As filed with the Securities and Exchange Commission on
November 25, 1998
1933 Act Registration No. 2-51992
1940 Act Registration No. 811-2527
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
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Post-Effective Amendment No. 45
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 45
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ZURICH MONEY FUNDS
------------------
(formerly named Kemper Money Funds)
(Exact name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, Illinois 60606
-------------------------------------------- -----
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 537-7000
Philip J. Collora, Secretary With a copy to:
Zurich Money Funds Cathy G. O'Kelly
222 South Riverside Plaza David A. Sturms
Chicago, Illinois 60606-5808 Vedder, Price, Kaufman & Kammholz
(Name and Address of Agent for Service) 222 North LaSalle Street
Chicago, Illinois 60601
It is proposed that this filing will become effective
Immediately upon filing pursuant to paragraph (b)
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X on November 30, 1998 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on November 30, 1998 pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on November 30, 1998 pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following:
this post-effective amendment designates a new effective
-------- date for a previously filed post-Effective amendment
<PAGE>
ZURICH MONEY FUNDS
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
<S> <C> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary; Summary of Expenses
3. Condensed Financial Financial Highlights; Performance
Information
4. General Description of Summary; Capital Structure; How the Funds Work; Investment
Registrant Objectives, Policies and Risk Factors
5. Management of the Fund Summary; Investment Manager; How to Make a Purchase
5A. Management's Discussion of Inapplicable
Fund Performance
6. Capital Stock and Other Summary; Capital Structure; Dividends and Taxes; How to Make a
Securities Purchase; Investment Objectives, Policies and Risk Factors
7. Purchase of Securities Being Summary; How to Make a Purchase; Net Asset Value; Investment
Offered Manager; Special Features; Account Services Directory
8. Redemption or Repurchase Summary; How to Make a Redemption; Special Features; Account
Services Directory
9. Pending Legal Proceedings Inapplicable
Cross Reference - Page 1
<PAGE>
ZURICH MONEY FUNDS
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
Caption in Statement
Item No. Item Caption of Additional Information
-------- ------------ -------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Inapplicable
History
13. Investment Objectives and Investment Restrictions; Municipal Securities; Appendix--Ratings
Policies of Investments
14. Management of the Fund Investment Manager; Officers and Trustees
15. Control Persons and Principal Officers and Trustees
Holders of Securities
16. Investment Advisory and Other Investment Manager; Officers and Trustees
Services
17. Brokerage Allocation and Portfolio Transactions
Other Practices
18. Capital Stock and Other Shareholder Rights
Securities
19. Purchase, Redemption and Purchase and Redemption of Shares; Dividends, Net Asset Value
Pricing of Securities Being and Taxes
Offered
20. Tax Status Dividends, Net Asset Value and Taxes
21. Underwriters Investment Manager
22. Calculation of Performance Performance
Data
23. Financial Statements Financial Statements
</TABLE>
Cross Reference - Page 2
<PAGE>
[LOGO]
Zurich Money Funds
prospectus
November 30, 1998
ZURICH MONEY FUNDS
222 South Riverside Plaza
Chicago, Illinois 60606-5808
1-800-537-6001
The Funds are designed for investors who seek maximum current income to the
extent consistent with stability of principal. Each Fund invests exclusively in
high quality money market instruments.
o Zurich Money Market Fund
o Zurich Government Money Fund
o Zurich Tax-Free Money Fund
This prospectus contains information about each Fund that a prospective investor
should know before investing and should be retained or future reference. A
Statement of Additional Information dated November 30, 1998, has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
It is available upon request without charge from the Funds at the address above
or by calling 1-800-537-6001.
Investments in the Funds are neither insured nor guaranteed by the U. S.
Government, the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other agency, and are not deposits or obligations of, or guaranteed or
endorsed by, any bank. There can be no assurance that a Fund will be able to
maintain a stable net asset value of $1.00 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
Table of Contents
Summary..................................................................... 1
Summary of Fund Expenses.................................................... 3
Financial Highlights........................................................ 4
How the Funds Work.......................................................... 6
Investment Objectives, Policies and Risk Factors............................ 7
Net Asset Value-- Determining Share Price.................................. 14
How to Make a Purchase..................................................... 14
How to Make a Redemption................................................... 17
Exchanging Shares.......................................................... 21
Special Features........................................................... 23
Dividends and Taxes........................................................ 25
Investment Manager......................................................... 28
Performance................................................................ 29
Capital Structure.......................................................... 30
Account Services Directory................................................. 32
<PAGE>
Summary
Investment Objectives
Zurich Money Funds (the "Trust") is an open-end, diversified, management
investment company offering a choice of three investment funds ("Funds"). Each
Fund is designed to provide you with professional management of your short-term
investment dollars; the dollars that you want to be very liquid and accessible
when special opportunities arise or that you want to know are in high quality
investments.
Each Fund invests in high quality short-term money market instruments consistent
with its specific objective.
o The Zurich Money Market Fund seeks maximum current income to the extent
consistent with stability of principal from a portfolio primarily of
commercial paper and bank obligations.
o The Zurich Government Money Fund seeks maximum current income to the extent
consistent with stability of principal from a portfolio of obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
o The Zurich Tax-Free Money Fund seeks maximum current income that is exempt
from federal income taxes to the extent consistent with stability of
principal from a portfolio of municipal securities.
Each Fund may use a variety of investment techniques in seeking its objective
including the purchase of repurchase agreements and variable rate securities.
Each Fund seeks to maintain a net asset value of $1.00 per share; however, there
is no assurance that the objective of any Fund will be achieved or that any Fund
will be able to maintain a net asset value of $1.00 per share. See "How the
Funds Work" and "Investment Objectives, Policies and Risk Factors."
Investment Manager
Scudder Kemper Investments, Inc. ("Scudder Kemper") is the investment manager
for the Funds and provides the Funds with continuous professional investment
supervision. Scudder Kemper is paid a monthly investment management fee on a
graduated basis at an annual rate ranging from 0.50% of the first $215 million
of average daily net assets of the Trust to 0.25% of average daily net assets of
the Trust over $800 million. See "Investment Manager."
1
<PAGE>
Buying and Selling Shares
You may buy and sell shares of each Fund at net asset value with no sales
charge. The minimum initial investment is $1,000 or $50 per month with an
automatic investment plan. The minimum subsequent investment is $100 ($50 with
an automatic investment plan). Accounts may be opened using the account
application available from the Funds or downloaded from www.zurichfunds.com.
Shares may be purchased by mailing a check, by wire transfer or in person in
downtown Chicago and Kansas City. Please see "How To Make a Purchase" for more
information on how easy it is to invest. Shares may be sold or redeemed by
written request or by using one of the Funds' expedited redemption procedures.
See "How To Make a Redemption" for specific details.
Dividends
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested in additional shares of the same Fund, unless you elect to be paid by
check. See "Dividends and Taxes."
Special Features
A number of features are available to account holders, including: the Zurich
MoneyPLUS AccountSM, a cash management program offering a combination of
features including a no minimum checking account and a VISA(R) Check Card and
electronic funds transfer programs. See "Special Features" and "Account Services
Directory" for a description of these and other features.
2
<PAGE>
Summary of Fund Expenses
Shareholder Transaction Expenses*
Sales Load on Purchases........................................ None
Sales Load on Reinvested Dividends............................. None
Deferred Sales Load............................................ None
Redemption Fees................................................ None
Exchange Fee................................................... None
- -----------
* Table does not include $3.00 monthly small account fee. See "How to Make a
Redemption."
Annual Fund Operating Expenses
(as a percentage of average net assets)
Zurich
Zurich Money Government Money Zurich Tax-Free
Market Fund Fund Money Fund
----------- ---- ----------
Management Fees 0.27% 0.27% 0.27%
12b-1 Fees None None None
Other Expenses 0.21% 0.16% 0.09%
----- ----- -----
Total Operating Expenses 0.48% 0.43% 0.36%
Example
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each time period:
Fund 1 year 3 years 5 years 10 years
- ---- ------ ------- ------- --------
Money Market $ 5 $ 15 $ 27 $ 60
Government $ 4 $ 14 $ 24 $ 54
Tax-Free $ 4 $ 12 $ 20 $ 46
The purpose of the table above is to assist you in understanding the various
costs and expenses that an investor in a Fund will bear directly or indirectly.
Investment dealers and other firms may independently charge shareholders
additional fees. The example assumes a 5% annual rate of return pursuant to
requirements of the Securities and Exchange Commission. This hypothetical rate
of return is not intended to be representative of past or future performance of
any Fund. The Example should not be considered to be a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
3
<PAGE>
Financial Highlights
The tables below show financial information for each Fund, expressed in terms of
one share outstanding throughout the period. The information in the tables is
covered by the report of the Funds' independent auditors. The report is
contained in the Funds' Registration Statement and is available from the Funds.
The financial statements contained in the Funds' 1998 Annual Report to
Shareholders are incorporated herein by reference and may be obtained by writing
or calling the Funds.
Zurich Money Market Fund
Year ended July 31,
1998 1997 1996
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of year $1.00 1.00 1.00
- --------------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .05
- --------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00
- --------------------------------------------------------------------------------
Total Return: 5.38% 5.27 5.34
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .48% .45 .50
- --------------------------------------------------------------------------------
Net investment income 5.24% 5.14 5.20
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets at end of year (in thousands) $4,538,627 4,361,935 4,225,775
- --------------------------------------------------------------------------------
Zurich Government Money Fund
Year ended July 31,
1998 1997 1996
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of year $1.00 1.00 1.00
- --------------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .05
- --------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00
- --------------------------------------------------------------------------------
Total Return: 5.33% 5.26 5.34
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .43% .44 .46
- --------------------------------------------------------------------------------
Net investment income 5.20% 5.13 5.20
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets at end of year (in thousands) $686,871 671,139 672,041
- --------------------------------------------------------------------------------
4
<PAGE>
Zurich Money Market Fund (continued)
Year ended July 31,
1995 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------
.05 .03 .03 .04 .07 .08 .09
- --------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------
5.34 3.20 2.96 4.45 7.19 8.50 9.03
- --------------------------------------------------------------------------------
.52 .52 .52 .49 .46 .45 .49
- --------------------------------------------------------------------------------
5.19 3.14 2.92 4.42 6.94 8.16 8.71
- --------------------------------------------------------------------------------
4,025,098 4,148,789 4,499,930 5,664,194 7,553,950 7,603,418 6,638,489
- --------------------------------------------------------------------------------
Zurich Government Money Fund (continued)
Year ended July 31,
1995 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------
.05 .03 .03 .04 .07 .08 .09
- --------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------
5.36 3.20 2.97 4.50 6.95 8.45 8.96
- --------------------------------------------------------------------------------
.46 .47 .45 .43 .43 .43 .49
- --------------------------------------------------------------------------------
5.21 3.15 2.94 4.44 6.65 8.08 8.79
- --------------------------------------------------------------------------------
603,601 707,368 694,303 926,328 1,126,417 845,347 514,303
- --------------------------------------------------------------------------------
5
<PAGE>
Zurich Tax-Free Money Fund
Year ended July 31,
1998 1997 1996
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period $1.00 1.00 1.00
- --------------------------------------------------------------------------------
Net investment income and dividends declared .03 .03 .03
- --------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00
- --------------------------------------------------------------------------------
Total Return: 3.46% 3.39 3.44
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .36% .37 .39
- --------------------------------------------------------------------------------
Net investment income 3.39% 3.33 3.38
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets at end of period (in thousands) $815,894 771,315 729,018
- --------------------------------------------------------------------------------
Note: Ratios have been determined on an annualized basis. Total return is not
annualized. The Zurich Money Market Fund's total return for the year
ended July 31, 1995 includes the effect of a capital contribution from
the investment manager. Without the capital contribution, the total
return would have been 4.62%.
How the Funds Work
Zurich Money Funds are designed to provide you with professional management of
short-term investment dollars. They are designed for investors who seek maximum
current income consistent with stability of principal plus liquidity. To help
meet these objectives, you are provided with a choice of separate investment
funds ("Funds"): the Zurich Money Market Fund (the "Money Market Fund"), the
Zurich Government Money Fund (the "Government Money Fund") and the Zurich
Tax-Free Money Fund (the "Tax-Free Money Fund"). Because each Fund combines its
shareholders' money, it can buy and sell large blocks of securities, which
reduces transaction costs and maximizes yields. Each Fund is managed by
investment professionals who analyze market trends to take advantage of changing
conditions and who seek to minimize risk by diversifying each Fund's
investments.
Each Fund seeks to maintain a net asset value of $1.00 per share. Thus, the
Funds are designed for investors who want to avoid the fluctuations of principal
commonly associated with equity and long-term bond investments. The fluctuations
of these other types of investments are often represented by the movement of
various unmanaged market indexes, such as the Dow Jones Industrial Average. In
addition, although there can be no guarantee that a Fund will achieve its
objective or that it will maintain a net asset value of $1.00 per share, each
Fund has maintained a $1.00 net asset value since its inception.
6
<PAGE>
Zurich Tax-Free Money Fund (continued)
Year ended July 31,
1995 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------
.03 .02 .02 .04 .05 .06 .06
- --------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------
3.53 2.33 2.39 3.57 5.07 5.81 6.21
- --------------------------------------------------------------------------------
.40 .41 .39 .39 .38 .40 .39
- --------------------------------------------------------------------------------
3.46 2.30 2.36 3.49 4.92 5.64 6.12
- --------------------------------------------------------------------------------
760,143 792,131 758,630 796,272 788,253 693,307 529,670
- --------------------------------------------------------------------------------
Investment Objectives, Policies and Risk Factors
Money Market Fund
The Money Market Fund seeks maximum current income to the extent consistent with
stability of principal. The Fund pursues its objective by investing exclusively
in the following types of U.S. Dollar denominated money market instruments that
mature in 12 months or less:
o Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities.
o Bank certificates of deposit (including time deposits) or bankers'
acceptances limited to domestic banks (including their foreign branches)
and Canadian chartered banks having total assets in excess of $1 billion.
o Commercial paper obligations rated A-1 or A-2 by Standard & Poor's
Corporation ("S&P") or Prime-1 or Prime-2 by Moody's Investors Service,
Inc. ("Moody's") or issued by companies with an unsecured debt issue
outstanding currently rated Aa by Moody's or AA by S&P or higher and
investments in other corporate obligations such as publicly traded bonds,
debentures and notes rated Aa by Moody's or AA by S&P or higher. For a
description of these ratings, see "Appendix -- Ratings of Investments" in
the Statement of Additional Information.
7
<PAGE>
o Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. Repurchase agreements are discussed below.
To the extent the Money Market Fund purchases Eurodollar certificates of deposit
issued by London branches of U.S. banks, or commercial paper issued by foreign
entities, consideration will be given to their marketability, to possible
restrictions on international currency transactions and to regulations imposed
by the domicile country of the foreign issuer. Eurodollar certificates of
deposit are not subject to the same regulatory requirements as certificates
issued by U.S. banks and associated income may be subject to the imposition of
foreign taxes.
The Money Market Fund may invest in commercial paper which is issued by major
corporations without registration under the Securities Act of 1933 in reliance
on the exemption from registration afforded by Section 3(a)(3) thereof. Such
commercial paper may be issued only to finance current transactions and must
mature in nine months or less. Trading of such commercial paper is conducted
primarily by institutional investors through investment dealers, and individual
investor participation in the commercial paper market is very limited.
The Fund may also invest in commercial paper issued in reliance on the so-called
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933 ("Section 4(2) paper"). Section 4(2) paper is restricted
as to disposition under the federal securities laws, and generally is sold to
institutional investors such as the Fund who agree that they are purchasing the
paper for investment and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors like the Fund through or with the
assistance of the issuer or investment dealers who make a market in the Section
4(2) paper, thus providing liquidity. The Fund's investment manager considers
the legally restricted but readily saleable Section 4(2) paper to be liquid;
however, pursuant to procedures approved by the Board of Trustees of the Trust,
if a particular investment in Section 4(2) paper is not determined to be liquid,
that investment will be included within the 10% limitation on illiquid
securities discussed under "The Funds" below. The Fund's investment manager
monitors the liquidity of its investments in Section 4(2) paper on a continuous
basis.
