (U.K.) Limited] [Dreman Value Management]
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the amendment of investment objectives and unidentified policies.
[ ] FOR ALL EXCEPT AS MARKED BELOW [ ] AGAINST ALL [ ] ABSTAIN ALL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3.1 Investment objectives 3.10 Margin purchases and short 3.18 Investment in mineral
sales exploration
3.2 Diversification 3.11 Purchase of securities of 3.19 Investment in issuers with
certain issuers short
3.3 Borrowing 3.12 Pledging of assets histories
3.4 Senior securities 3.13 Restricted and illiquid 3.20 Investment in Non-US
securities denominated
3.5 Concentration 3.14 Purchases of voting securities securities
3.6 Underwriting of 3.15 Purchases of options and 3.21 Investment in other investment
securities
3.7 Investment in real 3.16 Repurchase agreements companies
estate
3.8 Purchase of 3.17 Investment for the purpose of 3.22 Investment other than in
commodities accordance
3.9 Lending exercising control or with objectives and policies
management
</TABLE>
<PAGE> 141
To vote against a particular proposed change, applicable to your Fund, write the
sub-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.
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.
-----------------------------------
(Signature of Shareholder)
-----------------------------------
(Signature of joint owner, if any)
Dated _______ , 1998
PLEASE SIGN AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.
