<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-2.
</TABLE>
ZURICH MONEY FUNDS
ZURICH YIELDWISE MONEY FUND
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(Name of Registrant as Specified In Its Charter)
Thomas F. McDonough
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
October , 1998
ZURICH MONEY FUNDS
ZURICH MONEY MARKET FUND
ZURICH GOVERNMENT MONEY FUND
ZURICH TAX-FREE MONEY FUND
ZURICH YIELDWISE MONEY FUND
IMPORTANT NEWS
FOR ZURICH 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 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 invest-
<PAGE> 3
ment 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 as a result of
the transaction. You will still own the same shares in the same Fund. The
new investment management agreement is substantially identical to the former
investment management agreement, except for the dates of execution and
termination. Similarly, the other service arrangements between your Fund and
Scudder Kemper or affiliates of Scudder Kemper will not be affected by the
transaction. If shareholders do not approve the new investment management
agreement, the agreement will terminate and the Board Members of your Fund
will take such action as they deem to be in the best interests of your Fund
and its shareholders.
Q: WILL THE INVESTMENT MANAGEMENT FEES INCREASE?
A: No, the investment management fee rates paid by your Fund will remain the
same.
Q: WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A: In order to save your Fund the expense of a subsequent meeting, a vote is
also being sought for the modification and 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).
<PAGE> 4
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
ZURICH MONEY FUNDS
ZURICH MONEY MARKET FUND
ZURICH GOVERNMENT MONEY FUND
ZURICH TAX-FREE MONEY FUND
ZURICH YIELDWISE MONEY FUND
222 South Riverside Plaza
Chicago, Illinois 60606
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
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
<PAGE> 6
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
ZURICH MONEY FUNDS
ZURICH MONEY MARKET FUND
ZURICH GOVERNMENT MONEY FUND
ZURICH TAX-FREE MONEY FUND
ZURICH YIELDWISE MONEY FUND
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each a "Special
Meeting") of each Zurich Trust listed above (each Trust is a "Trust,"
collectively, the "Trusts"), or, if applicable, each of its series that is
listed on Appendix 1 to the Proxy Statement (each such series is referred to
herein as a "Fund" and, collectively, where applicable, with Zurich YieldWise
Money Fund, which does not have any series, the "Funds"), will be held jointly
at the offices of Scudder Kemper Investments, Inc., 13th Floor, Two
International Place, Boston, Massachusetts 02110, on December 17, 1998, at 11:00
a.m., Eastern time, for the following purposes:
PROPOSAL 1: To approve a new investment management agreement for each
Fund with Scudder Kemper Investments, Inc.; and
PROPOSAL 2: To modify or eliminate certain policies and to eliminate
the shareholder approval requirement as to certain other
matters.
The appointed proxies will vote in their discretion on any other business
as may properly come before 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.
<PAGE> 8
In the event that the necessary quorum to transact business or the vote
required to approve a Proposal is not obtained at the Special Meeting with
respect to one or more Funds, the persons named as proxies may propose one or
more adjournments of the Special Meeting in accordance with applicable law, to
permit further solicitation of proxies. Any such adjournment as to a matter will
require the affirmative vote of the holders of a majority of the concerned
Fund's shares present in person or by proxy at the Special Meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of the Proposals and will vote against any such
adjournment those proxies to be voted against the Proposals.
By Order of the Boards of Trustees,
/S/ Philip J. Collora
Philip J. Collora
Secretary
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
ZURICH MONEY FUNDS
ZURICH MONEY MARKET FUND
ZURICH GOVERNMENT MONEY FUND
ZURICH TAX-FREE MONEY FUND
ZURICH YIELDWISE MONEY FUND
222 South Riverside Plaza
Chicago, Illinois 60606
JOINT PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Board") of each of the Zurich Trusts
listed above (each Trust is a "Trust," collectively, the "Trusts") for use at
the Special Meetings of Shareholders of each Trust, or, if applicable, its
series that are listed on Appendix 1 hereto (each such series is referred to
herein as a "Fund" and, collectively, where applicable, with Zurich YieldWise
Money Fund, which does not have any series, the "Funds"), to be held jointly at
the offices of Scudder Kemper Investments, Inc. ("Scudder Kemper"), 13th Floor,
Two International Place, Boston, Massachusetts 02110, on December 17, 1998 at
11:00 a.m., Eastern time, and at any and all adjournments thereof (the "Special
Meeting").
In the descriptions of the Proposals below, the Trusts and Funds are
referred to by the acronyms listed in Appendix 1. The word "fund" is sometimes
used to mean investment companies or series thereof in general, and not the
Funds whose proxy statement this is. In addition, in this Proxy Statement, for
simplicity, actions are described as being taken by a Fund that is a series of
Zurich Money Funds, although all actions are actually taken by that Trust 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 October 19, 1998 or as soon as
practicable thereafter. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary at the principal executive office of the
Funds, c/o Scudder Kemper Investments, Inc., at 222 South Riverside Plaza,
Chicago, Illinois 60606) or in person at the Special Meeting, by executing a
superseding proxy or by submitting a notice of revocation to the Fund. All
properly executed proxies received in time for the Special Meeting will be voted
as specified in the proxy or, if no specification is made, in favor of the
Proposals referred to in the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of 30% of the shares of a Fund entitled to be cast shall be necessary
and sufficient to constitute a quorum for the transaction of business. In the
event that the necessary quorum to transact business or the vote required to
approve any
<PAGE> 10
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 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.
<PAGE> 11
Appendix 3 sets forth the beneficial owners of at least 5% of a Fund's
shares. To the best of each Trust's knowledge, as of June 30, 1998, no person
owned beneficially more than 5% of any Fund's outstanding shares, except as
stated in Appendix 3.
Appendix 4 hereto sets forth the number of shares of each Fund owned
directly or beneficially by the Trustees of the relevant Board.
Each Fund provides periodic reports to all of its shareholders which
highlight relevant information, including investment results and a review of
portfolio changes. You may receive an additional copy of the most recent annual
report for each Fund and a copy of any more recent semi-annual report, without
charge, by calling 1-800-xxx-xxxx or writing the Fund, c/o Scudder Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606.
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") (the "Zurich-B.A.T
Transaction" or the "Transaction"), which is described below, is referred to in
this Proxy Statement as a "Former Investment Management Agreement,"
collectively, the "Former Investment Management Agreements." The investment
management agreement currently in effect between each Fund and Scudder Kemper,
which is also described below, was executed as of the consummation of the
Zurich-B.A.T Transaction and is referred to in this Proxy Statement as a "New
Investment Management Agreement," collectively, the "New Investment Management
Agreements" and, together with the Former Investment Management Agreements, the
"Investment Management Agreements." (Scudder Kemper is sometimes referred to in
this Proxy Statement as the "Investment Manager.")
The information set forth in this Proxy Statement and the accompanying
materials concerning the Transaction, Scudder Kemper, Zurich, B.A.T and their
respective affiliates has been provided to the Funds by Scudder Kemper based
upon information that Scudder Kemper received from Zurich and its affiliates.
On June 26, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") entered into
an agreement with Zurich pursuant to which Scudder and Zurich agreed to form an
alliance. On December 31, 1997, Zurich acquired a majority interest in Scudder,
and Zurich Kemper Investments, Inc. ("Kemper"), a Zurich subsidiary, became part
of Scudder. Scudder's name was changed to Scudder Kemper Investments, Inc. The
transaction between Scudder and Zurich (the "Scudder-
<PAGE> 12
Zurich Transaction") resulted in the termination of each Fund's investment
management agreement with Kemper. Consequently, the Former Investment Management
Agreement between each Fund and Scudder Kemper was approved by each Trust's
Board and by each Fund's shareholders.
The Zurich-B.A.T Transaction. On December 22, 1997, Zurich and B.A.T
entered into a definitive agreement (the "Merger Agreement") pursuant to which
businesses of Zurich (including Zurich's almost 70% ownership interest in
Scudder Kemper) were to be combined with the financial services businesses of
B.A.T. On October 12, 1997, Zurich and B.A.T had confirmed that they were
engaged in discussions concerning a possible business combination; on October
16, 1997, Zurich and B.A.T announced that they had entered into an Agreement in
Principle, dated as of October 15, 1997 (the "Agreement in Principle"), to merge
B.A.T's financial services businesses with Zurich's businesses. The Merger
Agreement superseded the Agreement in Principle.
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 became the owners (through Zurich
Allied AG) of 57% of the voting stock of Zurich Financial 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.
<PAGE> 13
Below is a simplified chart showing the corporate structure of Zurich
Financial Services after these transactions:
[ZURICH FINANCIAL SERVICES FLOW CHART]
Corporate Governance. At the closing of the Zurich-B.A.T Transaction, the
parties entered into a Governing Agreement that establishes the corporate
governance structure for Zurich Allied AG, Allied Zurich p.l.c. and Zurich
Financial Services.
The Board of Directors of Zurich Financial Services consists of ten
members, five of whom were initially selected by Zurich and five by B.A.T. Mr.