The Money Market Fund may concentrate more than 25% of its assets in bank
certificates of deposit or banker's acceptances of United States banks in
accordance with its investment objective and policies. Accordingly, the Fund may
be more adversely affected by changes in market or economic conditions and other
circumstances affecting the banking industry than it would be if the Fund's
assets were not so concentrated.
Government Money Fund
The Government Money Fund seeks maximum current income to the extent consistent
with stability of principal. The Fund pursues its objective by investing
exclusively in the following securities that mature within 12 months or less.
8
<PAGE>
o U.S. Treasury bills, notes, bonds and other obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
o Repurchase agreements of the obligations described above.
Some securities issued by U.S. Government agencies or instrumentalities are
supported only by the credit of the agency or instrumentality, such as those
issued by the Federal Home Loan Bank, and others have an additional line of
credit with the U.S. Treasury, such as those issued by the Federal National
Mortgage Association, Farm Credit System and Student Loan Marketing Association.
Short-term U.S. Government obligations generally are considered to be the safest
short-term investment. The U.S. Government guarantee of the securities owned by
the Fund, however, does not guarantee the net asset value of its shares, which
the Fund seeks to maintain at $1.00 per share. Also, with respect to securities
supported only by the credit of the issuing agency or instrumentality or by an
additional line of credit with the U.S. Treasury, there is no guarantee that the
U.S. Government will provide support to such agencies or instrumentalities and
such securities may involve risk of loss of principal and interest.
Tax-Free Money Fund
The Tax-Free Money Fund seeks maximum current income that is exempt from federal
income taxes to the extent consistent with stability of principal. The Fund
pursues its objective primarily through a professionally managed, diversified
portfolio of short-term high quality tax-exempt municipal obligations.
Under normal market conditions at least 80% of the Fund's total assets will, as
a fundamental policy, be invested in obligations issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, the
income from which is exempt from federal income tax ("Municipal Securities"). In
compliance with the position of the staff of the Securities and Exchange
Commission, the Fund does not consider "private activity" bonds as described in
"Dividends and Taxes -- Tax-Free Money Fund" as Municipal Securities for
purposes of the 80% limitation. This is a fundamental policy so long as the
staff maintains its position, after which it would become non-fundamental.
Dividends representing net interest income received by the Tax-Free Money Fund
on Municipal Securities will be exempt from federal income tax when distributed
to the Fund's shareholders. Such dividend income may be subject to state and
local taxes. See "Dividends and Taxes -- Tax-Free Money Fund." The Fund's assets
will consist of Municipal Securities, temporary investments as described below
and cash. The Fund considers short-term Municipal Securities to be those that
mature in one year or less.
The Tax-Free Money Fund will invest only in Municipal Securities which at the
time of purchase:
o are rated within the two highest ratings for Municipal Securities (Aaa or
Aa) assigned by Moody's or (AAA or AA) assigned by S&P;
9
<PAGE>
o are guaranteed or insured by the U.S. Government as to the payment of
principal and interest;
o are fully collateralized by an escrow of U.S. Government securities
acceptable to the Fund's investment manager;
o have at the time of purchase a Moody's short-term municipal securities
rating of MIG-2 or higher or a municipal commercial paper rating of P-2 or
higher, or S&P's municipal commercial paper rating of A-2 or higher;
o are unrated, if longer term Municipal Securities of that issuer are rated
within the two highest rating categories by Moody's or S&P; or
o are determined to be at least equal in quality to one or more of the above
ratings in the discretion of the Fund's investment manager.
Municipal Securities generally are classified as "general obligation" or
"revenue" issues. General obligation bonds are secured by the issuer's pledge of
its full credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Industrial development bonds held by the Fund are in
most cases revenue bonds and are not payable from the unrestricted revenues of
the issuer. Among other types of instruments, the Fund may purchase tax-exempt
commercial paper, warrants and short-term municipal notes such as tax
anticipation notes, bond anticipation notes, revenue anticipation notes,
construction loan notes and other forms of short-term loans. Such notes are
issued with a short-term maturity in anticipation of the receipt of tax
payments, the proceeds of bond placements or other revenues. A more detailed
discussion of Municipal Securities and the Moody's and S&P ratings outlined
above is contained in the Statement of Additional Information. As indicated
above and under "Dividends and Taxes -- Tax-Free Money Fund," the Fund may
invest in "private activity" bonds.
The Tax-Free Money Fund may purchase securities which provide for the right to
resell them to an issuer, bank or dealer at an agreed upon price or yield within
a specified period prior to the maturity date of such securities. Such a right
to resell is referred to as a "Standby Commitment." Securities may cost more
with Standby Commitments than without them. Standby Commitments will be entered
into solely to facilitate portfolio liquidity. A Standby Commitment may be
exercised before the maturity date of the related Municipal Security if the
Fund's investment manager revises its evaluation of the creditworthiness of the
underlying security or of the entity issuing the Standby Commitment. The Fund's
policy is to enter into Standby Commitments only with issuers, banks or dealers
that are determined by the Fund's investment manager to present minimal credit
risks. If an issuer, bank or dealer should default on its obligation to
repurchase an underlying security, the Fund might be unable to recover all or a
portion of any loss sustained from having to sell the security
10
<PAGE>
elsewhere. For purposes of valuing the Fund's securities at amortized cost, the
stated maturity of Municipal Securities subject to Standby Commitments is not
changed.
The Tax-Free Money Fund may purchase high quality Certificates of Participation
in trusts that hold Municipal Securities. A Certificate of Participation gives
the Fund an undivided interest in the Municipal Security in the proportion that
the Fund's interest bears to the total principal amount of the Municipal
Security. These Certificates of Participation may be variable rate or fixed rate
with remaining maturities of one year or less. A Certificate of Participation
may be backed by an irrevocable letter of credit or guarantee of a financial
institution that satisfies rating agencies as to the credit quality of the
Municipal Security supporting the payment of principal and interest on the
Certificate of Participation. Payments of principal and interest would be
dependent upon the underlying Municipal Security and may be guaranteed under a
letter of credit to the extent of such credit. The quality rating by a rating
service of an issue of Certificates of Participation is based primarily upon the
rating of the Municipal Security held by the trust and the credit rating of the
issuer of any letter of credit and of any other guarantor providing credit
support to the issue. The Fund's investment manager considers these factors as
well as others, such as any quality ratings issued by the rating services
identified above, in reviewing the credit risk presented by a Certificate of
Participation and in determining whether the Certificate of Participation is
appropriate for investment by the Fund. It is anticipated by the Fund's
investment manager that, for most publicly offered Certificates of
Participation, there will be a liquid secondary market or there may be demand
features enabling the Fund to readily sell its Certificates of Participation
prior to maturity to the issuer or a third party. As to those instruments with
demand features, the Fund intends to exercise its right to demand payment from
the issuer of the demand feature only upon a default under the terms of the
Municipal Security, as needed to provide liquidity to meet redemptions, or to
maintain a high quality investment portfolio.
The Tax-Free Money Fund may purchase and sell Municipal Securities on a
when-issued or delayed delivery basis. A when-issued or delayed delivery
transaction arises when securities are bought or sold for future payment and
delivery to secure what is considered to be an advantageous price and yield to
the Fund at the time it enters into the transaction. In determining the maturity
of portfolio securities purchased on a when-issued or delayed delivery basis,
the Fund will consider them to have been purchased on the date when it committed
itself to the purchase.
A security purchased on a when-issued basis, like all securities held by the
Tax-Free Money Fund, is subject to changes in market value based upon changes in
the level of interest rates and investors' perceptions of the creditworthiness
of the issuer. Generally such securities will appreciate in value when interest
rates decline and decrease in value when interest rates rise. Therefore if, in
order to achieve higher interest income, the Fund remains substantially fully
invested at the same time that it has purchased securities on a when-issued
basis, there will be a greater possibility that the market value of the Fund's
assets will vary from $1.00 per share, since the value of a when-issued security
is subject to market fluctuation and no interest accrues to the
11
<PAGE>
purchaser prior to settlement of the transaction. See "Net Asset Value --
Determining Share Price."
The Fund will only make commitments to purchase Municipal Securities on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but the Fund reserves the right to sell these securities before
the settlement date if deemed advisable. The sale of these securities may result
in the realization of gains that are not exempt from federal income tax.
In seeking to achieve its investment objective, the Tax-Free Money Fund may
invest all or any part of its assets in Municipal Securities that are industrial
development bonds. Moreover, although the Fund does not currently intend to do
so on a regular basis, it may invest more than 25% of its assets in Municipal
Securities that are repayable out of revenue streams generated from economically
related projects or facilities, if such investment is deemed necessary or
appropriate by the Fund's investment manager. To the extent that the Fund's
assets are concentrated in Municipal Securities payable from revenues on
economically related projects and facilities, the Fund will be subject to the
risks presented by such projects to a greater extent than it would be if the
Fund's assets were not so concentrated.
From time to time, as a defensive measure or when acceptable short-term
Municipal Securities are not available, the Tax-Free Money Fund may invest in
taxable "temporary investments" which include:
o obligations of the U.S. Government, its agencies or instrumentalities;
o debt securities rated within the two highest grades by Moody's or S&P;
o commercial paper rated in the two highest grades by either of such rating
services;
o certificates of deposit of domestic banks with assets of $1 billion or
more; and
o any of the foregoing temporary investments subject to repurchase agreements
(Repurchase agreements are discussed below).
Interest income from temporary investments is taxable to shareholders as
ordinary income. Although the Fund is permitted to invest in taxable securities,
it is the Fund's primary intention to generate income dividends that are not
subject to federal income taxes. See "Dividends and Taxes." For a description of
the ratings, see "Appendix -- Ratings of Investments" in the Statement of
Additional Information.
The Funds
In addition to the specific investment objective and policies listed above, each
Fund limits its investments to securities that meet the requirements of Rule
2a-7 under the Investment Company Act of 1940 (the "1940 Act"). See "Net Asset
Value -- Determining Share Price."
12
<PAGE>
Each Fund may invest in instruments that have interest rates that adjust
periodically or that "float" continuously according to formulae intended to
minimize fluctuation in values of the instruments ("Variable Rate Securities").
The interest rate on a Variable Rate Security is ordinarily determined by
reference to or is a percentage of an objective standard such as a bank's prime
rate, the 90-day U.S. Treasury bill rate, or the rate of return on commercial
paper or bank certificates of deposit. Generally, the changes in the interest
rate on Variable Rate Securities reduce the fluctuation in the market value of
such securities. Accordingly, as interest rates decrease or increase, the
potential for capital appreciation or depreciation is less than for fixed-rate
obligations. Some Variable Rate Securities ("Variable Rate Demand Securities")
have a demand feature entitling the purchaser to resell the securities at an
amount approximately equal to amortized cost or the principal amount thereof
plus accrued interest. As is the case for other Variable Rate Securities, the
interest rate on Variable Rate Demand Securities varies according to some
objective standard intended to minimize fluctuation in the values of the
instruments. Each Fund determines the maturity of Variable Rate Securities in
accordance with Securities and Exchange Commission rules which allow the Fund to
consider certain of such instruments as having maturities shorter than the
maturity date on the face of the instrument.
Each Fund may invest in repurchase agreements, which are instruments under which
a Fund acquires ownership of a security from a broker-dealer or bank that agrees
to repurchase the security at a mutually agreed upon time and price (which price
is higher than the purchase price), thereby determining the yield during the
Fund's holding period. Maturity of the securities subject to repurchase may
exceed one year. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, a Fund might incur expenses in enforcing its rights, and
could experience losses, including a decline in the value of the underlying
securities and loss of income. A Fund will not purchase illiquid securities,
including time deposits and repurchase agreements maturing in more than seven
days, if, as a result thereof, more than 10% of such Fund's net assets valued at
the time of the transaction would be invested in such securities.
A Fund may not borrow money except as a temporary measure for extraordinary or
emergency purposes, and then only in an amount up to one-third of the value of
its total assets, in order to meet redemption requests without immediately
selling any portfolio securities. Any such borrowings under this provision will
not be collateralized. If for any reason the current value of the Fund's total
assets falls below an amount equal to three times the amount of its indebtedness
from money borrowed, the Fund will, within three business days, reduce its
indebtedness to the extent necessary. No Fund will borrow for leverage purposes.
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. As defined
in the 1940 Act, this means the lesser of the vote of (a) 67% of the shares of
such Fund present at a meeting where
13
<PAGE>
more than 50% of the outstanding shares are present in person or by proxy; or
(b) more than 50% of the outstanding shares of the Fund.
Net Asset Value -- Determining Share Price
The price you pay when you buy shares in a Fund and the price you receive if you
redeem is the net asset value computed after we receive your order to buy or
redeem in proper form (as described under "How To Make a Purchase"). The net
asset value per share of each Fund is calculated by dividing the total value of
the assets of the Fund, minus its liabilities, by the total number of its shares
outstanding.
The net asset value per share of each Fund is determined on each day the New
York Stock Exchange is open for trading, at 11:00 a.m., 1:00 p.m. and 3:00 p.m.
Central time for the Money Market and Government Money Funds and at 11:00 a.m.
and 3:00 p.m. Central time for the Tax-Free Money Fund. Each Fund seeks to
maintain a net asset value of $1.00 per share.
Each Fund values its portfolio instruments at amortized cost in accordance with
Rule 2a-7 under the 1940 Act, which means that they are valued at their
acquisition cost (as adjusted for amortization of premium or discount) rather
than at current market value. Calculations are made to compare the value of each
Fund's investments valued at amortized cost with market-based value.
Market-based valuations are obtained by using actual quotations provided by
market makers, estimates of market value, or values obtained from yield data
relating to classes of money market instruments published by reputable sources
at the mean between the bid and asked prices for the instruments. If a deviation
of 1/2 of 1% or more were to occur between a Fund's net asset value per share
calculated by reference to market-based values and a Fund's $1.00 per share net
asset value, or if there were any other deviation that the Board of Trustees
believed would result in a material dilution to shareholders or purchasers, the
Board of Trustees would promptly consider what action, if any, should be
initiated. In order to value its investments at amortized cost, the Funds
purchase only securities with a maturity of one year or less and maintain a
dollar-weighted average portfolio maturity of 90 days or less. In addition, the
Funds limit their portfolio investments to securities that meet the quality and
diversification requirements of Rule 2a-7.
How to Make a Purchase
Whether you're opening an account or adding to it, we hope that you'll find that
we've made your shareholder transactions easy. Shares of each Fund are sold at
their net asset value with no sales charge. To open an account you should use
the account application available from the Funds and choose one of the methods
outlined in the following table. Call 1-800-537-6001 if you have questions or
need assistance.
14
<PAGE>
Minimum Investment Amounts -- subject to change at any time in management's
discretion
- -------------------------------------------------------------------------------
Initial Investment $ 1,000
For Individual Retirement Accounts $ 250
For an automatic investment plan $ 50 per month
Subsequent Purchase $ 100
For Individual Retirement Accounts $ 50
Automatic Purchase Plan* $ 50
- -----------
* See "Special Features" for more information regarding Automatic Purchase
Plan.