Rolf Huppi, Zurich's Chairman and Chief Executive Officer, became Chairman and
Chief Executive Officer of Zurich Financial Services. In addition to his vote by
virtue of
<PAGE> 14
his position on the Board of Directors, as Chairman, Mr. Huppi will have a tie-
breaking vote on all matters except recommendations of the Audit Committee,
recommendations of the Remuneration Committee in respect of the remuneration of
the Chairman and the CEO, appointment and removal of the Chairman and CEO,
appointments to the Nominations, Audit and Remuneration Committees and
nominations to the Board of Directors not made through the Nominations
Committee.
The Group Management Board of Zurich Financial Services has been given
responsibility by the Board of Directors for the executive management of Zurich
Financial Services and has wide authority for such purpose. Of the 11 initial
members of the Group Management Board, eight were members of the Corporate
Executive Board of Zurich (including Mr. Edmond D. Villani, CEO of Scudder
Kemper, who is responsible for Global Asset Management for Zurich Financial
Services), and three were B.A.T executives.
The Board of Directors of Zurich Allied AG initially consists of 11
members, eight of whom were Zurich directors and three of whom were proposed by
B.A.T. The Board of Directors of Allied Zurich p.l.c. also initially consists of
11 members, eight of whom were B.A.T directors and three of whom were proposed
by Zurich. The parties have agreed that, as soon as possible, the Boards of
Directors of Zurich Financial Services, Zurich Allied AG and Allied Zurich
p.l.c. will have identical membership.
Shareholder resolutions of Zurich Financial Services in general require
approval by at least 58% of all shares outstanding.
The Governing Agreement also contains provisions relating to dividend
equalization and provisions intended to ensure equal treatment of Zurich Allied
AG and Allied Zurich p.l.c. shareholders in the event of a takeover bid for
either company.
The B.A.T financial services businesses, which, since the closing of the
Transaction, are owned by Zurich Financial Services, include: the Farmers Group
of Insurance companies; 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
B.A.T's tobacco business should not adversely affect Zurich or the present
Zurich subsidiaries, including Scudder Kemper.
<PAGE> 15
Governance arrangements that were put in place at the time of the
acquisition of Zurich's 70% interest in Scudder Kemper (which are discussed
below under "Investment Manager") remain unaffected by the Transaction. These
arrangements preclude the making of certain major decisions affecting Scudder
Kemper without the approval of Scudder Kemper directors elected by the
non-Zurich shareholders of Scudder Kemper.
Consummation of the Zurich-B.A.T Transaction may be deemed to have
constituted an "assignment," as that term is defined in the 1940 Act, of each
Fund's Former Investment Management Agreement with Scudder Kemper. As required
by the 1940 Act, each of the Former Investment Management Agreements provided
for its automatic termination in the event of its assignment. Accordingly, a New
Investment Management Agreement between each Fund and Scudder Kemper was
approved by the Board members of each Fund and is now being proposed for
approval by shareholders of each Fund. Scudder Kemper has received an exemptive
order from the Securities and Exchange Commission (the "SEC" or the
"Commission") permitting each Fund to obtain shareholder approval of its New
Investment Management Agreement within 150 days after the consummation of the
Transaction, which occurred on September 7, 1998 (and, consequently, within 150
days after the termination of its Former Investment Management Agreement),
instead of before the consummation of the Transaction. Pursuant to the exemptive
order, each Fund's investment management fees are being held in escrow until the
earlier of shareholder approval of the Fund's New Investment Management
Agreement or the expiration of the 150 day period. A copy of the master form of
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 July 21, 1998, the Board of each Trust met and the Board members of each
Trust, including the Board Members who are not parties to such agreement or
"interested persons" (as defined under the 1940 Act) (the "Non-Interested
Trustees" or "Non-Interested Board members") of any such party, voted to approve
the New Investment Management Agreements and to recommend approval to the
shareholders of each applicable Fund.
For information about the Boards' deliberations and the reasons for their
recommendation, please see "Board's Evaluation" below.
<PAGE> 16
BOARD'S EVALUATION
Each Board met on July 21, 1998 to consider the Transaction and its effects
on the Funds. Each Board met with senior management personnel of Scudder Kemper.
Each Board had the assistance of legal counsel, who prepared among other things,
an analysis of the Board's fiduciary obligations. As a result of its review and
consideration of the Transaction and the proposed new investment management
agreement, each Board voted unanimously to approve the applicable New Investment
Management Agreement and to recommend it to the shareholders of the respective
Fund for their approval.
In connection with its review, Scudder Kemper represented to each Board
that: the Transaction will have no effect on the operational management of any
Fund; the Transaction will not result in any change in the management or
operations of Scudder Kemper; there will not be any increase in the advisory fee
or any change in any other provision, other than the term, of any Investment
Management Agreement as a result of the Transaction; the Transaction will not
adversely affect Scudder Kemper's financial condition; and the Transaction
should expand Scudder Kemper's global asset management capabilities and enhance
Scudder Kemper's research capabilities, particularly with respect to the United
Kingdom and Europe.
In connection with its deliberations, each Board obtained certain
assurances from Zurich, including the following:
- Zurich has provided to the Board such information as is reasonably
necessary to evaluate the New Investment Management and other agreements.
- Zurich looks upon Scudder Kemper as the core of Zurich's global asset
management strategy. With that focus, Zurich will devote to Scudder
Kemper and its affairs all attention and resources that are necessary to
provide for the Funds top quality investment management, shareholder,
administrative and product distribution services.
- The Transaction will not result in any change in any Fund's investment
objectives or policies.
- The Transaction will not result in any change in the management or
operations of Scudder Kemper or its subsidiaries.
- The Transaction is not expected to result in any adverse change in the
investment management or operations of any Fund; and Zurich neither plans
nor proposes, for the foreseeable future, to make any material change in
the manner in which investment advisory services or other services are
rendered to any Fund which has the potential to have a material adverse
effect upon the Fund.
<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 that of each Fund itself and
relative to that of competitive investment companies; investment management fees
and expense ratios of each Fund and competitive investment companies; Scudder
Kemper's profitability from managing each Fund; fall-out benefits to Scudder
Kemper from its relationship to each Fund, including revenues derived from
services provided to the Fund by affiliates of Scudder Kemper; and the potential
benefits to Scudder Kemper and to each Fund and its shareholders of receiving
research services from broker/dealer firms in connection with the allocation of
portfolio transactions to such firms.
The Boards discussed the Transaction with the senior management of Scudder
Kemper and Zurich and among themselves. The Boards considered that Zurich is a
large, well-established company with substantial resources, and, as noted above,
has undertaken to devote such resources to Scudder Kemper as are necessary to
provide the Funds with top quality services.
As a result of their review and consideration of the Transaction and the
New Investment Management Agreements, at their meetings the Boards of each Trust
voted to approve the New Investment Management Agreements and to recommend their
approval to the shareholders of each Fund.
DESCRIPTION OF THE INVESTMENT MANAGEMENT AGREEMENTS
Except as disclosed below, all Former and New Investment Management
Agreements are substantially identical. Under the Investment Management
Agreements, Scudder Kemper provides each Fund with continuing investment
management services. The Investment Manager also determines which securities
should be purchased, held, or sold, and what portion of each Fund's assets
should be held uninvested, subject to each Trust's Charter, By-Laws, investment
<PAGE> 19
policies and restrictions, the provisions of the 1940 Act, and such policies and
instructions as the Trustees may have determined.
The Investment Management Agreement for ZMF applies to each of the Funds of
that Trust (i.e., ZMMF, ZGMF, and ZTMF). The Investment Management Agreement
applicable to ZYMF applies to that Fund individually. The Investment Management
Agreement applicable to ZMMF, ZGMF, and ZTMF provides that if the Trust
establishes any additional series with respect to which it desires to retain the
Investment Manager's services under the Investment Management Agreement, the
Trust must so notify the Investment Manager in writing; the Investment
Management Agreement will become applicable to the new series as soon as the
Investment Manager has notified the Trust in writing that it is willing to
render services under the Investment Management Agreement to the new series.
Each Investment Management Agreement provides that the Investment Manager
will provide portfolio management services, place portfolio transactions in
accordance with policies expressed in each Fund's registration statement, pay
each Fund's office rent, and render significant administrative services on
behalf of each Fund (not otherwise provided by third parties) necessary for each
Fund's operating as an open-end investment company, including, but not limited
to, preparing reports to and meeting materials for each Trust's Board and
reports and notices to Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of
various third-party and affiliated service providers to each Fund (such as each
Fund's transfer and pricing agents, fund accounting agent, custodian,
accountants and others) and other persons in any capacity deemed necessary or
desirable to Fund operations; preparing and making filings with the SEC and
other regulatory and self-regulatory organizations, including but not limited
to, preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by each
Fund's transfer agent; assisting in the preparation and filing of each Fund's
federal, state and local tax returns; preparing and filing each Fund's federal
excise tax returns pursuant to Section 4982 of the Internal Revenue Code of
1986, as amended; providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities and the calculation of
net asset value; monitoring the registration of shares of each Fund under
applicable federal and state securities laws; maintaining or causing to be
maintained for each Fund all books, records and reports and any other
information required under the 1940 Act, to the extent such books, records and
reports and other information are not maintained by each Fund's custodian or
other agents of each Fund; assisting in establishing accounting policies of each
Fund; assisting in the resolution of accounting issues that may arise with
respect to 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
<PAGE> 20
each Fund's bills; processing the payment of bills that have been approved by an
authorized person; assisting each Fund in determining the amount of dividends
and distributions available to be paid by each Fund to its shareholders,
preparing and arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the custodian, and the
accounting agent with such information as is required for such parties to effect
the payment of dividends and distributions; and otherwise assisting each Fund in
the conduct of its business, subject to the direction and control of each
Trust's Board.
Under each Investment Management Agreement, each Fund is responsible for
other expenses, including organizational expenses (including out-of-pocket
expenses, but not including the Investment Manager's overhead or employee
costs); brokers' commissions or other costs of acquiring or disposing of any
portfolio securities of each Fund; legal, auditing and accounting expenses;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; taxes and governmental fees;
the fees and expenses of each Fund's transfer agent; expenses of preparing share
certificates and any other expenses, including clerical expenses, of issuance,
offering, distribution, sale, redemption or repurchase of shares; the expenses
of and fees for registering or qualifying securities for sale; the fees and
expenses of Non-Interested Trustees; the cost of printing and distributing
reports, notices and dividends to current shareholders; and the fees and
expenses of each Fund's custodians, subcustodians, accounting agent, dividend
disbursing agents and registrars. Each Fund may arrange to have third parties
assume all or part of the expenses of sale, underwriting and distribution of
shares of each Fund. Each Fund is also responsible for expenses of shareholders'
and other meetings and its expenses incurred in connection with litigation and
the legal obligation it may have to indemnify officers and Trustees of each
Trust with respect thereto. Each Fund is also responsible for the maintenance of
books and records which are required to be maintained by each Fund's custodian
or other agents of each Trust; telephone, telex, facsimile, postage and other
communications expenses; any fees, dues and expenses incurred by each Fund in
connection with membership in investment company trade organizations; expenses
of printing and mailing prospectuses and statements of additional information of
each Fund and supplements thereto to current shareholders; costs of stationery;
fees payable to the Investment Manager and to any other Fund advisors or
consultants; expenses relating to investor and public relations; interest
charges, bond premiums and other insurance expense; freight, insurance and other
charges in connection with the shipment of each Fund's portfolio securities; and
other expenses.
The Investment Manager is responsible for the payment of the compensation
and expenses of all Trustees, officers and executive employees of each Fund
(including each Fund's share of payroll taxes) affiliated with the Investment
Manager and making available, without expense to each Fund, the services of such
Trustees, officers and employees as may duly be elected officers of each Trust,
subject to their individual consent to serve and to any limitations
<PAGE> 21
imposed by law. Each Fund is responsible for the fees and expenses (specifically
including travel expenses relating to Fund business) of Trustees not affiliated
with the Investment Manager. Under each Investment Management Agreement, the
Investment Manager also pays each Fund's share of payroll taxes. During each
Fund's most recent fiscal year, no compensation, direct or otherwise (other than
through fees paid to the Investment Manager), was paid or became payable by each
Trust to any of its officers or Trustees who were affiliated with the Investment
Manager.
In return for the services provided by the Investment Manager as investment
manager and the expenses it assumes under each Investment Management Agreement,
each Fund pays the Investment Manager a management fee which is accrued daily
and payable monthly. The management fee rate for each Fund under the Investment
Management Agreements is set forth in Appendix 5 hereto. As of the end of each
Fund's last fiscal year, each Fund had net assets and paid an aggregate
management fee to the Investment Manager during such period as also set forth in
Appendix 5 hereto. The investment management fee for ZMMF, ZGMF and ZTMF, and
the expense limitation (described below) for each of those Funds are computed
based on combined average daily net assets of the Funds. These are allocated
among the Funds based upon the relative net assets of each such Fund. The
investment management fee for ZYMF is computed based upon the average daily net
assets of that Fund.
The Investment Management Agreement applicable to the Funds in ZMF provides
that the investment manager will reimburse the Funds should the aggregate
expenses of the Funds exceed on an annual basis: 1.5% of the first $30 million
of the Funds' combined average daily net assets; and 1% of the Funds' combined
average daily net assets over $30 million. For this purpose, expenses include
the investment management fee but exclude interest, taxes, extraordinary
expenses, brokerage commissions and transaction costs.
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
<PAGE> 22
time without penalty by the vote of a majority of the outstanding voting
securities of the Fund or by a vote of the Board if a court establishes that the
Investment Manager or any of its officers or directors has taken any action
resulting in a breach of the Investment Manager's covenants under the Investment
Management Agreement. As stated above, each Investment Management Agreement
automatically terminates in the event of its assignment.
Scudder Kemper or one of its predecessors has acted as the Investment
Manager for each Fund as of the date set forth in the table in Appendix 6
hereto. Also shown in Appendix 6 is the date of each Former Investment
Management Agreement, the date when each Former Investment Management Agreement
was last approved by the shareholders of each Fund, the date when each New
Investment Management Agreement was last approved by the Trustees of each Fund
and the date to which each New Investment Management Agreement was last
continued. Each Former Investment Management Agreement was last submitted to
shareholders (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, which is currently
in effect, is dated the date of the consummation of the Transaction, which
occurred on September 7, 1998. Each New Investment Management Agreement was to
be in effect for an initial term ending on December 1, 1998 and to be continued
thereafter from year to year only if specifically approved at least annually by
the vote of "a majority of the outstanding voting securities" of each Fund, or
by the Board and, in either event, the vote of a majority of the Non-Interested
Trustees, cast in person at a meeting called for such purpose. At meetings held
on September 18, 1998, the Board of each Fund, including a majority of the
Non-Interested Trustees, approved the continuance of each New Investment
Management Agreement through September 30, 1999. In the event that shareholders
of a Fund do not approve the New Investment Management Agreement, it will
terminate. In such event, each Board will take such action as it deems to be in
the best interests of the Fund and its shareholders.
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
<PAGE> 23
partnership and was restructured as a Delaware corporation in 1985. Scudder
launched its first fund in 1928. Kemper launched its first fund in 1948. Since
December 31, 1997, Scudder Kemper has served as investment adviser to both
Scudder and Kemper funds. As of August 31, 1998, Scudder Kemper has more than
$241.1 billion in assets under management. The principal source of Scudder
Kemper's income is professional fees received from providing continuing
investment advice. Scudder Kemper provides investment counsel for many
individuals and institutions, including insurance companies, endowments,
industrial corporations and financial and banking organizations.
Founded in 1872, Zurich is a multinational, public corporation organized
under the laws of Switzerland. Its home office (and the home offices of Zurich
Financial Services and Zurich Allied AG) is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services
and have branch offices and subsidiaries in more than 40 countries throughout
the world. Zurich owns approximately 70% of the Investment Manager, with the
balance owned by the Investment Manager's officers and employees.
As stated above, Scudder Kemper is a Delaware corporation. Rolf Huppi* is
the Chairman of the Board and Director, Edmond D. Villani(#) is the President,
Chief Executive Officer and Director, Stephen R. Beckwith(#) is the Treasurer
and Chief Financial Officer, Kathryn L. Quirk(#) is the General Counsel, Chief
Compliance Officer and Secretary, Lynn S. Birdsong(#) is a Corporate Vice
President and Director, Cornelia M. Small(#) is a Corporate Vice President and
Director, and Laurence Cheng* 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 Rolf Huppi is
serving as an officer of Zurich; the principal occupation of Laurence Cheng is
serving as a senior partner of Capital Z Partners, an investment fund. Appendix
7 includes information regarding each Trustee and officer of each Trust who is
associated with Scudder Kemper.
The outstanding voting securities of the Investment Manager are held of
record 36.63% by Zurich Holding Company of America ("ZHCA"), a subsidiary of
Zurich; 32.85% by ZKI Holding Corp. ("ZKIH"), a subsidiary of Zurich; 20.86% by
Stephen R. Beckwith, Lynn S. Birdsong, Kathryn L. Quirk, Cornelia M. Small and
Edmond D. Villani, in their capacity as representatives (the "Management
Representatives") of the Investment Manager's management holders and retiree
holders pursuant to a Second Amended and Restated Security Holders
- ------------------------------
* Mythenquai 2, Zurich Switzerland.
(#) 345 Park Avenue, New York, New York
<PAGE> 24
Agreement (the "Security Holders Agreement") among the Investment Manager,
Zurich, ZHCA, ZKIH, the Management Representatives, the management holders, the
retiree holders and Edmond D. Villani, as trustee of Scudder Kemper Investments,
Inc. Executive Defined Contribution Plan Trust (the "Plan Trust"); and 9.66% by
the Plan Trust. There are no outstanding non-voting securities of the Investment
Manager.
In connection with the Scudder-Zurich Transaction (described above),
pursuant to which Zurich acquired a two-thirds interest in Scudder for $866.7
million in cash in December, 1997, Daniel Pierce, a Trustee of each Trust, sold
85.4% of his holdings in Scudder to Zurich for cash.
Pursuant to the Security Holders Agreement (which was entered into in
connection with the Scudder-Zurich Transaction), the Board of Directors of the
Investment Manager consists of four directors designated by ZHCA and ZKIH and
three directors designated by Management Representatives.