How To Make A Purchase
<TABLE>
<CAPTION>
Initial Investment Subsequent Investment
($1,000 or more) ($100 or more)
- --------------------------------------------------------------------------------------
<S> <C> <C>
By Mail o Complete the Account o Make your check payable to
Application and mail it with your Zurich Money Funds and
check (payable to Zurich Money mail it to:
Funds) to:
Kemper Service Company
Kemper Service Company Transfer Agency Division
Transfer Agency Division P.O. Box 419154
P.O. Box 419356 Kansas City, MO 64141-6154
Kansas City, MO 64141-6356
- --------------------------------------------------------------------------------------
By Phone o Call 1-888-ZURICH-1 o Call 1-888-ZURICH-1
(987-4241) to exchange from (987-4241) to exchange from
a Zurich YieldWise Funds or a Zurich YieldWise Funds or
a Kemper Funds account. a Kemper Funds account.
In Person o In downtown Chicago, you can o In downtown Chicago, you
make a direct investment at can make a direct
our Service Center at investment at our Service
222 South Riverside Plaza. Center at
In Kansas City, you can make 222 South Riverside Plaza.
a direct investment at In Kansas City, you can
811 Main Street, 7th Floor. make a direct investment at
811 Main Street, 7th Floor.
- -----------------------------------------------------------------------------------
15
<PAGE>
Initial Investment Subsequent Investment
($1,000 or more) ($100 or more)
- --------------------------------------------------------------------------------------
By Wire o To open an account through o Instruct your bank to wire
Transfer wire transfer of Federal your investment, together
(Federal Funds, call 1-800-537-6001. with your name and account
Funds) number, the name of the
o Provide your account Fund with the appropriate
registration instruction to Fund bank account number,
the service representative. and the name in which your
You will be provided with account is registered, to:
your new account number over
the phone. Zurich Money Funds,
United Missouri Bank of
o The Fund accepts wires at no Kansas City, N.A.
charge, although your bank ABA #1010-0069-5
may charge you for this Zurich Money Market
service. Fund: 98-0103-346-8,
o Instruct your bank to wire or
your investment, together
with your name and new Zurich Government Money
account number, to: Fund: 98-0116-259-4,
Zurich Money Funds: or
United Missouri Bank of
Kansas City, N.A. Zurich Tax-Free Money
ABA # 1010-0069-5 Fund: 98-0001-577-6
Zurich Money Market Fund:
98-0103-346-8, o The Fund accepts wires at
no charge, although your
or bank may charge you for
this service.
Zurich Government Money
Fund: 98-0116-259-4, or
Zurich Tax-Free Money
Fund: 98-0001-577-6
- -----------------------------------------------------------------------------------
By Electronic o Automatic Purchase Plan, Please see "Special Features"
Funds Transfer Payroll Direct Deposit and for more information on these
Government Direct Deposit services.
(Automated ($50 per month). Call
Clearing House 1-800-537-6001 for o EZ-Transfer
funds) instructions on setting up
an account. o Automatic Purchase Plan
($50 minimum)
o Payroll Direct Deposit
o Government Direct Deposit
All transactions are via the
Automated Clearing House
("ACH") System.
</TABLE>
16
<PAGE>
Other Information
Purchases by check or other negotiable bank draft will be invested as of 3:00
p.m. Central time on the next business day after receipt and will begin earning
dividends the following calendar day. Purchases by check drawn on a foreign bank
will normally be effective after the check clears. See "Purchase and Redemption
of Shares" in the Statement of Additional Information.
Purchase by wire of Federal Funds (i.e., monies credited to a bank's account
with its regional Federal Reserve Bank) will be effected at the next determined
net asset value. Purchases will receive that day's dividend if effected at or
prior to 1:00 p.m. Central time for the Money Market and the Government Money
Funds, and by 11:00 a.m. Central time for the Tax-Free Money Fund, otherwise
such shares will receive the dividend for the next calendar day if effected at
3:00 p.m. Central time.
The Funds reserve the right to withdraw all or any part of the offering made by
this prospectus or to reject purchase orders. The Funds also reserve the right
at any time to waive or increase the minimum investment requirements. All orders
to purchase shares are subject to acceptance by the Funds and are not binding
until confirmed or accepted in writing. Any purchase that would result in total
account balances for a single shareholder in excess of $3 million is subject to
prior approval by the Funds. Share certificates are issued only on request to
the Funds and may not be available for certain types of account registrations.
Investments may also be made in the Funds through broker-dealers and others, who
may charge a commission or other fee for their services. A $10 service fee will
be charged when a check for the purchase of shares is returned because of
insufficient or uncollected funds or a stop payment order.
If you elect to redeem shares of a Fund purchased by check or through
EZ-Transfer or Automatic Purchase Plan the Fund may delay transmittal of
redemption proceeds until it has determined that collected funds have been
received for the purchase of such shares, which may be up to 10 calendar days
from receipt by the Fund of the purchase amount. See "How to Make a Redemption."
How to Make a Redemption
You can access all or part of your account by redeeming your shares. Your shares
will be redeemed at the next determined net asset value after your request has
been received in proper form. If processed at 3:00 p.m. Central time, you will
receive that day's dividend on the shares you sold. If you redeem all your
shares of a Fund, you will receive the net asset value of such shares and all
declared but unpaid dividends on such shares. You may use any of the methods
outlined in the following table to sell your shares.
17
<PAGE>
How To Make A Redemption
- --------------------------------------------------------------------------------
By Redemption Check o All Redemption Checks should be for a minimum of
$500. Redemption Checks written in an amount
less than $500 will be charged a $10 service
fee.
o Redemption Checks should not be used to close
your account since the account normally includes
accrued but unpaid dividends.
o You may not use this feature to redeem shares
held in certificated form.
o Accounts with a Power of Attorney may not use
this feature.
- --------------------------------------------------------------------------------
By Phone o Telephone requests may be made by calling
1-888-ZURICH-1 (987-4241) Monday-Friday, 7 a.m.
to 6 p.m. CST and Saturday, 8 a.m. to 3 p.m. CST
or using the 24-hour Zurich InfoLine (888)
987-8678. You may receive the proceeds via:
o check by mail to the address to which your
account is registered, or
o electronic funds transfer (minimum $1,000 and
maximum $50,000) to a pre-authorized bank
account. See "Special Features -- EZ-Transfer."
o You may exchange to Zurich YieldWise Funds or
Kemper Funds. See "Exchanging Shares."
- --------------------------------------------------------------------------------
By Wire o You need to have signed up for wire transfer and
have the forms on file with the Shareholder
Service Agent before using it. Minimum wire:
$1,000
o Telephone requests may be made by calling
1-888-ZURICH-1 (987-4241) or in writing, subject
to the limitations on liability described under
"General" below.
o Proceeds will be sent only to the bank or trust
company you have designated on the account
application.
o You may not use this feature to redeem shares
held in certificated form.
18
<PAGE>
- --------------------------------------------------------------------------------
By Mail
o Complete a written request that includes the
following information: each account owner's
name, your account number, the amount to be
redeemed, and the signature of each owner
exactly as it appears on the account, including
any special capacity of the registered owner.
See "Signature Guarantee Requirements" below.
o Mail the written request to Kemper Service
Company, Transfer Agency Division, P.O. Box
419557, Kansas City, Missouri 64141-6557.
Signature Guarantee Requirements
If the proceeds of a redemption are $50,000 or less and the proceeds are payable
to the shareholder of record at the address of record, normally a telephone
request or a written request by any one account holder without a signature
guarantee is sufficient for redemptions by individual or joint account holders,
and trust, executor, guardian or custodian account holders provided the trustee,
executor, guardian or custodian is named in the account registration. Other
institutional account holders may exercise the special privilege of redeeming
shares by telephone request or written request without signature guarantee
subject to the same conditions as individual account holders and subject to the
limitations on liability described under "General" below, provided that the
privilege has been pre-authorized by the institutional account holder or
guardian account holder by written instruction to Kemper Service Company (the
"Shareholder Service Agent") with signatures guaranteed. All other redemption
requests must include a signature guaranteed by a commercial bank, trust
company, savings and loan association, federal savings bank, member firm of a
national securities exchange or other eligible financial institution. If any
share certificates were issued, they must also be signed with signature(s)
guaranteed. Additional documentation may be requested, and a signature guarantee
is normally required, from institutional and fiduciary account holders such as
corporations, custodians (e.g., under the Uniform Transfers to Minors Act),
executors, administrators, trustees or guardians. The privilege of redeeming
shares by telephone request or by written request without a signature guarantee
may not be used to redeem shares held in certificated form and may not be used
if the shareholder's account has had an address change within 30 days of the
redemption request.
Additional Information
o Redemption by Wire. Requests for wire transfer redemptions received by the
Shareholder Service Agent prior to 11:00 a.m. Central time will result in
shares being redeemed that day and normally a wire transfer will be sent to
the designated account that day. Dividends for that day will not be earned.
The Funds are not responsible for the efficiency of the federal wire system
or the account holder's financial services firm or bank. You are
responsible for any charges your firm or bank makes for sending or
receiving wire transfers. To change the designated account to receive wire
redemption proceeds, send a
19
<PAGE>
written request to the Shareholder Service Agent with signatures guaranteed
as described above. This privilege will be terminated if the Shareholder
Service Agent receives written notice from any account holder of revocation
of this authority.
o Redemption by Redemption Check. If you select the checkwriting method of
redemption on your account application, you will normally receive drafts
("Redemption Checks") within 2 weeks of opening your account which you may
use to draw on your Fund account, but not to close it. When a Redemption
Check is presented for payment, a sufficient number of full and fractional
shares in your account will be redeemed at the next determined net asset
value to cover the amount of the Redemption Check. This will enable you to
continue earning daily dividends until the Fund receives the Redemption
Check. You may not use Redemption Checks if there is a Power of Attorney on
the account.
You may write Redemption Checks payable to the order of any person in any amount
not more than $5 million. Unless one signer is authorized on the account
application, Redemption Checks must be signed by all account holders. If the
Shareholder Service Agent receives written notice by any owner revoking the
authorization to sign individually, all account owners will be required to sign.
Redemption Checks must be signed exactly as the account is registered. The Funds
may refuse to honor Redemption Checks whenever the right of redemption has been
suspended or postponed, or whenever the account is otherwise impaired. A $10
service fee will be charged when a Redemption Check is presented to redeem Fund
shares in excess of the value of your Fund account or in an amount less than
$500; when a Redemption Check is presented that would require redemption within
10 days of shares that were purchased by check or through EZ-Transfer or
Automatic Purchase Plan; or when you request "stop payment" of a Redemption
Check by telephone or in writing. A "stop payment" request may be made by
calling 1-888 ZURICH-1 (987-4241).
General
If shares of a Fund to be redeemed were purchased by check or through
EZ-Transfer or Automatic Purchase Plan (see "Special Features -- Electronic
Funds Transfer Programs") the Fund may delay transmittal of redemption proceeds
until it has determined that collected funds have been received for the purchase
of such shares, which will be up to 10 days from receipt by the Fund of the
purchase amount. Shareholders may not use wire transfer or Redemption Check
features until the shares being redeemed have been owned for at least 10 days
and shareholders may not use such procedures to redeem shares held in
certificated form. There is no such delay when the shares being redeemed were
originally purchased by wiring Federal Funds.
If shares being redeemed were acquired from an exchange of shares of a mutual
fund that were offered subject to a contingent deferred sales charge as
described in the prospectus for that other fund, the redemption of such shares
by a Fund may be subject to a contingent deferred sales charge as explained in
such prospectus.
20
<PAGE>
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions, ACH transactions and exchange transactions for individual
and institutional accounts and pre-authorized telephone redemption transactions
for certain institutional accounts. Shareholders may choose these privileges on
the Account Application or by contacting the Shareholder Service Agent for
appropriate instructions. Please note that the telephone exchange privilege is
automatic unless the shareholder refuses it on the account application. The
Trust or its agents may be liable for losses, expenses or costs arising out of
fraudulent or unauthorized telephone requests pursuant to these privileges,
unless the Trust or its agent reasonably believe, based upon reasonable
verification procedures, that the telephonic instructions are genuine. The
shareholder will bear the risk of loss, including loss resulting from fraudulent
or unauthorized transactions, as long as the reasonable verification procedures
are followed. The verification procedures include recording instructions,
requiring certain identifying information before acting upon instructions and
sending written confirmations.
During periods when it is difficult to contact the Shareholder Service Agent by
telephone, it may be difficult to use the telephone redemption privilege or the
wire redemption privilege, although you can still redeem by mail. The Funds
reserve the right to terminate or modify the redemption by check, phone or wire
privileges at any time.
Because of the high cost of maintaining small accounts, the Funds may assess a
monthly fee of $3 on any account with a balance below $1,000 for 30 consecutive
days. The fee will not apply to accounts enrolled in an automatic investment
program or to IRAs. See "How To Make a Purchase."
Exchanging Shares
Diversification is at the heart of most effective investment planning. That's
why we make it easy for you to exchange your shares of Zurich Money Funds for
shares of Zurich YieldWise Funds or shares of Kemper Funds. Please remember that
money market shares you acquire by dividend reinvestment may be exchanged into a
Kemper Mutual Fund with no sales charge; though money fund shares you purchase
are subject to the applicable sales charge when exchanged.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the fund into which they are being exchanged.
Exchanges are made based on relative dollar values of the shares involved in the
exchange. We don't charge you a service fee for an exchange; however, dealers or
other firms may charge for their services. To exchange shares, call us or
contact your financial adviser to obtain prospectuses of Zurich YieldWise Funds
or the Kemper Funds in which you are interested. You may make an exchange by
mail or by telephone:
21
<PAGE>
By Telephone
Once you've completed the authorization section on the account application and
we have it on file, exchange requests may be made by calling 1-888-ZURICH-1
(987-4241), subject to the limitations on liability described under "How To Make
a Redemption -- General." During periods when it is difficult to contact the
Shareholder Service Agent by telephone, it may be difficult to use the telephone
exchange privilege.
By Mail
Send your request to:
Zurich Money Funds
P.O. Box 419557
Attention: Exchange Department
Kansas City, Missouri 64141-6557
Exchanges will be effected by redemption of shares of the fund held and purchase
of shares of the other fund. For federal income tax purposes, any such exchange
constitutes a sale upon which a gain or loss may be realized, depending upon
whether the value of the shares being exchanged is more or less than the
shareholder's adjusted cost basis. Any certificates for shares must be deposited
prior to any exchange of such shares. The exchange privilege is not a right and
may be suspended, terminated or modified at any time. Except as otherwise
permitted by applicable regulation, 60 days prior written notice of any
termination or material change will be provided.
Automatic Exchange Plan
With an account balance of $1,000 or more, shareholders may authorize the
automatic exchange of a specified amount ($100 minimum) of such shares for
shares of a Kemper Fund. If selected, exchanges will be made automatically until
the privilege is terminated by the shareholder or the Fund. Exchanges are
subject to the terms and conditions described above under "Exchanging Shares,"
except that there is no minimum investment requirement for the Kemper Fund
acquired on exchange. This privilege may not be used for the exchange of shares
held in certificated form.