The Security Holders Agreement requires the approval of a majority of the
Scudder-designated directors for certain decisions, including changing the name
of Scudder Kemper, effecting an initial public offering before April 15, 2005,
causing Scudder Kemper to engage substantially in non-investment management and
related business, making material acquisitions or divestitures, making material
changes in Scudder Kemper's capital structure, dissolving or liquidating Scudder
Kemper, or entering into certain affiliated transactions with Zurich. The
Security Holders Agreement also provides for various put and call rights with
respect to Scudder Kemper stock held by persons who were employees of Scudder at
the time of the Scudder-Zurich Transaction, limitations on Zurich's ability to
purchase other asset management companies outside of Scudder Kemper, rights of
Zurich to repurchase Scudder Kemper stock upon termination of employment of
Scudder Kemper personnel, and registration rights for stock held by stockholders
of Scudder continuing after the Scudder-Zurich Transaction.
Directors, officers and employees of Scudder Kemper from time to time may
enter into transactions with various banks, including each Fund's custodian
bank. It is Scudder Kemper's opinion that the terms and conditions of those
transactions will not be influenced by existing or potential custodial or other
Fund relationships.
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street, Kansas
City, Missouri 64105, is each Fund's transfer agent and dividend-paying agent.
Pursuant to a services agreement with IFTC, Kemper Service Company ("KSC"), an
affiliate of Scudder Kemper, serves as Shareholder Service Agent of each Fund
for which IFTC serves as transfer and dividend-paying agent and, as such,
performs all of IFTC's duties as transfer agent and dividend-paying agent. IFTC
receives as transfer agent, and pays to KSC, annual account fees plus account
set up, maintenance, transaction and out-of-pocket expense reimbursement.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder
<PAGE> 25
Kemper, computes net asset value for each Fund. Currently, SFAC receives no
fee for its services to each Fund; however, subject to Board approval, at some
time in the future, SFAC may seek payment for its services to the Funds. Kemper
Distributors, Inc. ("KDI"), 222 South Riverside Plaza, Chicago, Illinois 60606,
a subsidiary of Scudder Kemper, is the principal underwriter of each Fund and
acts as agent of each Fund in the sale of its shares. The table provided in
Appendix 8 sets forth for each Fund, the fees paid to KSC (fees received from
each Fund by IFTC and remitted to KSC) during the last fiscal year of each Fund.
Money market instruments are normally purchased in principal transactions
directly from the issuer or from an underwriter or market maker. There are
normally no brokerage commissions paid for such purchases. Purchases from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and ask prices. No Fund paid any brokerage commissions
during its most recently completed fiscal year.
KSC, SFAC and KDI will continue to provide transfer agency, fund accounting
and underwriting 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, 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 may consider sales of shares of the Funds and of other
Kemper funds. When it can be done consistently with the policy of obtaining the
most favorable net results, Scudder Kemper may place such orders with brokers
and dealers who supply research, market and statistical information to a Fund or
to Scudder Kemper. 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 RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND
VOTE IN FAVOR OF THIS PROPOSAL 1.
<PAGE> 26
PROPOSAL 2: APPROVAL OF THE MODIFICATION OR ELIMINATION OF CERTAIN POLICIES AND
THE ELIMINATION OF THE SHAREHOLDER APPROVAL REQUIREMENT AS TO CERTAIN OTHER
MATTERS
The 1940 Act requires an investment company to adopt policies governing
certain specified activities, which can be changed only by a shareholder vote.
Policies that cannot be changed or eliminated without a shareholder vote are
referred to in this Proxy Statement as "fundamental" policies. The purposes of
this Proposal are to eliminate the requirement of shareholder approval to change
policies except where required by the 1940 Act and to provide the maximum
permitted flexibility in those policies that do require shareholder approval.
Management has advised the Boards that some of the Funds' fundamental policies
that are not required to be such under the 1940 Act were adopted in the past as
a result of now rescinded regulatory requirements and no longer serve any useful
purpose. Management believes that other fundamental policies, as well as the
classification of each Fund's investment objective(s) as fundamental, are
unnecessary because the provisions of the 1940 Act or Federal tax law, together
with the disclosure requirements of the Federal securities laws, provide
adequate safeguards for a Fund and its shareholders. The Proposal is described
in more detail below.
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 Requirement 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
<PAGE> 27
of these policies as non-fundamental. Any policy that is not designated as
fundamental can be modified or eliminated by the Board, and, as indicated below,
management intends to recommend to the Boards the elimination of several of them
as being inappropriate or unnecessary under current conditions.
Each proposed policy is identified in bold-type below together with a list
of Funds whose shareholders' vote is required.
Each Fund's current fundamental policies are set forth in Exhibit C.
Changes in fundamental policies that are approved by shareholders, as well as
changes in non-fundamental policies that are adopted by a Board, will be
reflected in each Fund's Prospectus and other disclosure documents. Any change
in the method of operation of a Fund will require prior Board approval.
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 REQUIREMENT TO AMEND INVESTMENT OBJECTIVES
AND UNIDENTIFIED POLICIES
PROPOSAL 2.1(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 2.1(b):
ZMMF, ZGMF, ZTMF
The following statement currently contained in the Funds' Prospectuses --
"Certain investment restrictions have been adopted for each Fund and are
presented in the Statement of Additional Information and, together with the
investment objective and policies of such Fund, cannot be changed without
approval by holders of a majority of its 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
<PAGE> 28
EACH FUND,] CANNOT BE CHANGED WITHOUT APPROVAL BY HOLDERS OF A MAJORITY OF
OUTSTANDING VOTING SHARES."
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 2.1(A) IS APPROVED BY THE SHAREHOLDERS OF A FUND, THE BRACKETED PORTION
OF THE PROPOSED STATEMENT OF THIS ITEM 2.1(B) WILL ALSO BE ELIMINATED FOR THAT
FUND.
REVISION OF FUNDAMENTAL POLICIES
Diversification
PROPOSAL 2.2:
All Funds
THE FUND HAS ELECTED TO BE CLASSIFIED AS A DIVERSIFIED SERIES OF AN OPEN-END
INVESTMENT COMPANY.
The Funds currently state to be "diversified" funds under the 1940 Act.
ZMMF and ZTMF also each contain a separate diversification policy that the Fund
may not invest more than 5% of its total assets in the securities of any one
issuer. These policies include an exception for U.S. Government securities. ZMMF
and ZYMF also contain a separate policy prohibiting the purchase of more than
10% of the voting securities of any one issuer. Accordingly, these provisions,
which apply to 100% of the value of the applicable Fund's total assets, are more
restrictive than the definition of a diversified fund under the 1940 Act which
applies to only 75% of the value of a fund's total 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.
<PAGE> 29
Borrowing
PROPOSAL 2.3:
All Funds
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 the
Funds may borrow up to one-third of the value of its total assets. Additionally,
ZMMF, ZGMF, ZTMF and ZYMF may not borrow for leverage. Additionally, ZYMF may
not make investments while borrowings are in excess of 5% of its total assets.
The proposed policy would permit each Fund to engage in borrowing in a
manner and to the full extent permitted by applicable law. The 1940 Act requires
borrowings to have 300% asset coverage, which means, in effect, that a fund
would be permitted to borrow up to an amount equal to 50% of its total assets
under the proposed borrowing policy. Additionally, under the proposed policy,
each Fund would not be limited to borrowing for temporary or emergency purposes,
could borrow for leverage, and could purchase securities for investment while
borrowings are outstanding. However, the Boards have no current intention of
authorizing any of these practices. If a Board authorized a Fund to borrow for
leverage, such borrowings would increase the Fund's volatility and the risk of
loss in a declining market.
Senior Securities
PROPOSAL 2.4:
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 proposed policy rewords the current policy for each Fund without making
any material changes.
Concentration
PROPOSAL 2.5:
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.
<PAGE> 30
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 ZMMF, there is an exception for investing up to 100% of
the Fund's of assets in bank instruments. For ZTMF, there is an exception for
U.S. Government and municipal securities and U.S. Government-guaranteed
securities. ZYMF contains both of the exceptions set forth above. ZGMF invests
exclusively in U.S. Government and U.S. Government-guaranteed securities. 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.
Underwriting of Securities
PROPOSAL 2.6:
All Funds
THE FUND MAY NOT ENGAGE IN THE BUSINESS OF UNDERWRITING SECURITIES ISSUED BY
OTHERS, EXCEPT TO THE EXTENT THAT THE FUND MAY BE DEEMED TO BE AN UNDERWRITER IN
CONNECTION WITH THE DISPOSITION OF PORTFOLIO SECURITIES.
The proposed underwriting policy has been reworded without making any
material changes.
Investment In Real Estate
PROPOSAL 2.7:
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 rewords the current policies without making
any material changes. The policy of ZYMF currently also prohibit investment in
real estate limited partnerships. ZGMF does not currently have a real estate
policy; however, the Fund is only permitted to invest in U.S. government
<PAGE> 31
securities. Management intends to recommend to the Boards of the Funds the
adoption of each of the foregoing policies as non-fundamental policies.
Purchase of Commodities
PROPOSAL 2.8:
All Funds
THE FUND MAY NOT PURCHASE PHYSICAL COMMODITIES OR CONTRACTS RELATING TO PHYSICAL
COMMODITIES.
The proposed policy rewords the current policies for ZMMF, ZYMF and ZTMF
without making any material changes. ZGMF does not currently have a commodities
policy; however, the Fund is only permitted to invest in U.S. government
securities.
Lending
PROPOSAL 2.9:
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, except
for the purchase of debt obligations or repurchase agreements. 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.
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, Restricted and Illiquid Securities,
Purchases of Voting Securities, Investment for the Purpose of Exercising Control
or Management, Investment in Issuers with Short Histories and Investment in
Investment Companies) were initially adopted by the Funds due to state
<PAGE> 32
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 2.10:
All Funds
Each Fund is currently prohibited from making margin purchases and short
sales except to obtain short-term credits necessary for clearance of
transactions. If elimination of this restriction is approved by shareholders,
each Fund's potential use of margin transactions beyond the clearance of
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
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 2.11:
ZMMF, ZTMF
The current policy of each Fund prohibits the purchase of securities of
issuers any of whose officers, directors, trustees or security holders is an
officer, trustee or director of the Fund or an officer, director, trustee or
security holder of Scudder Kemper if one or more of such individuals owns more
than 1/2 of one percent of the shares or securities of such issuer and own
collectively more than 5% of the shares or securities of such issuer.
Transactions between each Fund and an affiliated person of a Fund are currently
regulated under the 1940 Act.
Restricted and Illiquid Securities
PROPOSAL 2.12:
ZMMF, ZGMF, ZTMF
ZMMF and ZGMF are currently prohibited from entering into repurchase
agreements if, as a result, more than 10% of the Fund's total assets would be
invested in illiquid securities, including repurchase agreements maturing in
more than seven days. ZMMF and ZTMF are each also prohibited from investing more
than 5% of its total assets in securities restricted as to disposition under the
<PAGE> 33
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 2.13:
ZMMF, ZYMF
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 is a "diversified" fund and is therefore limited to purchasing, with
respect to 75% of its assets, not more than 10% of the voting securities of a
single issuer.
Purchases of Options and Warrants
PROPOSAL 2.14:
ZMMF, ZTMF
The Funds are currently prohibited from writing, purchasing or selling
options.
Investment for the Purpose of Exercising Control or Management
PROPOSAL 2.15:
ZMMF, ZTMF
The Funds are currently prohibited from investing for the purpose of
exercising control or management of another issuer.
Investment in Mineral Exploration
PROPOSAL 2.16:
ZMMF, ZTMF
Each of the Funds is 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 2.17:
ZMMF, ZTMF
Each of the Funds 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.
<PAGE> 34
PROPOSAL 2.18:
Investment in other Investment Companies
ZMMF, ZTMF
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.
PROPOSAL 2.19:
Investment other than in Accordance with Objectives and Policies
ZMMF, ZGMF
The Fund is currently prohibited from purchasing securities or making
investments other than in accordance with their respective investment objectives
and policies. Management believes that this policy is not meaningful.
THE BOARD MEMBERS OF EACH TRUST RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND
VOTE IN FAVOR OF THIS PROPOSAL 2.
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy card and
proxy statement and all other costs incurred in connection with the solicitation
of proxies, including any additional solicitation made by letter, telephone or
telegraph, will be paid by Zurich or its affiliates. In addition to solicitation
by mail, certain officers and representatives of each Trust, officers and
employees of Scudder Kemper and certain financial services firms and their
representatives, who will receive no extra compensation for their services, may
solicit proxies by telephone, telegram or personally.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Special Meeting date approaches, certain
shareholders of each Fund may receive a telephone call from a representative of
SCC if their votes have not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of each Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Trustees believe that these procedures are reasonably designed to
ensure that the identity of the shareholder casting the vote is accurately
determined and that the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security or
employer identification number, title (if the shareholder is authorized to act
on
<PAGE> 35
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.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Trust, c/o Scudder Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, within a
reasonable time before the solicitation of proxies for such meeting. The timely
submission of a proposal does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No Board Member is aware of any matters that will be presented for action
at 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 and/or Fund.
<PAGE> 36
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards of Trustees,
/S/ Philip J. Collora
Philip J. Collora
Secretary
<PAGE> 37
EXHIBIT A
FORM OF
NEW INVESTMENT MANAGEMENT AGREEMENT
[Items in brackets that are not underscored are applicable to all Funds other
than ZYMF.]
[Underscored items in brackets apply to ZYMF only.]
[ZURICH MONEY FUNDS]
[ZURICH YIELDWISE MONEY FUND]
222 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
SEPTEMBER 7, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
[ZURICH MONEY MARKET FUND
ZURICH GOVERNMENT MONEY FUND
ZURICH TAX-FREE MONEY FUND]
[ZURICH YIELDWISE MONEY FUND]
Ladies and Gentlemen:
[ZURICH MONEY FUNDS][ZURICH YIELDWISE MONEY FUND] (the "Trust") has been
established as a Massachusetts business trust to engage in the business of an
investment company. Pursuant to the Trust's Declaration of Trust, as amended
from time-to-time (the "Declaration"), the Board of Trustees is authorized to
issue the Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized [the Zurich Money Market
Fund, the Zurich Government Money Fund and the Zurich Tax-Free Money Fund]
[Zurich YieldWise Money Fund] (each a "Fund" and collectively, the "Funds").
Series may be abolished and dissolved, and additional series established, from
time to time by action of the Trustees.
The Trust, on behalf of the [Funds][Fund], has selected you to act as the
investment manager of the [Funds][Fund] and to provide certain other services,
as more fully set forth below, and you have indicated that you are willing to
act as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. [In the event the Trust establishes one or
more additional series with respect to which it desires to retain you to render
the services described hereunder, it shall notify you in writing. If you are
willing to render such services, you shall notify the Trust in writing,
whereupon such series
A-1
<PAGE> 38
shall become a Fund hereunder.] Accordingly, the Trust on behalf of the
[Funds][Fund] agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of [each][the] Fund in the manner and
in accordance with the investment objectives, policies and restrictions
specified in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information (the "SAI") relating to [each][the]
Fund included in the Trust's Registration Statement on Form N-1A, as
amended from time to time, (the "Registration Statement") filed by the
Trust under the Investment Company Act of 1940, as amended, (the "1940
Act") and the Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you by the
Trust. The Trust has also furnished you with copies properly certified or
authenticated of each of the following additional documents related to the
Trust and the [Funds][Fund]:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-
Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders
of [each][the] Fund selecting you as investment manager and approving
the form of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial
Interest relating to the [Funds][Fund], as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to
the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Portfolio Management Services. As manager of the assets of the
[Funds][Fund], you shall provide continuing investment management of the
assets of the [Funds][Fund] in accordance with the investment objectives,
policies and restrictions set forth in the Prospectus and SAI; the
applicable provisions of the 1940 Act and the Internal Revenue Code of
1986, as amended, (the "Code") relating to regulated investment companies
and all rules and regulations thereunder; and all other applicable federal
and state laws and regulations of which you have knowledge; subject always
to policies and instructions adopted by the Trust's Board of Trustees. In
connection therewith, you shall use reasonable efforts to manage
[each][the] Fund so that it will qualify as a regulated investment company
under Subchapter M of the Code and regulations issued thereunder. The
[Funds][Fund] shall have the benefit of the investment analysis and
research, the review of current economic conditions and trends and the
consideration of long-range investment policy generally available to your
A-2
<PAGE> 39
investment advisory clients. In managing the [Funds][Fund] in accordance
with the requirements set forth in this section 2, you shall be entitled to
receive and act upon advice of counsel to the Trust. You shall also make
available to the Trust promptly upon request all of the [Funds'][Fund's]
investment records and ledgers as are necessary to assist the Trust in
complying with the requirements of the 1940 Act and other applicable laws.
To the extent required by law, you shall furnish to regulatory authorities
having the requisite authority any information or reports in connection
with the services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the Trust are
being conducted in a manner consistent with applicable laws and
regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts
relating to investments to be purchased, sold or entered into by
[each][the] Fund and place orders with broker-dealers, foreign currency
dealers, futures commission merchants or others pursuant to your
determinations and all in accordance with Fund policies as expressed in the
Registration Statement. You shall determine what portion of [each][the]
Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on
the investment performance of [each][the] Fund and on the performance of
your obligations pursuant to this Agreement, and you shall supply such
additional reports and information as the Trust's officers or Board of
Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio management
services specified above in section 2, you shall furnish at your expense
for the use of the [Funds][Fund] such office space and facilities in the
United States as the [Funds][Fund] may require for its reasonable needs,
and you (or one or more of your affiliates designated by you) shall render
to the Trust administrative services on behalf of the [Funds][Fund]
necessary for operating as an open end investment company and not provided
by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the Trust's Board of
Trustees and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable to Fund operations; preparing
and making filings with the Securities and Exchange Commission (the "SEC")
and other regulatory and self-regulatory organizations, including, but not
limited to, preliminary and definitive proxy materials, post-effective
amendments to the Registration Statement, semi-annual reports on Form N-SAR
and notices pursuant to
A-3
<PAGE> 40
Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
[Funds'][Fund's] transfer agent; assisting in the preparation and filing of
[each][the] Fund's federal, state and local tax returns; preparing and
filing [each][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
[each][the] Fund under applicable federal and state securities laws;
maintaining or causing to be maintained for the [Funds][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 [Funds'][Fund's] custodian or other agents of the
[Funds][Fund]; assisting in establishing the accounting policies of the
[Funds][Fund]; assisting in the resolution of accounting issues that may
arise with respect to the [Funds'][Fund's] operations and consulting with
the [Funds'][Fund's] independent accountants, legal counsel and the
[Funds'][Fund's] other agents as necessary in connection therewith;
establishing and monitoring [each][the] Fund's operating expense budgets;
reviewing [each][the] Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the [Funds][Fund] in
determining the amount of dividends and distributions available to be paid
by [each][the] Fund to its shareholders, preparing and arranging for the
printing of dividend notices to shareholders, and providing the transfer
and dividend paying agent, the custodian, and the accounting agent with
such information as is required for such parties to effect the payment of
dividends and distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the [Funds'][Fund's] business, subject
to the direction and control of the Trust's Board of Trustees. Nothing in
this Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the [Funds][Fund] or any other person not a
party to this Agreement which is obligated to provide services to the
[Funds][Fund].