Subject to the limitations described in this section, Class A shares (or the
equivalent) of the following Kemper Mutual Funds may be exchanged for each other
at their relative net asset values: Kemper Technology Fund, Kemper Total Return
Fund, Kemper Growth Fund, Kemper Small Capitalization Equity Fund, Kemper Income
and Capital Preservation Fund, Kemper Municipal Bond Fund, Kemper Diversified
Income Fund, Kemper High Yield Series, Kemper U.S. Government Securities Fund,
Kemper International Fund, Kemper State Tax-Free Income Series, Kemper
Adjustable Rate U.S. Government Fund, Kemper Blue Chip Fund, Kemper Global
Income Fund, Kemper Target Equity Fund (series are subject to a limited offering
period), Kemper Intermediate Municipal Bond Fund, Kemper Cash Reserves Fund,
Kemper U.S. Mortgage Fund, Kemper Short-Intermediate Government Fund, Kemper
Value Plus Growth Fund, Kemper Value Series, Kemper Horizon Fund,
22
<PAGE>
Kemper Quantitative Equity Fund, Kemper Europe Fund, Kemper Asian Growth Fund
and Kemper Aggressive Growth Fund ("Kemper Mutual Funds") and certain "Money
Market Funds" (Zurich Money Funds, Cash Equivalent Fund, Tax-Exempt California
Money Market Fund, Cash Account Trust, Investors Municipal Cash Fund and
Investors Cash Trust). In addition, shares of Zurich Money Funds may be
exchanged for shares of Zurich YieldWise Funds. Shares of Money Market Funds and
Kemper Cash Reserves Fund that were acquired by purchase (not including shares
acquired by dividend reinvestment) are subject to the applicable sales charge on
exchange with Kemper Funds. Shares purchased by check or through
EXPRESS-Transfer or Bank Direct Deposit may not be exchanged until they have
been owned for at least 15 days. In addition, shares of Kemper Funds, other than
a Money Market Fund and Kemper Cash Reserves Fund, acquired by exchange from
another fund may not be exchanged thereafter until they have been owned for 15
days. Series of Kemper Target Equity Fund will be available on exchange only
during the Offering Period for such series as described in the prospectus for
such series. Cash Equivalent Fund, Tax-Exempt California Money Market Fund, Cash
Account Trust, Investors Municipal Cash Fund and Investors Cash Trust are
available on exchange but only through a financial services firm having a
services agreement with Kemper Distributors, Inc. with respect to such funds.
Exchanges may only be made for funds that are available for sale in the
shareholder's state of residence. Currently, Tax-Exempt California Money Market
Fund is available for sale only in California and the portfolios of Investors
Municipal Cash Fund are available for sale only in certain states.
Special Retirement Plans
Shareholders of the Money Market Fund who have purchased shares because they are
participants in tax-exempt retirement plans of Scudder Kemper and its affiliates
may exchange their shares for Class I shares of any "Kemper Mutual Fund" listed
above to the extent that they are available through their plan. Conversely,
shareholders of Class I shares may exchange their shares for shares of the Money
Market Fund if the shareholders of Class I shares have purchased shares because
they are participants in tax-exempt retirement plans of Scudder Kemper and its
affiliates. Exchanges will be made at the shares' relative net asset values
through their plan. Exchanges are subject to the limitations set forth above.
Special Features
Zurich MoneyPLUS Account(SM)
The Zurich MoneyPLUS Account(SM) is a cash management program offering a
combination of features and benefits. The program includes checkwriting (no
minimum dollar amount) and a VISA(R) Gold Check Card (a debit card). The
INVESTORS MONEYCARD(SM) VISA(R) is issued by Investors Fiduciary Trust Company
("IFTC"). Currently, the fee for this service is $65 a year with charges for
additional checks. There is a fee of $1.00 per transaction for use of Automated
Teller
23
<PAGE>
Machines. The minimum initial account balance required to be eligible for this
privilege is $5,000. You may use only the checks provided through the Zurich
MoneyPLUS Account(SM). Any check for an amount in excess of the funds available
for redemption from the shareholder's account will be returned and will subject
the account to additional service fees. If you have the INVESTORS MONEYCARD(SM)
VISA(R) and request an expedited wire transfer redemption, the wire will be sent
on the next business day following the request. Fees and features of the Zurich
MoneyPLUS Account(SM) are subject to modification. This program is available
only to those who are residents of the United States. Shareholders should
contact the Shareholder Service Agent at 1-800-537-6001 for more information.
Electronic Funds Transfer Programs
For your convenience, the Funds have established several investment and
redemption programs using electronic funds transfer which are described below.
There is currently no charge by the Funds for these programs. Shareholders
should contact the Shareholder Service Agent at 1-888-ZURICH-1 (987-4241) for
more information.
o EZ-Transfer With just one easy phone call, EZ-Transfer quickly and
conveniently transfers money (minimum $100 and maximum $50,000) from your
bank, savings and loan or credit union account to purchase shares in a
Fund. You can also redeem shares (minimum $100 and maximum $50,000) from
your Fund account and transfer the proceeds to your bank, savings and loan
or credit union checking account. When you choose to participate in the
EZ-Transfer program, you designate the bank, savings and loan or credit
union account which will be debited or credited under the program. After
you have received a notice confirming that this service has been added to
your Fund account, please allow a minimum of 20 days for bank notification
and processing. By choosing to participate in this program, you authorize
the Shareholder Service Agent to rely upon telephone instructions from any
person to transfer the specified amounts between your Fund account and your
predesignated bank, savings and loan or credit union account, subject to
the limitations on liability under "How To Make a Redemption-- General."
The Shareholder Service Agent will then purchase or redeem sufficient full
and fractional shares in your account to satisfy the request. Once you are
enrolled in EZ-Transfer, you can initiate a transaction by simply calling
Zurich Shareholder Services toll free at 1-888-ZURICH-1 (987-4241) Monday
through Friday, 8:00 a.m. to 3:00 p.m. Central time or by calling Zurich
Info Line at 1-888-987-8678 24 hours a day. See "How To Make a Redemption--
General" for information on our 10 day hold policy. Any account holder may
terminate this privilege by sending written notice to Zurich Money Funds,
P.O. Box 419415, Kansas City, Missouri 64141-6415. Termination will become
effective as soon as the Shareholder Service Agent has had a reasonable
time to act upon the request. EZ-Transfer cannot be used with passbook
savings accounts. This program may not be used for tax-deferred plans such
as Individual Retirement Accounts (IRAs).
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o Automatic Purchase Plan You may establish an automatic investment program
with your Fund account. With Automatic Purchase Plan, monthly investments
(maximum $50,000) are made automatically from your account at a bank,
savings and loan, or credit union into your Fund account. By signing up for
this privilege, you authorize the Trust and its agents to take money out of
your predesignated bank, savings and loan or credit union account and
invest that money in your Fund account. Any account owner may terminate
this privilege simply by sending written notice to Zurich Money Funds, P.O.
Box 419415, Kansas City, Missouri 64141-6415. Termination will become
effective as soon as the Shareholder Service Agent has had a reasonable
time to act upon the request. This privilege may not be used with passbook
savings accounts.
o Automatic Check Deposit You may conveniently invest in the Funds through
Payroll Direct Deposit or Government Direct Deposit. You can arrange to
have all or a portion of your net pay or government check automatically
invested in your Fund account each payment period. You may terminate your
participation in these programs by giving written notice to your employer
or the government agency, as appropriate. (A reasonable time to act is
required.) The Funds are not responsible for the efficiency of your
employer or the government agency making the payment or any financial
institution transmitting payment.
To use these features, the participating financial institution must be
affiliated with the ACH System. This ACH affiliation permits the Shareholder
Service Agent to electronically transfer money between your bank account or
employer's payroll bank in the case of Payroll Direct Deposit or the U.S.
Government in the case of Government Direct Deposit, and your Fund account. Your
financial institution's crediting policies for these transferred funds may vary.
These features may be amended or terminated at any time by the Funds.
Other Special Features
Information about the following special features is contained in the Statement
of Additional Information. Additional information may also be obtained by
contacting Zurich Shareholder Services at 1-888-ZURICH-1 (987-4241).
-- Automatic Withdrawal Programs
-- Tax Sheltered Retirement Programs
Dividends and Taxes
Dividend Payment
To help keep your account growing, dividends from any Fund are automatically
reinvested in additional shares of that Fund, unless you request payment by
check on your account application or make such a request later. Dividends are
declared daily and paid monthly.
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Dividends are normally reinvested on the 25th of each month if a business day,
otherwise on the prior business day. If you've chosen to receive dividends in
cash, checks will be mailed monthly to you or any person you designate.
Shareholders may request this option by contacting the Shareholder Service Agent
(see "How To Buy Shares").
Each Fund will reinvest dividend checks (and future dividends) in shares of that
same Fund if checks are returned as undeliverable. Dividends and other
distributions of a Fund in the aggregate amount of $10 or less are automatically
reinvested in shares of the same Fund unless you request that such policy not be
applied to your account.
Dividend Exchange Privilege
Upon written request to the Shareholder Service Agent, a shareholder may elect
to have Fund dividends invested without sales charge in shares of a Kemper Fund
offering this privilege at the net asset value of the other fund. See
"Exchanging Shares" for a list of these Kemper Funds. To use this privilege of
investing Fund dividends in shares of a Kemper Fund, shareholders must maintain
a minimum account value of $1,000 in the Zurich Money Funds. Share certificates
will only be issued on request.
Taxable Funds
The Money Market Fund and the Government Money Fund each intend to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code (the "Code") and if so qualified will not be subject to federal
income taxes to the extent its earnings are distributed. Dividends derived from
interest and short-term capital gains are taxable as ordinary income whether
received in cash or reinvested in additional shares. Dividends from these Funds
do not qualify for the dividends received deduction available to corporate
shareholders.
Tax-Free Money Fund
The Tax-Free Money Fund intends to continue to qualify under the Code as a
regulated investment company and, if so qualified, will not be liable for
federal income taxes to the extent its earnings are distributed. This Fund also
intends to meet the requirements of the Code applicable to regulated investment
companies distributing tax-exempt interest dividends and, accordingly, dividends
representing net interest received on Municipal Securities will not be
includable by shareholders in their gross income for federal income tax
purposes, except to the extent such interest is subject to the alternative
minimum tax as discussed below. Dividends representing taxable net investment
income (such as net interest income from temporary investments in obligations of
the U.S. Government) and net short-term capital gains, if any, are taxable to
shareholders as ordinary income. All taxpayers will be required to disclose on
their federal income tax returns the amount of tax-exempt interest earned during
the year, including exempt-interest dividends from the Tax-Free Money Fund.
Net interest on certain "private activity bonds" issued on or after August 8,
1986 is treated as an item of tax preference and may, therefore, be subject to
both the individual and corporate alternative minimum tax. To the extent
provided by
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regulations to be issued by the Secretary of the Treasury, exempt-interest
dividends from the Tax-Free Money Fund are to be treated as interest on private
activity bonds in proportion to the interest income the Fund receives from
private activity bonds, reduced by allowable deductions. For the 1997 calendar
year, 19% of the net interest income of the Tax-Free Money Fund was derived from
"private activity bonds."
Exempt-interest dividends, except to the extent of interest from "private
activity bonds," are not treated as a tax preference item. For a corporate
shareholder, however, such dividends will be included in determining such
corporate shareholder's "adjusted current earnings." Seventy-five percent of the
excess, if any, of "adjusted current earnings" over the corporate shareholder's
other alternative minimum taxable income with certain adjustments will be a tax
preference item. Corporate shareholders are advised to consult their tax
advisers with respect to alternative minimum tax consequences.
Individuals whose modified income exceeds a base amount will be subject to
federal income tax on up to 85% of their Social Security benefits. Modified
income includes adjusted gross income, tax-exempt interest, including
exempt-interest dividends from the Tax-Free Money Fund, and 50% of Social
Security benefits.
The tax exemption of dividends from the Tax-Free Money Fund for federal income
tax purposes does not necessarily result in exemption under the income or other
tax laws of any state or local taxing authority. The laws of the several states
and local taxing authorities vary with respect to the taxation of such income
and shareholders of the Fund are advised to consult their own tax adviser as to
the status of their accounts under state and local tax laws.
The Funds
Dividends declared in October, November or December to shareholders of record as
of a date in one of those months and paid during the following January are
treated as paid on December 31 of the calendar year in which declared for
federal income tax purposes. Each Fund may adjust its schedule for dividend
reinvestment for the month of December to assist it in complying with reporting
and minimum distribution requirements contained in the Code.
Each Fund is required by law to withhold 31% of taxable dividends paid to
certain shareholders who do not furnish a correct taxpayer identification number
(in the case of individuals, a social security number) and in certain other
circumstances. Trustees of qualified retirement plans and 403(b)(7) accounts are
required by law to withhold 20% of the taxable portion of any distribution that
is eligible to be "rolled over." The 20% withholding requirement does not apply
to distributions from IRAs or any part of a distribution that is transferred
directly to another qualified retirement plan, 403(b)(7) account, or IRA.
Shareholders should consult their tax advisers regarding the 20% withholding
requirement.
You will receive a monthly statement giving complete details of dividend
reinvestment and purchase and redemption transactions during the month. Tax
information will be provided annually. You should retain copies of your monthly
account statements or
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<PAGE>
year-end statements for tax reporting purposes. However, those who have
incomplete records may obtain historical account transaction information at a
reasonable fee.
When more than one shareholder resides at the same address, certain reports and
communications to be delivered to such shareholders may be combined in the same
mailing package, and certain duplicate reports and communications may be
eliminated. Similarly, account statements to be sent to such shareholders may be
combined in the same mailing package or consolidated into a single statement.
However, a shareholder may request that the foregoing policies not be applied to
the shareholder's account.
Investment Manager
Scudder Kemper Investments, Inc. ("Scudder Kemper"), 345 Park Avenue, New York,
New York, is the investment manager of the Funds and provides the Funds with
continuous professional investment supervision. Scudder Kemper has been engaged
in the management of investment funds for more than seventy years with more than
$230 billion in assets under management.
Scudder Kemper is an indirect subsidiary of Zurich Financial Services, Inc., a
newly formed global insurance and financial services company. Zurich Financial
Services, Inc. owns approximately 70% of Scudder Kemper, with the balance owned
by Scudder Kemper's officers and employees. The Zurich family of companies
manages over $403 billion in assets worldwide.
In connection with the formation of Zurich Financial Services, Inc., each Fund's
existing investment management agreement with Scudder Kemper was deemed to have
been assigned and, therefore, terminated. The Board has approved a new
investment management agreement with Scudder Kemper, which is substantially
identical to the current investment management agreement, except for the dates
of execution and termination. This agreement became effective upon the
termination of the then current investment management agreement and will be
submitted for shareholder approval at a special meeting currently scheduled to
conclude in December 1998.
Responsibility for overall management of the Funds rests with the Board of
Trustees and officers of the Trust. Professional investment supervision is
provided by Scudder Kemper. The investment management agreement provides that
Scudder Kemper shall act as the Funds' investment adviser, manage their
investments and provide the Funds with various services and facilities. Frank J.
Rachwalski, Jr. is the lead portfolio manager of the Funds. He has served in
this capacity since the Funds commenced operations. Mr. Rachwalski joined
Scudder Kemper in January, 1973 and is currently a Managing Director of Scudder
Kemper and a Vice President of the Trust. He received a B.B.A. and an M.B.A.
from Loyola University, Chicago, Illinois.
For the services and facilities furnished, the Trust pays a monthly investment
management fee on a graduated basis at an annual rate ranging from 0.50% of the
first $215 million of average daily net assets of the Trust, to 0.25% of average
daily net assets of the Trust over $800 million.
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Scudder Fund Accounting ("SFAC"), a subsidiary of Scudder Kemper, is responsible
for determining the daily net asset value per share of each Fund and maintaining
all accounting records related thereto. Currently, SFAC receives no fee for its
services; however, subject to Board approval, at some time in the future SFAC
may seek payment for its services under its agreement with the Trust.
Year 2000 Readiness
Like other mutual funds and financial and business organizations worldwide, the
Funds could be adversely affected if computer systems on which the Funds rely,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to process correctly date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to address successfully the Year 2000 Issue could result in
interruptions to and other material adverse effects on the Funds' business and
operations. The Adviser has commenced a review of the Year 2000 Issue, although
there can be no assurances that these steps will be sufficient. In addition,
there can be no assurances that the Year 2000 Issue will not have an adverse
effect on the companies whose securities are held by the Funds or on global
markets or economies generally.
Kemper Distributors, Inc., 222 South Riverside Plaza, Chicago, Illinois
60606-5808, an affiliate of Scudder Kemper, is the principal underwriter of the
Funds and acts as agent of the Funds in the sale of their shares.
Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas
City, Missouri 64105, as custodian, and State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, as sub-custodian, have custody of
all securities and cash of the Funds. They attend to the collection of principal
and income, and payment for and collection of proceeds of securities bought and
sold by the Funds. IFTC is also the Funds' transfer and dividend-paying agent.
Pursuant to a services agreement with IFTC, Kemper Service Company, 811 Main
Street, Kansas City, Missouri 64105, an affiliate of Scudder Kemper, serves as
Shareholder Service Agent of the Funds.
Performance
The Funds may advertise several types of performance information, including
"yield," "effective yield," "total return," "average annual total return" and,
for the Tax-Free Money Fund only, "tax equivalent yield." Please remember that
performance information is based upon historical earnings and is not
representative of future performance. The yield of a Fund refers to the net
investment income generated by a hypothetical investment in the Fund over a
specific seven-day period. This net investment income is then annualized, which
means that the net investment income generated during the seven-day period is
assumed to be generated each week over an annual period and is shown as a
percentage of the investment. The effective yield is calculated similarly, but
the net investment income earned by the investment is
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assumed to be compounded weekly when annualized. The effective yield will be
slightly higher than the yield due to this compounding effect. Average annual
total return and total return measure both net investment income and any
realized or unrealized appreciation or depreciation of a Fund's investments,
assuming reinvestment of all dividends. Average annual total return represents
the average annual percentage change over the period and total return represents
the aggregate percentage or dollar value change over the period. Tax equivalent
yield is the yield that a taxable investment must generate in order to equal the
Tax-Free Money Fund's yield for an investor in a stated federal income tax
bracket (normally assumed to be the maximum tax rate). Tax equivalent yield is
based upon, and will be higher than, the portion of the Tax-Free Money Fund's
yield that is tax-exempt.
The performance of a Fund may be compared to that of other money market mutual
funds or mutual fund indexes as reported by independent mutual fund reporting
services such as Lipper Analytical Services, Inc. ("Lipper"). A Fund's
performance and its relative size may be compared to other money market mutual
funds as reported by IBC Financial Data, Inc.'s Money Fund Report(R) or Money
Market Insight(R), reporting services on money market funds. Investors may want
to compare a Fund's performance to that of various bank products as reported by
BANK RATE MONITOR(TM), a financial reporting service that weekly publishes
average rates of bank and thrift institution money market deposit accounts and
interest bearing checking accounts or various certificate of deposit indexes.
The performance of a Fund also may be compared to that of U.S. Treasury bills
and notes. Certain of these alternative investments may offer fixed rates of
return and guaranteed principal and may be insured. In addition, investors may
want to compare a Fund's performance to the Consumer Price Index either directly
or by calculating its "real rate of return," which adjusts its return for the
effects of inflation.
Information may be quoted from publications such as Morningstar, Inc., The Wall
Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago Tribune,
USA Today, Institutional Investor and Registered Representative. The Funds may
depict the historical performance of the securities in which a Fund may invest
over periods reflecting a variety of market or economic conditions either alone
or in comparison with alternative investments, performance indexes of those
investments or economic indicators. Each Fund may also describe its portfolio
holdings and depict its size or relative size compared to other mutual funds,
the number and make-up of its shareholder base and other descriptive factors
concerning the Fund.
Each Fund's returns will fluctuate. Shares of the Funds are not insured.
Additional information concerning a Fund's performance appears in the Statement
of Additional Information.
Capital Structure
Zurich Money Funds is an open-end, diversified, management investment company,
organized as a business trust under the laws of Massachusetts on August 9, 1985.
Effective February 1, 1996, the name of the Trust was changed from Kemper Money
Market Fund to Kemper Money Funds, and effective April 14, 1997, the name of the
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Trust was changed from Kemper Money Funds to Zurich Money Funds. Effective
November 29, 1985, the Money Market Fund, pursuant to a reorganization,
succeeded to the assets and liabilities of Kemper Money Market Fund, Inc., a
Maryland corporation organized on September 19, 1974. Effective November 14,
1986, the Government Money Fund succeeded to the assets and liabilities of
Kemper Government Money Market Fund, a business trust organized under the laws
of Massachusetts on August 9, 1985.
Effective November 29, 1985, Kemper Government Money Market Fund succeeded to
the assets and liabilities of Kemper Government Money Market Fund, Inc., a
Maryland corporation organized November 3, 1981. The Tax-Free Money Fund
commenced public offering of its shares on September 10, 1987. The Trust may
issue an unlimited number of shares of beneficial interest, all having no par
value, which may be divided by the Board of Trustees into classes of shares,
subject to compliance with the Securities and Exchange Commission regulations
permitting the creation of separate classes of shares. The Trust's shares are
not currently divided into classes. While only shares of the three previously
described Funds are presently being offered, the Board of Trustees may authorize
the issuance of additional series if deemed desirable, each with its own
investment objective, policies and restrictions. Since the Trust may offer
multiple series, it is known as a "series company." Shares of a Fund have equal
noncumulative voting rights and equal rights with respect to dividends, assets
and liquidation of such Fund subject to any preferences, rights or privileges of
any classes of shares within the Fund. Generally, each class of shares issued by
a particular Fund would differ as to the allocation of certain expenses of the
Fund, such as distribution and administrative expenses, permitting, among other
things, different levels of services or methods of distribution among various
classes. Shares are fully paid and nonassessable when issued, are transferable
without restriction and have no preemptive or conversion rights. The Trust is
not required to hold annual shareholders' meetings and does not intend to do so.
However, it will hold special meetings as required or deemed desirable for such
purposes as electing trustees, changing fundamental policies or approving an
investment management agreement. Subject to the Agreement and Declaration of
Trust of the Trust, shareholders may remove trustees. Shareholders will vote by
Fund and not in the aggregate except when voting in the aggregate is required
under the 1940 Act, such as for the election of trustees.
Each Fund may in the future seek to achieve its investment objective by pooling
its assets with assets of other mutual funds for investment in another
investment company having the same investment objective and substantially the
same investment policies and restrictions as such Fund. The purpose of such an
arrangement is to achieve greater operational efficiencies and to reduce costs.
It is expected that any such investment company will be managed by Scudder
Kemper in substantially the same manner as the corresponding Fund. Shareholders
of each Fund will be given at least 30 days' prior notice of any such
investment, although they will not be entitled to vote on the action. Such
investment would be made only if the Trustees determine it to be in the best
interests of the respective Fund and its shareholders.
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Account Services Directory
To avoid delays in the future, it is a good idea to sign up for account services
and features at the time an account is opened.
To Open A New Account
If you would like to open a new account or need a question answered, call a
Zurich Money Fund Specialist between 8 a.m. and 6 p.m. Central time at
1-800-537-6001.
Current Account Assistance
If you have a question about a current account, call a Shareholder Services
Representative between 7 a.m. and 6 p.m. Central time, Monday through Friday,
and between 8 a.m. and 3 p.m. Central time on Saturday at 1-888-ZURICH-1
(987-4241).
For better service, please have your account number and your most recent
statement at hand. For a special phone line for hearing impaired shareholders
with a Telecommunications Device for the Deaf (TDD), call 1-800-972-3006.
24-Hour Account Information
From a touch-tone phone, you can use Zurich InfoLine (1-888-987-8678), our
automated account information service, to obtain the following information 24
hours a day:
o account balance
o current yield
o pre-authorized transfers to and from a bank account
o last dividend paid
o transaction confirmation
Checkwriting
You can write any number of checks for $500 or more against your available
account balance. See Zurich MoneyPlus Account(SM) for a no-minimum checking
option.
Automatic Check Deposit
You can save time by signing up for direct deposit of Payroll or Government
checks into your Zurich Money Funds account. Ask your employer about how to
arrange this with all or part of your paycheck. Government Direct Deposit forms
are available by calling 1-888-ZURICH-1 (987-4241).
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Automatic Investing
If you already directly deposit your paycheck into a bank account, you may want
to consider using Automatic Purchase Plan to help set aside some money for the
future. You specify the frequency and amount of your investment, and Zurich will
automatically have money from your personal checking or savings account
transferred to your Zurich Money Funds account. And this service may be changed
at any time . . . even deferred for a few months if you need to.
Money-by-Phone
You can make transfers from your money market account to your bank account with
just a phone call if you sign up for EZ-Transfer. This feature also allows you
to transfer money to your Zurich Money Funds account over-the-phone. These
transfers generally take 1-2 days, depending on the time of day that you call
Shareholder Services.
You can also request an expedited (same day) wire transfer from your money
market account to your bank if you call before 11 a.m. Central time ($1,000
minimum redemption)
Automatic Bill-Paying
The Automatic Withdrawal feature can be used to pay a regular, important bill
such as a mortgage or car payment. You designate when and how much, and Zurich
will make the payment directly from your money market account.
Zurich MoneyPLUS Account(SM)
A powerful money management feature that makes it easy and economical to use
your Zurich Money Funds for day-to-day transactions. For a $65 annual fee, you
get unlimited checkwriting and a VISA Gold Check Card to use for debit and ATM
transactions. For special forms to sign-up for this add-on feature, call
1-800-537-6001. For customer service on the VISA card, call 1-800-346-8904.
Exchanges with Kemper Funds and Zurich YieldWise Funds
You can exchange with Kemper Funds and Zurich YieldWise Funds by calling
Shareholder Services between 8 a.m. and 3 p.m. Central time, Monday through
Friday at 1-888-ZURICH-1 (987-4241).
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ZURICH
Kemper Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606-5808
www.zurichfunds.com
Telephone: 1-800-537-6001
printed on recycled paper
ZMF-1 (5/98)
ZKDI-711044
34
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
November 30, 1998
ZURICH MONEY FUNDS
222 South Riverside Plaza, Chicago, Illinois 60606-5808
(800) 537-6001
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus of Zurich Money Funds (the "Trust") dated
November 30, 1998. The prospectus may be obtained without charge by calling or
writing Zurich Money Funds.
TABLE OF CONTENTS
INVESTMENT RESTRICTIONS.....................................................2
MUNICIPAL SECURITIES........................................................5
INVESTMENT MANAGER..........................................................6
PORTFOLIO TRANSACTIONS......................................................8
PURCHASE AND REDEMPTION OF SHARES..........................................10
DIVIDENDS, NET ASSET VALUE AND TAXES.......................................10
PERFORMANCE................................................................11
OFFICERS AND TRUSTEES......................................................16
SPECIAL FEATURES...........................................................18
SHAREHOLDER RIGHTS.........................................................19
APPENDIX -- RATINGS OF INVESTMENTS.........................................21
The financial statements appearing in the Funds' 1998 Annual Report to
Shareholders are incorporated herein by reference. The Funds' Annual Report
accompanies this Statement of Additional Information.
LOGO
printed on recycled paper
1
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INVESTMENT RESTRICTIONS
The Zurich Money Market Fund (the "Money Market Fund"), Zurich Government Money
Fund (the "Government Money Fund") and Zurich Tax-Free Money Fund (the "Tax-Free
Money Fund") have adopted certain investment restrictions which, together with
the investment objective and policies of each Fund, cannot be changed without
approval by holders of a majority of such Fund's outstanding voting shares. As
defined in the Investment Company Act of 1940, this means the lesser of the vote
of (a) 67% of the shares of the Fund present at a meeting where more than 50% of
the outstanding shares of the Fund are present in person or by proxy; or (b)
more than 50% of the outstanding shares of the Fund.
The Money Market Fund 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).
(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 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.
<PAGE>
(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 deposit 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.
(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.
The Government Money Fund 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.
<PAGE>
(3) Make loans to others (except through the purchase of debt obligations
or repurchase agreements in accordance with its investment objective
and policies).
(4) Borrow money except as a temporary measure for extraordinary or
emergency purposes and then only in an amount up to one-third of the
value of its total assets, in order to meet redemption requests
without immediately selling any 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
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.
The Tax-Free Money Fund 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
this 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.
<PAGE>
(6) Make short sales of securities or purchase securities on margin,
except to obtain such short-term credits as may be necessary for the
clearance of transactions.
(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.
If a Fund adheres to a percentage restriction at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation. The Funds did
not borrow money, as permitted by investment restrictions number 7 (Money Market
Fund), number 4 (Government Money Fund) and number 5 (Tax-Free Money Fund), in
the latest fiscal year; and they have no present intention of borrowing during
the coming year. In any event, borrowings would only be as permitted by such
restrictions. The Tax-Free Money Fund may invest more than 25% of its total
assets in industrial development bonds.
MUNICIPAL SECURITIES
Municipal Securities which the Tax-Free Money Fund may purchase include, without
limitation, debt obligations issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, public
utilities, schools, streets, and
<PAGE>
water and sewer works. Other public purposes for which Municipal Securities may
be issued include refunding outstanding obligations, obtaining funds for general
operating expenses and obtaining funds to loan to other public institutions and
facilities.
Municipal Securities, such as industrial development bonds, are issued by or on
behalf of public authorities to obtain funds for purposes including privately
operated airports, housing, conventions, trade shows, ports, sports, parking or
pollution control facilities or for facilities for water, gas, electricity or
sewage and solid waste disposal. Such obligations, which may include lease
arrangements, are included within the term Municipal Securities if the interest
paid thereon qualifies as exempt from federal income tax. Other types of
industrial development bonds, the proceeds of which are used for the
construction, equipment, repair or improvement of privately operated industrial
or commercial facilities, may constitute Municipal Securities, although current
federal tax laws place substantial limitations on the size of such issues.
Municipal Securities generally are classified as "general obligation" or
"revenue." General obligation notes are secured by the issuer's pledge of its
full credit and taxing power for the payment of principal and interest. Revenue
notes are payable only from the revenues derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source. Industrial development bonds which are Municipal
Securities are in most cases revenue bonds and generally do not constitute the
pledge of the credit of the issuer of such bonds.
Examples of Municipal Securities that are issued with original maturities of one
year or less are short-term tax anticipation notes, bond anticipation notes,
revenue anticipation notes, construction loan notes, pre-refunded municipal
bonds, warrants and tax-free commercial paper.
Tax anticipation notes typically are sold to finance working capital needs of
municipalities in anticipation of receiving property taxes on a future date.
Bond anticipation notes are sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future. Revenue anticipation
notes are issued in expectation of receipt of other types of revenue such as
those available under the Federal Revenue Sharing Program. Construction loan
notes are instruments insured by the Federal Housing Administration with
permanent financing by "Fannie Mae" (the Federal National Mortgage Association)
or "Ginnie Mae" (the Government National Mortgage Association) at the end of the
project construction period. Pre-refunded municipal bonds are bonds which are
not yet refundable, but for which securities have been placed in escrow to
refund an original municipal bond issue when it becomes refundable. Tax-free
commercial paper is an unsecured promissory obligation issued or guaranteed by a
municipal issuer. The Tax-Free Money Fund may purchase other Municipal
Securities similar to the foregoing, which are or may become available,
including securities issued to pre-refund other outstanding obligations of
municipal issuers.
The federal bankruptcy statutes relating to the adjustments of debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material adverse changes in the
rights of holders of obligations issued by such subdivisions or authorities.
Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states, and legislation has been introduced to effect changes in public school
finances in some states. In other instances there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or federal law which ultimately could affect the
validity of those Municipal Securities or the tax-free nature of the interest
thereon.
INVESTMENT MANAGER
Investment Manager. Scudder Kemper Investments, Inc. ("Scudder Kemper" or "the
Adviser"), 345 Park Avenue, New York, New York is the Funds' investment manager.