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the compensation and
expenses of all Trustees, officers and executive employees of the Trust
(including [each][the] Fund's share of payroll taxes) who are affiliated
persons of you, and you shall make available, without expense to the
[Funds][Fund], the services of such of your directors, officers and
employees as may duly be elected officers of the Trust, subject to their
individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described
in section 2 hereof and the administrative services described in section 3
hereof.
You shall not be required to pay any expenses of the [Funds][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
A-4
<PAGE> 41
the [Funds'][Fund's] Trustees and officers as are directors, officers or
employees of you whose services may be involved, for the following expenses
of [each][the] Fund: organization expenses of [each][the] Fund (including
out of-pocket expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or consultants; legal
expenses; auditing and accounting expenses; maintenance of books and
records which are required to be maintained by the [Funds'][Fund's]
custodian or other agents of the Trust; telephone, telex, facsimile,
postage and other communications expenses; taxes and governmental fees;
fees, dues and expenses incurred by the [Funds][Fund] in connection with
membership in investment company trade organizations; fees and expenses of
the [Funds'][Fund's] accounting agent for which the Trust is responsible
pursuant to the terms of the Fund Accounting Services Agreement,
custodians, subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; expenses of
preparing share certificates and, except as provided below in this section
4, other expenses in connection with the issuance, offering, distribution,
sale, redemption or repurchase of securities issued by [each][the] Fund;
expenses relating to investor and public relations; expenses and fees of
registering or qualifying Shares of [each][the] Fund for sale; interest
charges, bond premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of [each][the] Fund's
portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Trust business) of Trustees, officers
and employees of the Trust who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio
securities of the [Funds][Fund]; expenses of printing and distributing
reports, notices and dividends to shareholders; expenses of printing and
mailing Prospectuses and SAIs of [each][the] Fund and supplements thereto;
costs of stationery; any litigation expenses; indemnification of Trustees
and officers of the Trust; and costs of shareholders' and other meetings.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of [a][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 [a][the] Fund's Shares
pursuant to an underwriting agreement which provides that the underwriter
shall assume some or all of such expenses, or (ii) the Trust on behalf of
[a][the] Fund shall have adopted a plan in conformity with Rule 12b-1 under
the 1940 Act providing that [a][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 [a][the] Fund (or some other party) pursuant to
such a plan.
A-5
<PAGE> 42
5. Management Fee. For all services to be rendered, payments to be
made and costs to be assumed by you as provided in sections 2, 3, and 4
hereof, the Trust on behalf of the [Funds][Fund] shall pay you in United
States Dollars on the last day of each month the unpaid balance of a fee
equal to the excess of (a) 1/12 of .50 of 1 percent of the [combined]
average daily net assets as defined below of the [Funds][Fund] for such
month; provided that, for any calendar month during which the average of
such values exceeds $215,000,000, the fee payable for that month based on
the portion of the average of such values in excess of $215,000,000 shall
be 1/12 of .375 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$550,000,000, the fee payable for that month based on the portion of the
average of such values in excess of $550,000,000 shall be 1/12 of .30 of 1
percent of such portion; and provided that, for any calendar month during
which the average of such values exceeds $800,000,000, the fee payable for
that month based on the portion of the average of such values in excess of
$800,000,000 shall be 1/12 of .25 of 1 percent of such portion; over [(b)
the greater of (i) the amount by which the Funds' aggregate expenses exceed
on an annual basis 1.5% of the first $30,000,000 of combined average daily
net assets and 1% of average daily net assets over $30,000,000 or (ii)] any
compensation waived by you from time to time (as more fully described
below). You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided that no such
payment shall exceed 75 percent of the amount of your fee then accrued on
the books of the [Funds][Fund] and unpaid.
The "average daily net assets" of [a][the] Fund shall mean the average
of the values placed on [a][the] Fund's net assets as of 4:00 p.m. (New
York time) on each day on which the net asset value of 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 [a][the] Fund shall always be determined pursuant to the
applicable provisions of the Declaration and the Registration Statement. If
the determination of net asset value does not take place for any particular
day, then for the purposes of this section 5, the value of the net assets
of [such][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 [a][the] Fund determines the value of the net
assets of its portfolio more than once on any day, then the last such
determination thereof on that day shall be deemed to be the sole
determination thereof on that day for the purposes of this section 5.
[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 Funds,
shall cause the aggregate expenses of the Funds to exceed on an annual
A-6
<PAGE> 43
basis 1.5% of the first $30,000,000 of combined average daily net assets
and 1% of average daily net assets over $30,000,000. Except to the extent
that such amount has been reflected in reduced payments to you, you shall
refund to the Funds 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
Funds 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
services. You shall be contractually bound hereunder by the terms of any
publicly announced waiver of your fee, or any limitation of the [Funds']
[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 [Funds][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 [each][the] Fund's account with brokers or dealers selected
by you in accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of [a][the] Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf
of [such][the] Fund.
Your services to the [Funds][Fund] pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you may render
investment advice, management and services to others. In acting under this
Agreement, you shall be an independent contractor and not an agent of the
Trust. Whenever [a][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 [Funds][Fund] recognize[s] that in
A-7
<PAGE> 44
some cases this procedure may adversely affect the size of the position
that may be acquired or disposed of for the [Funds][Fund].
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust agrees
that you shall not be liable under this Agreement for any error of judgment
or mistake of law or for any loss suffered by [a][the] Fund in connection
with the matters to which this Agreement relates, provided that nothing in
this Agreement shall be deemed to protect or purport to protect you against
any liability to the Trust, the [Funds][Fund] or [their][its] shareholders
to which you would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of your duties, or by
reason of your reckless disregard of your obligations and duties hereunder.
8. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1999, and continue in force from year
to year thereafter [with respect to each Fund], but only so long as such
continuance is specifically approved [for each Fund] at least annually (a)
by the vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and
(b) by the Trustees of the Trust, or by the vote of a majority of the
outstanding voting securities of [such][the] Fund. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder and any applicable SEC exemptive
order therefrom.
This Agreement may be terminated with respect to [a][the] Fund at any
time, without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of [such][the] Fund or by the Trust's Board
of Trustees on 60 days' written notice to you, or by you on 60 days'
written notice to the Trust. This Agreement shall terminate automatically
in the event of its assignment.
This Agreement may be terminated with respect to [a][the] Fund at any
time without the payment of any penalty by the Board of Trustees or by vote
of a majority of the outstanding voting securities of [such][the] Fund in
the event that it shall have been established by a court of competent
jurisdiction that you or any of your officers or directors has taken any
action which results in a breach of your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved in a manner consistent
with
A-8
<PAGE> 45
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
["Zurich Money Funds"]["Zurich YieldWise Money Fund"] refers to the
Trustees under the Declaration collectively as Trustees and not as
individuals or personally, and that no shareholder of [a][the] Fund, or
Trustee, officer, employee or agent of the Trust, shall be subject to
claims against or obligations of the Trust or of [a][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 [each][the] Fund pursuant to this Agreement shall
be limited in all cases to [each][the] Fund and its assets, and you shall
not seek satisfaction of any such obligation from the shareholders or any
shareholder of [a][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][the] Fund, or series, under the
Declaration are separate and distinct from those of any and all other
series.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject,
however, to such exemptions as may be granted by the SEC by any rule,
regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, or in a manner which
would cause [a][the] Fund to fail to comply with the requirements of
Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on behalf of
the [Funds][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
A-9
<PAGE> 46
counterpart to the Trust, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
[ZURICH MONEY FUNDS, on behalf of
Zurich Money Market Fund
Zurich Government Money Fund
Zurich Tax-Free Money Fund]
[ZURICH YIELDWISE MONEY FUND]
By:
---------------------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
---------------------------------------------
President
A-10
<PAGE> 47
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.
INSURANCE PRODUCTS
Scudder Variable Life Stability of capital and 0.370% of net assets $ 102,576,377
Investment Fund Money current income from a
Market Portfolio portfolio of money market
instruments.
</TABLE>
B-1
<PAGE> 48
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS
---- --------- -------- ------
<S> <C> <C> <C>
AARP FUNDS
AARP High Quality Money Fund Current income consistent with 0.350% to $2 billion $ 471,310,867
maintaining stability and 0.330% next $2 billion
safety of principal and a 0.300% next $2 billion
constant net asset value of 0.280% next $2 billion
$1.00 per share while offering 0.260% next $3 billion
liquidity, through investment 0.250% next $3 billion
in high quality securities. 0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of net assets
AARP High Quality Tax Free Current income free from 0.350% to $2 billion $ 102,613,893
Money Fund federal income taxes 0.330% next $2 billion
consistent with maintaining 0.300% next $2 billion
stability and safety of 0.280% next $2 billion
principal and a constant net 0.260% next $3 billion
asset value of $1.00 per share 0.250% next $3 billion
while offering liquidity, 0.240% thereafter
through investment in INDIVIDUAL FUND FEE
high-quality municipal 0.100% of net assets
securities.
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.
B-2
<PAGE> 49
KEMPER FUNDS+
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS
---------- --------- -------- ------
<S> <C> <C> <C>
ANNUITY PRODUCTS
Kemper Money Market Maximum current income to the 0.500% of net assets $ 100,143,000
Portfolio extent consistent with
stability of principal from a
portfolio of high quality
money market instruments.
MONEY MARKET FUNDS
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 assets(1)** $ 312,194,000
Portfolio (Investors Cash extent consistent with
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)**
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(2)**
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(2)**
Kemper Cash Reserves Fund Maximum current income to the 0.400% to $250 million $ 339,655,000
extent consistent with 0.380% next $750 million
stability of principal from a 0.350% next $1.5 billion
portfolio of high quality 0.320% next $2.5 billion
money market instruments. 0.300% next $2.5 billion
0.280% next $2.5 billion
0.260% next $2.5 billion
0.250% thereafter
</TABLE>
B-3
<PAGE> 50
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS
---------- --------- -------- ------
<S> <C> <C> <C>
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(3)
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 0.220% to $500 million $ 333,427,000
Equivalent Fund) is exempt from federal income 0.200% next $500 million
taxes to the extent 0.175% next $1 billion
consistent with stability of 0.160% next $1 billion
capital from a portfolio of 0.150% thereafter
municipal securities.
Treasury Portfolio Maximum current income to the 0.150% of net assets(4)** $ 74,290,000
(Investors Cash Trust) extent consistent with
stability of capital by
investing in U.S. Government
obligations and repurchase
agreements.
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 0.175% next $1 billion
taxes to the extent 0.160% next $1 billion
consistent with stability of 0.150% thereafter(2)**
capital.
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.
** 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) 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.
(3) Payable in the aggregate for each of the Government Securities Portfolio
and Money Market Portfolio series of Cash Equivalent Fund.
(4) Payable in the aggregate for each of the Government Securities Portfolio
and Treasury Portfolio series of Investors Cash Trust.
B-4
<PAGE> 51
EXHIBIT C
CURRENT FUNDAMENTAL INVESTMENT POLICIES
ZURICH MONEY FUNDS ("ZMF")
ZURICH MONEY MARKET FUND ("ZMMF")
ZURICH GOVERNMENT MONEY FUND ("ZGMF")
ZURICH TAX-FREE MONEY FUND ("ZTMF")
ZMMF may not:
(1) Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds or industrial revenue bonds
(except through the purchase of debt obligations in accordance with its
investment objective and policies), and except that all or substantially
all of the assets of the Fund may be invested in another registered
investment company having the same investment objective and substantially
similar investment policies as the Fund.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result more than 5% of the value of the Fund's
assets would be invested in securities of that issuer, except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(3) Purchase more than 10% of any class of securities of any issuer,
except that all or substantially all of the assets of the Fund may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund. All debt securities and all preferred stocks are each considered as
one class.
(4) Invest more than 5% of the Fund's total assets in securities of
issuers which with their predecessors have a record of less than three
years continuous operation, and equity securities of issuers which are not
readily marketable, except that all or substantially all of the assets of
the Fund may be invested in another registered investment company having
the same investment objective and substantially similar investment policies
as the Fund.
(5) Enter into repurchase agreements if, as a result thereof, more
than 10% of the Fund's total assets valued at the time of the transaction
would be subject to repurchase agreements maturing in more than seven days.
(6) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
C-1
<PAGE> 52
(7) Borrow money except as a temporary measure for extraordinary or
emergency purposes and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without
immediately selling any money market instruments (any such borrowings under
this section will not be collateralized). If, for any reason, the current
value of the Fund's total assets falls below an amount equal to three times
the amount of its indebtedness from money borrowed, the Fund will, within
three business days, reduce its indebtedness to the extent necessary. The
Fund will not borrow for leverage purposes.
(8) Make short sale of securities, or purchase any securities on
margin, except to obtain such short-term credits as may be necessary for
the clearance of transactions.
(9) Write, purchase or sell puts, calls or combinations thereof.
(10) Concentrate more than 25% of the value of its assets in any one
industry; provided, however, that the Fund reserves freedom of action to
invest up to 100% of its assets in certificates of deposits or bankers'
acceptances when management considers it to be in the best interests of the
Fund in attaining its investment objective, and except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(11) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Trust or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer, except that all
or substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(12) Invest more than 5% of the Fund's total assets in securities
restricted as to disposition under the federal securities laws (except
commercial paper issued under Section 4(2) of the Securities Act of 1933),
and except that all or substantially all of the assets of the Fund may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(13) Invest for the purpose of exercising control or management of
another issuer.
(14) Invest in commodities or commodity futures contracts or in real
estate, although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate.
(15) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
C-2
<PAGE> 53
(16) Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets, and except that all or substantially all of the assets of the Fund
may be invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(17) Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities, and except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(18) Issue senior securities as defined in the Investment Company Act
of 1940.
ZGMF may not:
(1) Purchase securities or make investments other than in accordance
with its investment objective and policies, except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(2) Enter into repurchase agreements if, as a result thereof, more
than 10% of the Fund's total assets valued at the time of the transaction
would be subject to repurchase agreements maturing in more than seven days.
(3) Make loans to others (except though the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(4) Borrow money except as a temporary measure for extraordinary or
emergency purposes and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without
immediately selling any instruments (any such borrowings under this section
will not be collateralized). If, for any reason, the current value of the
Fund's total assets falls below an amount equal to three times the amount
of its indebtedness from money borrowed, the Fund will, within three
business days, reduce its indebtedness to the extent necessary. The Fund
will not borrow for leverage purposes.
(5) Make short sales of securities, or purchase any securities on
margin, except to obtain such short-term credits as may be necessary for
the clearance of transactions.
(6) Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of Fund securities, and except that
C-3
<PAGE> 54
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(7) Issue senior securities as defined in the Investment Company Act
of 1940.
ZTMF may not:
(1) Purchase securities if as a result of such purchase 25% or more of
the Fund's total assets would be invested in any one industry or in any one
state, except that all or substantially all of the assets of the Fund may
be invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund. Municipal Securities and obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities are not considered an
industry for purposes of this restriction.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities) if
as a result more than 5% of the value of the Fund's assets would be
invested in the securities of such issuer, except that all or substantially
all of the assets of the Fund may be invested in another registered
investment company having the same investment objective and substantially
similar investment policies as the Fund. For purposes of limitation, the
Fund will regard the entity which has the primary responsibility for the
payment of interest and principal as the issuer.
(3) Invest more than 5% of the Fund's total assets in industrial
development bonds sponsored by companies which with their predecessors have
less than three years' continuous operation.
(4) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(5) Borrow money except as a temporary measure for extraordinary or
emergency purposes and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without
immediately selling any money market instruments (any such borrowings under
this section will not be collateralized). If, for any reason, the current
value of the Fund's total assets falls below an amount equal to three times
the amount of its indebtedness from money borrowed, the Fund will, within
three business days, reduce its indebtedness to the extent necessary. The
Fund will not borrow for leverage purposes.
(6) Make short sale of securities or purchase securities on margin,
except to obtain such short-term credits as may be necessary for the
clearance of transactions.
C-4
<PAGE> 55
(7) Write, purchase or sell puts, calls or combinations thereof,
although the Fund may purchase Municipal Securities subject to Standby
Commitments in accordance with its investment objective and policies.
(8) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Trust or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer, except that all
or substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(9) Invest more than 5% of the Fund's total assets in securities
restricted as to disposition under the federal securities laws (except
commercial paper issued under Section 4(2) of the Securities Act of 1933),
except that all or substantially all of the assets of the Fund may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(10) Invest for the purpose of exercising control or management of
another issuer.
(11) Invest in commodities or commodity futures contracts or in real
estate except that the Fund may invest in Municipal Securities secured by
real estate or interests therein.
(12) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in Municipal Securities of
issuers which invest in or sponsor such programs.
(13) Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets, and except that all or substantially all of the assets of the Fund
may be invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(14) Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities, and except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(15) Issue senior securities as defined in the Investment Company Act
of 1940.
C-5
<PAGE> 56
ZURICH YIELDWISE FUNDS
ZURICH YIELDWISE MONEY FUND ("ZYMF")
ZYMF may not:
(1) Purchase more than 10% of any class of voting securities of any
issuer, except that all or substantially all of the assets of the Fund may
be invested in another registered investment company having the same
investment objective and substantially similar investment policies as the
Fund.
(2) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its investment
objective and policies).