Scudder Kemper is approximately 70% owned by Zurich Financial Services, Inc. a
newly formed global insurance and financial services company. The balance of the
Adviser is owned by its officers and employees. Pursuant to an investment
management agreement, Scudder Kemper acts as each Fund's investment adviser,
manages its investments, administers its business affairs, furnishes
<PAGE>
office facilities and equipment, provides clerical, and administrative services,
and permits any of its officers or employees to serve without compensation as
trustees or officers of the Trust if elected to such positions. The Trust pays
the expenses of its operations, including the fees and expenses of independent
auditors, counsel, custodian and transfer agent and the cost of share
certificates, reports and notices to shareholders, costs of calculating net
asset value and maintaining all accounting records thereto, brokerage
commissions or transaction costs, taxes, registration fees, the fees and
expenses of qualifying the Fund and its shares for distribution under federal
and state securities laws and membership dues in the Investment Company
Institute or any similar organization. Trust expenses generally are allocated
among the Funds on the basis of relative net assets at the time of allocation,
except that expenses directly attributable to a particular Fund are charged to
that Fund.
The investment management agreement continues in effect from year to year for
each Fund so long as its continuation is approved at least annually (a) by a
majority of the trustees who are not parties to such agreement or interested
persons of any such party except in their capacity as trustees of the Trust and
(b) by the shareholders of each Fund or the Board of Trustees. If continuation
is not approved for a Fund, the investment management agreement nevertheless may
continue in effect for the Funds for which it is approved and Scudder Kemper may
continue to serve as investment manager for the Fund for which it is not
approved to the extent permitted by the Investment Company Act of 1940. The
agreement may be terminated at any time upon 60 days notice by either party, or
by a majority vote of the outstanding shares of a Fund with respect to that
Fund, and will terminate automatically upon assignment. Shareholders of each
Fund will vote separately upon continuation of the investment management
agreement and upon other matters affecting only an individual Fund. Additional
Funds may be subject to a different agreement.
The investment management agreement provides that Scudder Kemper shall not be
liable for any error of judgment or of law, or for any loss suffered by the
Funds in connection with the matters to which the agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Scudder Kemper in the performance of its obligations and duties, or by
reason of its reckless disregard of its obligations and duties under the
agreement.
At December 31, 1997, pursuant to the terms of an agreement, Scudder, Stevens &
Clark, Inc. ("Scudder") and Zurich Insurance Company ("Zurich") formed a new
global organization by combining Scudder with Zurich Kemper Investments, Inc., a
former subsidiary of Zurich and the former investment manager to each Fund, and
Scudder changed its name to Scudder Kemper Investments, Inc. As a result of the
transaction, Zurich owned approximately 70% of the Adviser, with the balance
owned by the Adviser's officers and employees.
On September 7, 1998, the businesses of Zurich (including Zurich's 70% interest
in Scudder Kemper) and the financial services businesses of B.A.T Industries
p.l.c. ("B.A.T") were combined to form a new global insurance and financial
services company known as Zurich Financial Services, Inc. By way of a dual
holding company structure, former Zurich shareholders initially owned
approximately 57% of Zurich Financial Services, Inc., with the balance initially
owned by former B.A.T shareholders.
Upon consummation of this transaction, each Fund's existing investment
management agreement with Scudder Kemper was deemed to have been assigned and,
therefore, terminated. The Board has approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the current
investment management agreement, except for the date of execution and
termination. This agreement became effective upon the termination of the then
current investment management agreement and will be submitted for shareholder
approval at a special meeting currently scheduled to conclude in December 1998.
For the services and facilities furnished, the Trust pays an annual investment
management fee, payable monthly, on a graduated basis of .50% of the first $215
million of average daily net assets of the Trust, 0.375% on the next $335
million, 0.30% on the next $250 million and 0.25% of average daily net assets of
the Trust over $800 million. Scudder Kemper has agreed to reimburse the Trust
should all operating expenses of the Trust, including the investment management
fee of Scudder Kemper but excluding taxes, interest, extraordinary expenses and
brokerage commissions or transaction costs, exceed 1 1/2% of the first $30
million of average net assets of the Trust and 1% of average net assets over $30
million on an annual basis. The investment management fee and the expense
limitation
<PAGE>
are computed based upon the combined average daily net assets of the Funds and
are allocated among such Funds based upon the relative net assets of each Fund.
For its services as investment adviser and manager and for facilities furnished
during the fiscal years ended July 31 indicated, the Funds incurred investment
management fees as shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fund 1998 1997 1996 1995
- ---- ---- ---- ---- ----
Money Market $12,086,000 $11,666,000 $11,134,000 $10,924,000
Government Money $ 1,815,000 $ 1,894,000 $ 1,747,000 $ 1,637,000
Tax-Free Money $ 2,156,000 $ 2,068,000 $ 2,032,000 $ 2,072,000
</TABLE>
Fund Accounting Agent. Scudder Fund Accounting Corporation ("SFAC"), a
subsidiary of the Adviser, is responsible for determining the daily net asset
value per share of the Fund and maintaining all accounting records related
thereto. Currently, SFAC receives no fee for its services to the Fund; however,
subject to Board approval, at some time in the future, SFAC may seek payment for
its services under this agreement.
Principal Underwriter. Kemper Distributors, Inc. ("KDI"), an affiliate of
Scudder Kemper, is the principal underwriter for shares of the Funds and acts as
agent of the Funds in the sale of their shares. The Funds pay the cost for the
prospectus and shareholder reports to be set in type and printed for existing
shareholders, and KDI pays for the printing and distribution of copies thereof
used in connection with the offering of shares to prospective investors. KDI
also pays for supplementary sales literature and advertising costs. Terms of
continuation, termination and assignment under the underwriting agreement are
identical to those described above with regard to the investment management
agreement, except that termination other than upon assignment requires six
months notice and shares are voted in the aggregate and not by Fund whenever
shareholders vote with respect to such agreement.
Certain officers or trustees of the Trust are also directors or officers of
Scudder Kemper and KDI as indicated under "Officers and Trustees."
Custodian and Shareholder Service Agent. Investors Fiduciary Trust Company
("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri 64105, as custodian,
and State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as sub-custodian, have custody of all securities and cash
of the Funds. They attend to the collection of principal and income, and payment
for and collection of proceeds of securities bought and sold by the Funds. IFTC
is also the Funds' transfer and dividend-paying agent. Pursuant to a services
agreement with IFTC, Kemper Service Company ("KSvC"), an affiliate of Scudder
Kemper, serves as "Shareholder Service Agent." IFTC receives, as transfer agent,
and pays to KSvC, annual account fees of a maximum of $8 per account plus
account set-up, transaction, maintenance and out-of-pocket expense
reimbursement. For the fiscal year ended July 31, 1998, IFTC remitted
shareholder service fees in the amount of $6,375,000 to KSvC as Shareholder
Service Agent.
Independent Auditors and Reports to Shareholders. The Funds' independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Funds' annual financial statements, review certain
regulatory reports and the Funds' federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Funds. Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.
LEGAL COUNSEL. Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601, serves as legal counsel to the Fund.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken principally to pursue the objective of
each Fund in relation to movements in the general level of interest rates, to
invest money obtained from the sale of Fund shares, to reinvest proceeds from
maturing portfolio securities and to meet redemptions of Fund shares. This may
increase or decrease the yield of a Fund depending upon management's ability to
correctly time and execute such transactions. Since a Fund's assets
<PAGE>
are invested in securities with short maturities, its portfolio will turn over
several times a year. Securities with maturities of less than one year are
excluded from required portfolio turnover rate calculations, so each Fund's
portfolio turnover rate for reporting purposes is zero.
Scudder Kemper and its affiliates furnish investment management services for the
Kemper Funds, Zurich Money Funds, Zurich YieldWise Funds and other clients
including affiliated insurance companies. These entities may share some common
research and trading facilities. At times investment decisions may be made to
purchase or sell the same investment security for a Fund and for one or more of
the other clients of Scudder Kemper or its affiliates. When two or more of such
clients are simultaneously engaged in the purchase or sale of the same security
through the same trading facility, the transactions are allocated as to amount
and price in a manner considered equitable to each.
The primary objective of the Adviser in placing orders for the purchase and sale
of securities for a Fund's portfolio is to obtain the most favorable net results
taking into account such factors as price, commission where applicable, size of
order, difficulty of execution and skill required of the executing
broker/dealer. The Adviser seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through its familiarity
with commissions charged on comparable transactions, as well as by comparing
commissions paid by a Fund to reported commissions paid by others. The Adviser
reviews on a routine basis commission rates, execution and settlement services
performed, making internal and external comparisons.
When it can be done consistently with the policy of obtaining the most favorable
net results, it is the Adviser's practice to place such orders with
broker/dealers who supply research, market and statistical information to a
Fund. The term "research, market and statistical information" includes advice as
to the value of securities; the advisability of investing in, purchasing or
selling securities; the availability of securities or purchasers or sellers of
securities; and analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts.
The Adviser is authorized when placing portfolio transactions for a Fund to pay
a brokerage commission in excess of that which another broker might charge for
executing the same transaction solely on account of receipt of the research,
market or statistical information. In effecting transactions in over-the-
counter securities, orders are placed with the principal market makers for the
security being traded unless, after exercising care, it appears that more
favorable results are available elsewhere.
In selecting among firms believed to meet the criteria for handling a particular
transaction, the Adviser may give consideration to those firms that have sold or
are selling shares of a Fund managed by the Adviser.
To the maximum extent feasible, it is expected that the Adviser will place
orders for a portfolio transactions through Scudder Investor Services ("SIS"), a
corporation registered as a broker-dealer and a subsidiary of the Adviser. SIS
will place orders on behalf of the Fund with issuers, underwriters or other
brokers and dealers. SIS will not receive any commission, fee or other
remuneration from the Fund for this service.
Although certain research, market and statistical information from
broker/dealers may be useful to a Fund and to the Adviser, it is the opinion of
the Adviser that such information only supplements its own research effort since
the information must still be analyzed, weighed and reviewed by the Adviser's
staff. Such information may be useful to the Adviser in providing services to
clients other than the Fund and not all such information is used by the Adviser
in connection with the Fund. Conversely, such information provided to the
Adviser by broker/dealers through whom other clients of the Adviser effect
securities transactions may be useful to the Adviser in providing services to a
Fund.
The Board members for a Fund review from time to time whether the recapture for
the benefit of a Fund of some portion of the brokerage commissions or similar
fees paid by a Fund on portfolio transaction is legally permissible and
advisable.
Money market instruments are normally purchased in principal transactions
directly from the issuer or from an underwriter or market maker. There usually
are no brokerage commissions paid by the Fund for such purchases. During the
last three fiscal years the Fund paid no portfolio brokerage commissions.
Purchases from underwriters
<PAGE>
will include a commission or concession paid by the issuer to the underwriter,
and purchases from dealers serving as market makers will include the spread
between the bid and asked prices.
PURCHASE AND REDEMPTION OF SHARES
Shares of each Fund are sold at their net asset value next determined after an
order and payment are received in the form described in the Funds' prospectus.
There is no sales charge. The minimum initial investment in any Fund is $1,000
and the minimum subsequent investment is $100 but such minimum amounts may be
changed at any time. See the prospectus for certain exceptions to these
minimums. The Funds may waive the minimum for purchases by trustees, directors,
officers or employees of the Trust or Scudder Kemper and its affiliates and the
$3 monthly fee assessed on accounts below $1,000. An investor wishing to open an
account should use the Account Application Form available from the Funds and
choose one of the methods of purchase described in the Funds' prospectus. An
order for the purchase of shares that is accompanied by a check drawn on a
foreign bank (other than a check drawn on a Canadian bank in U.S. Dollars) will
not be considered in proper form and will not be processed unless and until the
Fund determines that it has received payment of the proceeds of the check. The
time required for such a determination will vary and cannot be determined in
advance.
Upon receipt by the Shareholder Service Agent, of a request for redemption in
proper form, shares will be redeemed by a Fund at the applicable net asset value
as described in the Funds' prospectus. A shareholder may elect to use either the
regular or expedited redemption procedures.
The Funds may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange ("Exchange") is
closed other than customary weekend and holiday closings or during any period in
which trading on the Exchange is restricted, (b) during any period when an
emergency exists as a result of which (i) disposal of a Fund's investments is
not reasonably practicable, or (ii) it is not reasonably practicable for the
Fund to determine the value of its net assets, or (c) for such other periods as
the Securities and Exchange Commission may by order permit for the protection of
the Funds' shareholders.
Although it is the Trust's present policy to redeem in cash, if the Board of
Trustees determines that a material adverse effect would be experienced by the
remaining shareholders if payment were made wholly in cash, the Trust will pay
the redemption price in whole or in part by a distribution of portfolio
securities in lieu of cash, in conformity with the applicable rules of the
Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees may deem fair and equitable. If such a distribution
occurs, shareholders receiving securities and selling them could receive less
than the redemption value of such securities and in addition could incur certain
transaction costs. Such a redemption would not be as liquid as a redemption
entirely in cash. The Trust has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940 pursuant to which the Trust is obligated to
redeem shares of a Fund solely in cash up to the lesser of $250,000 or 1% of the
net assets of the Fund during any 90-day period for any one shareholder of
record.
DIVIDENDS, NET ASSET VALUE AND TAXES
Dividends. Dividends are declared daily and paid monthly. Shareholders will
receive dividends in additional shares of the same Fund unless they elect to
receive cash. Dividends will be reinvested monthly at the net asset value
normally on the 25th of each month if a business day, otherwise on the prior
business day. The Funds will pay shareholders who redeem their entire accounts
all unpaid dividends at the time of redemption not later than the next dividend
payment date.
Each Fund calculates its dividends based on its daily net investment income. For
this purpose, the net investment income of a Fund consists of (a) accrued
interest income plus or minus amortized discount or premium (excluding market
discount for the Tax-Free Money Fund), (b) plus or minus all short-term realized
gains and losses on portfolio assets and (c) minus accrued expenses allocated to
the Fund. Expenses of the Funds are accrued each day. While each Fund's
investments are valued at amortized cost, there will be no unrealized gains or
losses on portfolio securities. However, should the net asset value of a Fund
deviate significantly from market value, the Board of
<PAGE>
Trustees could decide to value the portfolio securities at market value and then
unrealized gains and losses would be included in net investment income above.
Net Asset Value. As described in the prospectus, each Fund values its portfolio
instruments at amortized cost, which does not take into account unrealized
capital gains or losses. This involves initially valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if it sold the instrument.
Calculations are made to compare the value of a Fund's investments valued at
amortized cost with market values. Market valuations are obtained by using
actual quotations provided by market makers, estimates of market value, or
values obtained from yield data relating to classes of money market instruments
published by reputable sources at the mean between the bid and asked prices for
the instruments. If a deviation of of 1% or more were to occur between the net
asset value per share calculated by reference to market values and a Fund's
$1.00 per share net asset value, or if there were any other deviation that the
Board of Trustees of the Trust believed would result in a material dilution to
shareholders or purchasers, the Board of Trustees would promptly consider what
action, if any, should be initiated. If a Fund's net asset value per share
(computed using market values) declined, or were expected to decline, below
$1.00 (computed using amortized cost), the Board of Trustees of the Trust might
temporarily reduce or suspend dividend payments in an effort to maintain the net
asset value at $1.00 per share. As a result of such reduction or suspension of
dividends or other action by the Board of Trustees, an investor would receive
less income during a given period than if such a reduction or suspension had not
taken place. Such action could result in investors receiving no dividends for
the period during which they held shares and receiving, upon redemption, a price
per share lower than that which they paid. On the other hand, if a Fund's net
asset value per share (computed using market values) were to increase, or were
anticipated to increase, above $1.00 (computed using amortized cost), the Board
of Trustees of the Trust might supplement dividends in an effort to maintain the
net asset value at $1.00 per share.
Taxes. Interest on indebtedness which is incurred to purchase or carry shares of
a mutual fund portfolio which distributes exempt-interest dividends during the
year is not deductible for federal income tax purposes. Further, the Tax-Free
Money Fund may not be an appropriate investment for persons who are `substantial
users' of facilities financed by industrial development bonds held by the
Tax-Free Money Fund or are `related persons' to such users; such persons should
consult their tax advisers before investing in the Tax-Free Money Fund.