(3) Borrow money except as a temporary measure for extraordinary or
emergency purposes and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without
immediately selling any money market instruments (any such borrowings under
this sections will not be collateralized). If, for any reason, the current
value of the Funds' total assets falls below an amount equal to three times
the amount of its indebtedness from money borrowed, the Fund will, within
three days (not including Sundays and holidays), reduce its indebtedness to
the extent necessary. The Fund will not borrow for leverage purposes and
will not purchase securities or make investments while borrowing in excess
of 5% of the Fund's total assets are outstanding.
(4) Make short sales of securities, or purchase any securities on
margin except to obtain such short-term credits as may be necessary for the
clearance of transactions.
(5) Invest in commodities or commodity futures contracts or in real
estate (or real estate limited partnerships), although it may invest in
securities which are secured by real estate and securities of issuers which
invest or deal in real estate.
(6) Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities, and except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.
(7) Issue senior securities except as permitted under the Investment
Company Act of 1940.
(8) Concentrate 25% or more of the Fund's total assets in any one
industry; provided, however, that the Fund reserves freedom of action to
(a) invest up to 100% of its assets in obligations of, or guaranteed by,
the United States Government, its agencies or instrumentalities, and (b)
invest 25% or more of its assets in bank certificates of deposits, time
deposits or
C-6
<PAGE> 57
banker's acceptances of United States banks and their domestic branches, in
accordance with its investment objective and policies, and except that all
or substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
For more information, please call Shareholder Communications
Corporation, your Fund's information agent, at 1-800-733-8481, ext. 429.
C-7
<PAGE> 58
APPENDIX 1
ZURICH TRUSTS and Series
ZURICH MONEY FUNDS ("ZMF")
Zurich Money Market Fund ("ZMMF")
Zurich Government Money Fund ("ZGMF")
Zurich Tax-Free Money Fund ("ZTMF")
ZURICH YIELDWISE MONEY FUND ("ZYMF")
<PAGE> 59
APPENDIX 2
FUND SHARES OUTSTANDING
Holders of record of the shares of each Fund at the close of business on
September 22, 1998 (the "Record Date"), as to any matter on which they are
entitled to vote, will be entitled to one vote per share on all business of the
Special Meeting. The table below sets forth the number of shares outstanding for
each Fund as of June 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING
FUND AS OF JUNE 30, 1998
---- -------------------
<S> <C>
Zurich Government Money Fund 668,923,488.750
Zurich Money Market Fund 4,511,057,837.470
Zurich Tax-Free Money Fund 777,414,798.660
Zurich YieldWise Money Fund 1,242,607,198.860
</TABLE>
<PAGE> 60
APPENDIX 3
BENEFICIAL OWNERS OF 5% OR MORE OF FUND SHARES
As of June 30, 1998, no person is known to the Trusts to own beneficially
more than five percent of the Shares of any Fund except as shown below.
Certain accounts for which the Investment Manager acts as investment
adviser owned 25,568,537 shares in the aggregate, or 66.53% of the outstanding
shares of ZURICH MONEY MARKET FUND 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.
<PAGE> 61
APPENDIX 4
FUND SHARES OWNED BY TRUSTEES
TO BE PROVIDED
<PAGE> 62
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>
Zurich Government Money 7/31/98 $ 686,871,000 0.50% of the first $215 $ 1,815,000
Fund million of combined
average daily net
assets; 0.375% of the
next $335 million; 0.30%
of the next $250
million; 0.25%
thereafter
Zurich Money Market Fund 7/31/98 $4,538,627,000 0.50% of the first $215 $12,086,000
million of combined
average daily net
assets; 0.375% of the
next $335 million; 0.30%
of the next $250
million; 0.25%
thereafter
Zurich Tax-Free Money 7/31/98 $ 815,894,000 0.50% of the first $215 $ 2,156,000
Fund million of combined
average daily net
assets; 0.375% of the
next $335 million; 0.30%
of the next $250
million; 0.25%
thereafter
Zurich YieldWise Money 7/31/98 $1,071,728,000 0.50% of the first $215 $ 385,000*
Fund million of average daily
net assets; 0.375% of
the next $335 million;
0.30% of the next $250
million; 0.25%
thereafter
</TABLE>
- ------------------------------
+The management fee rates shown are for each Fund's most recently completed
fiscal year, unless otherwise noted.
++Aggregate management fees disclosed in this table may include fees paid to
successors and affiliates of Scudder Kemper Investments, Inc.
*After waiver and/or expense limitations.
<PAGE> 63
APPENDIX 6
DATES RELATING TO
FORMER AND NEW INVESTMENT MANAGEMENT AGREEMENTS
<TABLE>
<CAPTION>
TERMINATION
FORMER DATE
INVESTMENT NEW (UNLESS
DATE OF MANAGEMENT INVESTMENT CONTINUED)
FORMER AGREEMENT MANAGEMENT FOR NEW
COMMENCEMENT INVESTMENT LAST AGREEMENT INVESTMENT
OF MANAGEMENT APPROVED BY LAST APPROVED MANAGEMENT
FUND OPERATIONS AGREEMENT SHAREHOLDERS BY TRUSTEES AGREEMENT
---- ------------ ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Zurich Government Money Fund 11/5/81 12/31/97 12/3/97 9/18/98 9/30/99
Zurich Money Market Fund 11/20/74 12/31/97 12/3/97 9/18/98 9/30/99
Zurich Tax-Free Money Fund 9/10/87 12/31/97 12/3/97 9/18/98 9/30/99
Zurich YieldWise Money Fund 4/17/97 12/31/97 12/3/97 9/18/98 9/30/99
</TABLE>
<PAGE> 64
APPENDIX 7
TRUSTEES AND OFFICERS ASSOCIATED
WITH SCUDDER KEMPER
<TABLE>
<CAPTION>
ASSOCIATION WITH
NAME POSITION WITH TRUST SCUDDER KEMPER
---- ------------------- ----------------
<S> <C> <C>
Daniel Pierce Chairman of the Board and Trustee Managing Director of Scudder
Kemper
Edmond D. Villani Trustee Chief Executive Officer and
Managing Director of Scudder
Kemper
Mark S. Casady President Managing Director of Scudder
Kemper
Philip J. Collora Vice President and Secretary Attorney, Senior Vice
President of Scudder Kemper
Thomas W. Littauer Vice President Managing Director of Scudder
Kemper
Ann M. McCreary Vice President Managing Director of Scudder
Kemper
Robert C. Peck, Jr. Vice President Managing Director of Scudder
Kemper
Kathryn L. Quirk Vice President Managing Director of Scudder
Kemper
Frank J. Rachwalski, Jr. Vice President Managing Director of Scudder
Kemper
Linda J. Wondrack Vice President Senior Vice President of
Scudder Kemper
John R. Hebble Treasurer Senior Vice President of
Scudder Kemper
Brenda Lyons Assistant Treasurer Vice President of Scudder
Kemper
Caroline Pearson Assistant Secretary Senior Vice President of
Scudder Kemper
Maureen E. Kane Assistant Secretary Vice President of Scudder
Kemper
Elizabeth C. Werth Assistant Secretary Vice President of Scudder
Kemper
</TABLE>
<PAGE> 65
APPENDIX 8
FEES PAID TO KSC
<TABLE>
<CAPTION>
AGGREGATE FEE
PAID TO KSC
(REMITTED BY IFTC,
FUND FISCAL YEAR WHERE APPLICABLE)
---- ----------- ------------------
<S> <C> <C>
Zurich Government Money Fund 7/31/98 $
Zurich Money Market Fund 7/31/98 $
Zurich Tax-Free Money Fund 7/31/98 $
Zurich YieldWise Money Fund 7/31/98 $
</TABLE>
<PAGE> 66
PROXY [NAME OF FUND] PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF YOUR FUND
SPECIAL MEETING OF SHAREHOLDERS -- DECEMBER 17, 1998
The undersigned hereby appoints Bruce H. Goldfarb, Kathryn L. Quirk, Thomas
F. McDonough and Daniel Pierce and each of them, the proxies of the undersigned,
with the power of substitution to each of them, to vote all shares of the Fund
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Fund to be held at the offices of Scudder Kemper Investments, Inc., Two
International Place, Boston, Massachusetts 02110, on Wednesday, December 17,
1998 at 11:00 a.m., eastern time, and at any adjournments thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund 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. To approve the modification or elimination of certain policies and the
elimination of the shareholder approval requirement as to certain other
matters.
[ ] FOR ALL EXCEPT AS MARKED BELOW [ ] AGAINST ALL [ ] ABSTAIN ALL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2.1 Investment objectives [ ] 2.10 Margin purchases and short [ ] 2.16 Investment in mineral
sales exploration [ ]
2.2 Diversification [ ] 2.11 Purchase of securities of 2.17 Investment in issuers with
related short
2.3 Borrowing [ ] issuers [ ] histories [ ]
2.4 Senior securities [ ] 2.12 Restricted and illiquid [ ] 2.18 Investment in other investment
securities
2.5 Concentration [ ] 2.13 Purchases of voting securities [ ] companies [ ]
2.6 Underwriting of [ ] 2.14 Purchases of Options and [ ] 2.19 Investment other than in
securities Warrants accordance
2.7 Investment in real [ ] 2.15 Investment for the purpose of with objectives and policies [ ]
estate
2.8 Purchase of [ ] exercising control or [ ]
commodities management
2.9 Lending [ ]
</TABLE>
<PAGE> 67
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.