The "Superfund Act of 1986" (the "Superfund Act") imposes a separate tax on
corporations at a rate of 0.12 percent of the excess of such corporation's
"modified alternative minimum taxable income" over $2 million. A portion of
tax-exempt interest, including exempt-interest dividends from the Tax-Free Money
Fund, may be includible in modified alternative minimum taxable income.
Corporate shareholders are advised to consult their tax advisers with respect to
the consequences of the Superfund Act.
PERFORMANCE
As reflected in the prospectus, the historical performance calculation for a
Fund may be shown in the form of "yield," "effective yield," "total return,"
"average annual total return" and, for the Tax-Free Money Fund only, "tax
equivalent yield." These various measures of performance are described below.
Each Fund's yield is computed in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission. Under that
method, the current yield quotation is based on a seven-day period and is
computed for each Fund as follows. The first calculation is net investment
income per share, which is accrued interest on portfolio securities, plus or
minus amortized discount or premium (excluding market discount for the Tax-Free
Money Fund), less accrued expenses. This number is then divided by the price per
share (expected to remain constant at $1.00) at the beginning of the period
("base period return"). The result is then divided by 7 and multiplied by 365
and the resulting yield figure is carried to the nearest one-hundredth of one
percent. Realized capital gains or losses and unrealized appreciation or
depreciation of investments are not included in the calculation.
<PAGE>
Each Fund's effective yield is determined by taking the base period return
(computed as described above) and calculating the effect of assumed compounding.
The formula for the effective yield is:
(base period return + 1^365/7-1.
Average annual total return ("AATR") is found for a specific period by first
taking a hypothetical $1,000 investment ("initial investment") on the first day
of the period and computing the "redeemable value" of that investment at the end
of the period. The redeemable value is then divided by the initial investment,
and this quotient is taken to the Nth root (N representing the number of years
in the period) and 1 is subtracted from the result, which is then expressed as a
percentage. The calculation assumes that all dividends have been reinvested at
net asset value on the reinvestment dates.
Total return is not calculated according to a standard formula, except when
calculated for the "Financial Highlights" table in the financial statements.
Total return is calculated similarly to AATR but is not annualized. It may be
shown as a percentage or the increased dollar value of the hypothetical
investment over the period.
All performance information shown below is for periods ended July ,
1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
*Tax-
Effective Equivalent Total Total Total
Yield Yield Yield AATR AATR AATR Return Return Return
Fund 7 days 7 days 7 days 1 yr. 5 yrs. 10 yrs. 1 yr. 5 yrs. 10 yrs.
- ---- ------ ------ ------ ----- ------ ------- ----- ------ -------
Money Market 5.19% 5.32% n/a 5.36% 4.58% 5.65% 5.36% 30.81% 73.24%
Government Money 5.18 5.31 n/a 5.34 4.58 5.62 5.34 30.81 72.76
Tax-Free Money 3.36 3.42 5.34 3.46 3.09 3.92 3.46 20.05 46.82
</TABLE>
* Based upon a marginal federal income tax rate of 37.1%.
The tax equivalent yield of the Tax-Free Money Fund is computed by dividing that
portion of the Fund's yield (computed as described above) which is tax-exempt by
(one minus the stated federal income tax rate) and adding the result to that
portion, if any, of the yield of the Fund that is not tax-exempt. For additional
information concerning tax-exempt yields, see "Tax-Exempt versus Taxable Yield"
below.
Each Fund's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in a Fund will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
which the investment in a Fund is held, but also on such matters as Fund
expenses.
Money market mutual funds allow smaller investors to participate in the money
market and to receive money market yields that previously were available only to
those investors with large sums of money. Prior to the introduction of the first
money market mutual funds, small investors wanting to manage their cash reserves
had a limited choice of bank products available with a predetermined set of
interest rates such as passbook savings accounts and checking accounts.
Currently, there are hundreds of money market funds managing billions of dollars
for millions of investors. Zurich Money Funds is one of the largest money market
funds.
Investors have an extensive choice of money market funds and money market
deposit accounts and the information below may be useful to investors who wish
to compare the past performance of the Money Market Fund, the Government Money
Fund and the Tax-Free Money Fund with that of their competitors. Past
performance cannot be a guarantee of future results.
<PAGE>
As indicated in the prospectus (see "Performance"), the performance of the Funds
may be compared to that of other mutual funds tracked by Lipper Analytical
Services, Inc. ("Lipper"). Lipper performance calculations include the
reinvestment of all capital gain and income dividends for the periods covered by
the calculations. A Fund's performance also may be compared to other money
market funds reported by IBC Financial Data, Inc.'s Money Fund Report(R), or
Money Market Insight(R), reporting services on money market funds. As reported
by IBC, all investment results represent total return (annualized results for
the period net of management fees and expenses) and one year investment results
are effective annual yields assuming reinvestment of dividends. From time to
time the Funds may include in their sales communications ranking and rating
information received from various organizations, to include but not be limited
to, ratings from Morningstar, Inc. and rankings from Lipper.
<PAGE>
As indicated in the prospectus, a Fund's performance also may be compared on a
before or after-tax basis to various bank products, including the average rate
of bank and thrift institution money market deposit accounts, interest bearing
checking accounts and certificates of deposit as reported in the BANK RATE
MONITOR National Index(TM) of 100 leading bank and thrift institutions as
published by the BANK RATE MONITOR(TM), N. Palm Beach, Florida 33408. The rates
published by the BANK RATE MONITOR National Index(TM) are averages of the
personal account rates offered on the Wednesday prior to the date of publication
by 100 large banks and thrifts in the top ten Consolidated Standard Metropolitan
Statistical Areas.
With respect to money market deposit accounts and interest bearing checking
accounts, account minimums range upward from $2,000 in each institution and
compounding methods vary. Interest bearing checking accounts generally offer
unlimited check writing while money market deposit accounts generally restrict
the number of checks that may be written. If more than one rate is offered, the
lowest rate is used. Rates are determined by the financial institution and are
subject to change at any time specified by the institution. Generally, the rates
offered for these products take market conditions and competitive product yields
into consideration when set. Bank products represent a taxable alternative
income producing product. Bank and thrift institution deposit accounts may be
insured. Shareholder accounts in the Funds are not insured. Bank passbook
savings accounts compete with money market mutual fund products with respect to
certain liquidity features but may not offer all of the features available from
a money market mutual fund, such as check writing. Bank passbook savings
accounts normally offer a fixed rate of interest while the yield of the Funds
fluctuates. Bank checking accounts normally do not pay interest but compete with
money market mutual fund products with respect to certain liquidity features
(e.g., the ability to write checks against the account). Bank certificates of
deposit may offer fixed or variable rates for a set term. (Normally, a variety
of terms are available.) Withdrawal of these deposits prior to maturity will
normally be subject to a penalty. In contrast, shares of the Funds are
redeemable at the net asset value (normally, $1.00 per share) next determined
after a request is received, without charge.
<PAGE>
Investors may also want to compare a Fund's performance to that of U.S. Treasury
bills or notes because such instruments represent alternative income producing
products. Treasury obligations are issued in selected denominations. Rates of
U.S. Treasury obligations are fixed at the time of issuance and payment of
principal and interest is backed by the full faith and credit of the U.S.
Treasury. The market value of such instruments will generally fluctuate
inversely with interest rates prior to maturity and will equal par value at
maturity. Generally, the values of obligations with shorter maturities will
fluctuate less than those with longer maturities. Each Fund's yield will
fluctuate. Also, while each Fund seeks to maintain a net asset value per share
of $1.00, there is no assurance that it will be able to do so.
Tax-Free versus Taxable Yield. You may want to determine which investment --
tax-free or taxable -- will provide you with a higher after-tax return. To
determine the taxable equivalent yield, simply divide the yield from the
tax-free investment by the sum of [1 minus your marginal tax rate]. The tables
below are provided for your convenience in making this calculation for selected
tax-free yields and taxable income levels. These yields are presented for
purposes of illustration only and are not representative of any yield that the
Tax-Free Money Fund may generate. Both tables are based upon current law as to
the 1998 federal tax rate schedules.
Taxable Equivalent Yield Table for Persons Whose Adjusted Gross Income is Under
$124,500
<TABLE>
<CAPTION>
<S> <C> <C>
Your
Marginal A Tax-Exempt Yield of:
Taxable Income Federal Tax 2% 3% 4% 5% 6% 7%
Single Joint Rate Is Equivalent to a Taxable Yield of:
- -------------------------------------------------------------------------------------------------------
$25,350-$61,400 $42,350-$102,300 28.0% 2.78 4.17 5.56 6.94 8.33 9.72
- -------------------------------------------------------------------------------------------------------
Over $61,400 Over $102,300 31.0 2.90 4.35 5.80 7.25 8.70 10.14
- -------------------------------------------------------------------------------------------------------
</TABLE>
Taxable Equivalent Yield Table for Persons Whose Adjusted Gross Income is Over
$124,500*
<TABLE>
<CAPTION>
<S> <C> <C>
Your
Marginal A Tax-Exempt Yield of:
Taxable Income Federal Tax 2% 3% 4% 5% 6% 7%
Single Joint Rate Is Equivalent to a Taxable Yield of:
- -------------------------------------------------------------------------------------------------------
$61,400-$128,100 $102,300-$155,950 31.9% 2.94 4.41 5.87 7.34 8.81 10.28
- -------------------------------------------------------------------------------------------------------
$128,100-$278,450 $155,950-$278,450 37.1 3.18 4.77 6.36 7.95 9.54 11.13
- -------------------------------------------------------------------------------------------------------
Over $278,450 Over $278,450 40.8 3.38 5.07 6.76 8.45 10.14 11.82
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* This table assumes a decrease of $3.00 of itemized deductions for each
$100 of adjusted gross income over $124,500. For a married couple with
adjusted gross income between $186,800 and $309,300 (single between
$124,500 and $247,000), add 0.7% to the above Marginal Federal Tax
Rate for each personal and dependency exemption. The taxable
equivalent yield is the tax-exempt yield divided by: 100% minus the
adjusted tax rate. For example, if the table tax rate is 37.1% and you
are married with no dependents, the adjusted tax rate is 38.5% (37.1%
+ 0.7% + 0.7%). For a tax-exempt yield of 6%, the taxable equivalent
yield is about 9.8% (6% / (100% - 38.5%)).
OFFICERS AND TRUSTEES
The officers and trustees of the Trust, their birthdates, their principal
occupations and their affiliations, if any, with the Adviser and KDI, the
principal underwriter, or their affiliates, are as follows:
DAVID W. BELIN (6/20/28), Trustee, 2000 Financial Center, 7th and Walnut, Des
Moines, Iowa; Member, Belin Lamson McCormick Zumbach Flynn, P.C. (attorneys).
LEWIS A. BURNHAM (1/8/33), Trustee, 16410 Avila Boulevard, Tampa, Florida;
Retired; formerly, Partner, Business Resources Group; formerly, Executive Vice
President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY (3/8/37), Trustee, 7515 Pelican Bay Boulevard, Naples,
Florida; Retired; formerly, Executive Vice President, A. O. Smith Corporation
(diversified manufacturer).
ROBERT B. HOFFMAN (12/11/36), Trustee, 800 North Lindbergh Boulevard, St. Louis,
Missouri; Vice Chairman and Chief Financial Officer, Monsanto Company
(agricultural, pharmaceutical and nutritional/food products); formerly, Vice
President, Head of International Operations FMC Corporation (manufacturer of
machinery and chemicals).
DONALD R. JONES (1/17/30), Trustee, 182 Old Wick Lane, Inverness, Illinois;
Retired; Director, Motorola, Inc. (manufacturer of electronic equipment and
components); formerly, Executive Vice President and Chief Financial Officer,
Motorola, Inc.
SHIRLEY D. PETERSON (9/3/41), Trustee, 401 Rosemont Avenue, Frederick, Maryland;
President, Hood College; formerly, partner, Steptoe & Johnson (attorneys); prior
thereto, Commissioner, Internal Revenue Service; prior thereto, Assistant
Attorney General, U.S. Department of Justice; Director, Bethlehem Steel Corp.
DANIEL PIERCE (3/18/34), Chairman and Trustee*, Two International Place, Boston,
Massachusetts; Managing Director, Adviser; Director, Fiduciary Trust Company and
Fiduciary Company Incorporated.
WILLIAM P. SOMMERS (7/22/33), Trustee, 333 Ravenswood Avenue, Menlo Park,
California; President and Chief Executive Officer, SRI International (research
and development); formerly, Executive Vice President, Iameter (medical
information and educational service provider); prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton, Inc. (management consulting
firm) (retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
EDMOND D. VILLANI (3/4/47), Trustee*, 345 Park Avenue, New York, New York;
President, Chief Executive Officer and Managing Director, Adviser.
MARK S. CASADY (9/21/60), President*, 345 Park Avenue, New York, New York;
Managing Director, Adviser; formerly, Institutional Sales Manager of an
unaffiliated mutual fund distributor.
<PAGE>
PHILIP J. COLLORA (11/15/45), Vice President and Secretary*, 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice President, Adviser.
THOMAS W. LITTAUER (4/26/55), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Adviser; formerly, Head of Broker Dealer
Division of an unaffiliated investment management firm during 1997; prior
thereto, President of Client Management Services of an unaffiliated investment
management firm from 1991 to 1996.
ANN M. McCREARY (11/6/56), Vice President*, 345 Park Avenue, New York, New York;
Managing Director, Adviser.
ROBERT C. PECK, JR. (10/1/46), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Adviser; formerly, Executive Vice
President and Chief Investment Officer with an unaffiliated investment
management firm from 1988 to June 1997.
KATHRYN L. QUIRK (12/3/52), Vice President*, 345 Park Avenue, New York, New
York; Managing Director, Adviser.
FRANK J. RACHWALSKI, JR. (3/26/45), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Adviser.
LINDA J. WONDRACK (9/12/64), Vice President*, Two International Place, Boston,
Massachusetts; Senior Vice President, Adviser.
JOHN R. HEBBLE (6/27/58), Treasurer*, Two International Place, Boston,
Massachusetts; Senior Vice President, Adviser.
BRENDA LYONS (2/21/63), Assistant Treasurer*, Two International Place, Boston,
Massachusetts; Senior Vice President, Adviser.
CAROLINE PEARSON (4/1/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Senior Vice President, Adviser; formerly, Associate,
Dechert Price & Rhoads (law firm) 1989 to 1997.
MAUREEN E. KANE (2/14/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Vice President, Adviser; formerly, Assistant Vice
President of an unaffiliated investment management firm; prior thereto,
Associate Staff Attorney of an unaffiliated investment management firm;
Associate, Peabody & Arnold (law firm).
ELIZABETH C. WERTH (10/1/47), Assistant Secretary*, 222 South Riverside Plaza,
Chicago, Illinois; Vice President, Adviser and KDI.
* Interested persons of the Funds as defined in the Investment Company Act of
1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Funds. The table below shows amounts paid or
accrued to those trustees who are not designated "interested persons" during the
Trust's 1998 fiscal year except that the information in the last column is for
calendar year 1997.
Total Compensation
From Trust and
Aggregate Compensation Fund Complex
Name of Trustee From Trust Paid to Trustees**
- --------------- ---------- ------------------
<PAGE>
David W. Belin* $14,100 $168,100
Lewis A. Burnham 7,700 117,800
Donald L. Dunaway* 12,600 162,700
Robert B. Hoffman 7,300 109,400
Donald R. Jones 7,900 114,200
Shirley D. Peterson 6,800 114,000
William P. Sommers 6,800 109,400
- ------------
* Includes current fees deferred and interest pursuant to deferred
compensation agreements with the Trust. Deferred amounts accrue interest
monthly at a rate equal to the yield of Zurich Money Funds -- Zurich Money
Market Fund. Total deferred amounts and interest accrued through July 31,
1998 are $149,800 for Mr. Belin and $60,300 for Mr. Dunaway.
** Includes compensation for service on twenty-five funds managed by Scudder
Kemper with 43 fund portfolios. Each trustee currently serves as a trustee
of 26 funds managed by Scudder Kemper with 48 fund portfolios. Total
compensation does not reflect amounts paid by the Adviser to the trustees
for meeting regarding the combination of Scudder, Stevens & Clark, Inc. and
Zurich Kemper Investments, Inc. Such amounts totaled $21,900, $25,400,
$21,900, $17,300, $20,800, $24,200 and $21,900 for Messrs. Belin, Burnham,
Dunaway, Hoffman, Jones, Ms. Peterson and Mr. Sommers, respectively.
As of October 31, 1998, the officers and trustees of the Trust, as a group,
owned less than 1% of the outstanding shares of each Fund and no person owned of
record 5% or more of the outstanding shares of any Fund.
SPECIAL FEATURES
Automatic Withdrawal Program. If you own $5,000 or more of a Fund's shares you
may provide for the payment from your account of any requested dollar amount to
be paid to you or your designated payee monthly, quarterly, semi-annually or
annually. The $5,000 minimum account size is not applicable to Individual
Retirement Accounts. Dividend distributions will be automatically reinvested at
net asset value. A sufficient number of full and fractional shares will be
redeemed to make the designated payment. Depending upon the size of the payments
requested, redemptions for the purpose of making such payments may reduce or
even exhaust the account. The program may be amended on thirty days notice by
the Fund and may be terminated at any time by the shareholder or the Funds.
Tax-Sheltered Retirement Programs. The Shareholder Service Agent provides
retirement plan services and documents and can establish your account in any of
the following types of retirement plans:
o Individual Retirement Accounts (IRAs) with IFTC as custodian. This includes
Savings Incentive Match Plan for Employees of Small Employers ("SIMPLE"),
IRA accounts and Simplified Employee Pension Plan (SEP) IRA accounts and
prototype documents.
o 403(b) Custodial Accounts with IFTC as custodian. This type of plan is
available to employees of most non-profit organizations.
o Prototype money purchase pension and profit-sharing plans may be adopted by
employers. The maximum contribution per participant is the lesser of 25% of
compensation or $30,000.
Brochures describing the above plans as well as providing model defined benefit
plans, target benefit plans, 457 plans, 401(k) plans, SIMPLE 401(k) plans and
materials for establishing them are available from the Shareholder Service Agent
upon request. The brochures for plans with IFTC as custodian describe the
current fees payable to IFTC for its services as custodian. Investors should
consult with their own tax advisers before establishing a retirement plan.
<PAGE>
SHAREHOLDER RIGHTS
The Trust generally is not required to hold meetings of its shareholders. Under
the Agreement and Declaration of Trust of the Trust ("Declaration of Trust"),
however, shareholder meetings will be held in connection with the following
matters: (a) the election or removal of trustees, if a meeting is called for
such purpose; (b) the adoption of any contract for which shareholder approval is
required by the Investment Company Act of 1940 ("1940 Act"); (c) any termination
of the Trust, a Fund or a class to the extent and as provided in the Declaration
of Trust; (d) any amendment of the Declaration of Trust (other than amendments
changing the name of the Trust, supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective or inconsistent provision
thereof); ; and (e) such additional matters as may be required by law, the
Declaration of Trust, the By-laws of the Trust, or any registration of the Trust
with the Securities and Exchange Commission or any state, or as the trustees may
consider necessary or desirable. The shareholders also would vote upon changes
in fundamental investment objectives, policies or restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of his
successor or until such trustee sooner dies, resigns, retires or is removed by a
majority vote of the shares entitled to vote (as described below) or a majority
of the trustees. In accordance with the 1940 Act (a) the Trust will hold a
shareholder meeting for the election of trustees at such time as less than a
majority of the trustees have been elected by shareholders, and (b) if, as a
result of a vacancy in the Board of Trustees, less than two-thirds of the
trustees have been elected by the shareholders, that vacancy will be filled only
by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the written request of the holders of not less than 10% of the
outstanding shares. Upon the written request of ten or more shareholders who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding shares of the Trust stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting in
person or by proxy of at least 30% of the shares entitled to vote on a matter
shall constitute a quorum. Thus, a meeting of shareholders of the Trust could
take place even if less than a majority of the shareholders were represented on
its scheduled date. Shareholders would in such a case be permitted to take
action which does not require a larger vote than a majority of a quorum, such as
the election of trustees and ratification of the selection of auditors. Some
matters requiring a larger vote under the Declaration of Trust, such as
termination or reorganization of the Trust and certain amendments of the
Declaration of Trust, would not be affected by this provision; nor would matters
which under the 1940 Act require the vote of a "majority of the outstanding
voting securities" as defined in the 1940 Act.
The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Trust (or any Fund or class) by notice to the shareholders without
shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Trust. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust and the
Trust will be covered by insurance which the trustees consider adequate to cover
foreseeable tort claims. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered by Scudder Kemper remote
and not material since it is limited to circumstances in which a disclaimer is
inoperative and the Trust itself is unable to meet its obligations.
Master/Feeder Structure. The Board of Trustees has the discretion to retain the
current distribution arrangement for the Funds while investing in a master fund
in a master/feeder fund structure as described below. A master/feeder
<PAGE>
fund structure is one in which a fund (a "feeder fund"), instead of investing
directly in a portfolio of securities, invests most or all of its investment
assets in a separate registered investment company (the "master fund") with
substantially the same investment objective and policies as the feeder fund.
Such a structure permits the pooling of assets of two or more feeder funds,
preserving separate identities or distribution channels at the feeder fund
level. Based on the premise that certain of the expenses of operating an
investment portfolio are relatively fixed, a larger investment portfolio may
eventually achieve a lower ratio of operating expenses to average net assets. An
existing investment company is able to convert to a feeder fund by selling all
of its investments, which involves brokerage and other transaction costs and
realization of a taxable gain or loss, or by contributing its assets to the
master fund and avoiding transaction costs and, if proper procedures are
followed, the realization of taxable gain or loss.
<PAGE>
APPENDIX -- RATINGS OF INVESTMENTS
COMMERCIAL PAPER RATINGS
A-1, A-2 and Prime-1, Prime-2 Commercial Paper Ratings
Commercial paper rated by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are adequate to meet cash requirements.
Long-term senior debt is rated "A" or better. The issuer has access to at least
two additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determine whether the
issuer's commercial paper is rated A-1, A-2 or A-3.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by it
in assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations. Relative
strength or weakness of the above factors determines whether the issuer's
commercial paper is rated Prime-1, 2 or 3.
MIG-1 and MIG-2 Municipal Notes
Moody's ratings for state and municipal notes and other short-term loans will be
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in
short-term borrowing, while various factors of the first importance in bond risk
are of lesser importance in the short run. Loans designated MIG-1 are of the
best quality, enjoying strong protection from established cash flows of funds
for their servicing or from established and broad-based access to the market for
refinancing, or both. Loans designated MIG-2 are of high quality, with margins
of protection ample although not so large as in the preceding group.
STANDARD & POOR'S CORPORATION BOND RATINGS
AAA. This is the highest rating assigned by Standard & Poor's Corporation to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA. Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A. Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
Aaa. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
<PAGE>
Aa. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
<PAGE>
Annual Report to
Shareholders for the Year
Ended July 31, 1998
[ZURICH LOGO]
Zurich Money Funds
<PAGE> 2
TABLE OF CONTENTS
SUBJECT PAGE
1
Fund objectives
2
Performance summary
5
Variables affecting performance
6
Performance update
9
Terms to know
10
Portfolio composition
11
Portfolio of investments
28
Report of independent auditors
30
Financial statements
36
Financial highlights
<PAGE> 3
1
FUND OBJECTIVES
Zurich Money Funds is an open-end, diversified, management investment company
offering a choice of three investment funds. Each fund invests in high quality
short-term money market instruments consistent with its specific objective as
outlined below. Each Fund seeks to maintain a net asset value of $1.00 per
share, however there is no assurance that a $1.00 value will be maintained. An
investment in money market funds is neither insured nor guaranteed by the U.S.
Government.
ZURICH MONEY MARKET FUND
This fund seeks maximum current income to the extent consistent with stability
of principal by investing primarily in commercial paper, securities of the U.S.
Government, its agencies, and bank certificates of deposit.
ZURICH GOVERNMENT MONEY FUND
This fund seeks maximum current income to the extent consistent with stability
of principal by investing exclusively in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
ZURICH TAX-FREE MONEY FUND
This fund seeks maximum current income that is exempt from federal income taxes
to the extent consistent with stability of principal from a portfolio of
short-term, high quality tax-exempt municipal securities.
<PAGE> 4
2
PERFORMANCE SUMMARY
ZURICH MONEY MARKET FUND
<TABLE>
<CAPTION>
<S> <C>
YIELD COMPARISON FUND YIELD VS. FIRST TIER MONEY MARKET FUNDS
Zurich Money Market
Fund is compared to [WEEKLY 7-DAY AVERAGE YIELD BAR GRAPH]
its IBC Financial Data
category -- The First
Tier Money Market Fund FUND YIELD FIRST TIER
Average which consists MONEY MARKET FUNDS
of all
non-institutional 8/8/97 5.27% 4.95%
taxable money market 9/5/97 5.24% 4.95%
funds investing in 10/3/97 5.25% 4.95%
only first tier 11/7/97 5.22% 4.95%
(highest rating) 12/05/97 5.31% 5.00%
securities tracked by 1/02/98 5.47% 5.07%
IBC Financial Data. 2/06/98 5.30% 4.99%
Returns are historical 3/06/98 5.21% 4.96%
and do not guarantee 4/03/98 5.21% 4.93%
future results. Fund 5/01/98 5.21% 4.90%
yields fluctuate. 6/05/98 5.18% 4.92%
7/03/98 5.18% 4.94%
7-day yield is the 7/31/98 5.20% 4.92%
annualized net
investment income per
share for the period
shown. Gains or losses
are not included.
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. TOP 10% #31 OF 302 FUNDS 1 YEAR
rankings are based -----------------------------------------------------
upon changes in net TOP 11% #21 OF 189 FUNDS 5 YEARS
asset value with all -----------------------------------------------------
dividends reinvested TOP 8% #10 OF 121 FUNDS 10 YEARS
for the periods -----------------------------------------------------
indicated as of TOP FUND #1 OF 33 FUNDS 20 YEARS
7/31/98. Rankings are
historical and do not
guarantee future
performance. The
Lipper category used
for comparison is the
Lipper Money Market
Instrument Fund
category.
10-YEAR PERFORMANCE 10-YEAR PERFORMANCE
This chart shows the
value of a [PERFORMANCE OF A $10,000 HYPOTHETICAL INVESTMENT BAR GRAPH]
hypothetical $10,000
investment in Zurich 8/1/88 $10,000
Money Market Fund over 7/31/89 $10,903
the past 10 fiscal 7/31/90 $11,830
years with all 7/31/91 $12,680
dividends reinvested. 7/31/92 $13,243
The returns shown are 7/31/93 $13,635
historical and do not 7/31/94 $14,071
represent future 7/31/95 $14,822
performance. 7/31/96 $15,618
7/31/97 $16,442
7/31/98 $17,323
</TABLE>
<PAGE> 5
3
ZURICH GOVERNMENT MONEY FUND
<TABLE>
<CAPTION>
<S><C>
YIELD COMPARISON FUND YIELD VS. GOVERNMENT MONEY MARKET FUNDS
Zurich Government
Money Fund is compared [WEEKLY 7-DAY AVERAGE YIELD BAR GRAPH]
to its IBC Financial
Data category -- The FUND YIELD GOVERNMENT MONEY
Government Money MARKET FUNDS
Market Fund Average 8/8/97 5.27% 4.90%
which consists of all 9/5/97 5.24% 4.90%
non-institutional 10/3/97 5.16% 4.90%
government money 11/7/97 5.18% 4.92%
market funds tracked 12/05/97 5.29% 4.95%
by IBC Financial Data. 1/02/98 5.40% 4.97%
Returns are historical 2/06/98 5.22% 4.94%
and do not guarantee 3/06/98 5.21% 4.94%
future results. Fund 4/03/98 5.16% 4.92%
yields fluctuate. 5/01/98 5.16% 4.87%
6/05/98 5.20% 4.90%
7-day yield is the 7/03/98 5.15% 4.92%
annualized net 7/31/98 5.15% 4.89%
investment income per
share for the period
shown. Gains or losses
are not included.
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. TOP 9% #10 OF 112 1 YEAR
rankings are based ----------------------------------------------
upon changes in net TOP 6% #5 OF 83 FUNDS 5 YEARS
asset value with all ----------------------------------------------
dividends reinvested TOP 7% #3 OF 46 FUNDS 10 YEARS
for the periods
indicated as of
7/31/98. Rankings are
historical and do not
guarantee future
performance. The
Lipper category used
for comparison is the
Lipper Government
Money Market Fund
category.
10-YEAR PERFORMANCE 10-YEAR PERFORMANCE
This chart shows the
value of a [PERFORMANCE OF A $10,000 HYPOTHETICAL INVESTMENT]
hypothetical $10,000
investment in Zurich 8/1/88 $10,000
Government Money Fund 7/31/89 $10,896
over the past 10 7/31/90 $11,817
fiscal years, with all 7/31/91 $12,637
dividends reinvested. 7/31/92 $13,207
The returns shown are 7/31/93 $13,599
historical and do not 7/31/94 $14,035
represent future 7/31/95 $14,787
performance. 7/31/96 $15,581
7/31/97 $16,401
7/31/98 $17,276
</TABLE>
<PAGE> 6
4
ZURICH MONEY FUNDS PERFORMANCE SUMMARY, CONTINUED
ZURICH TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
<S> <C>
YIELD COMPARISON FUND YIELD VS. TAX-FREE MONEY MARKET FUNDS
Zurich Tax-Free Money
Fund is compared to [WEEKLY 7-DAY AVERAGE YIELD BAR GRAPH]
its IBC Financial Data
category -- The TAX-FREE
Tax-Free Money Market FUND YIELD MONEY MARKET FUNDS
Fund Average which
consists of all 8/4/97 3.45% 3.04%
non-institutional 9/5/97 3.31% 2.9%
tax-free money market 10/3/97 3.55% 3.29%
funds tracked by IBC 11/7/97 3.43% 3.09%
Financial Data. 12/05/97 3.61% 3.23%
Returns are historical 1/02/98 3.67% 3.34%
and do not guarantee 2/06/98 3.42% 3.00%
future results. Fund 3/06/98 3.29% 2.91%
yields fluctuate. 4/03/98 3.39% 3.03%
Income from Zurich 5/01/98 3.73% 3.42%
Tax-Free Money Fund 6/05/98 3.51% 3.18%
may be subject to 7/03/98 3.40% 3.03%
state and local taxes 7/27/98 3.37% 2.99%
and the alternative
minimum tax.
7-day yield is the
annualized net
investment income per
share for the period
shown. Gains or losses
are not included.
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. TOP 4% #5 OF 131 FUNDS 1 YEAR
rankings are based ---------------------------------------------------
upon changes in net TOP 8% #8 OF 102 FUNDS 5 YEARS
asset value with all ---------------------------------------------------
dividends reinvested TOP 7% #5 OF 68 FUNDS 10 YEARS
for the periods ---------------------------------------------------
indicated as of
7/31/98. Rankings are
historical and do not
guarantee future
performance. The
Lipper category used
for comparison is the
Lipper Tax-Free Money
Market Fund category.
10-YEAR PERFORMANCE [10 YEAR PERFORMANCE BAR GRAPH]
This chart shows the
value of a 8/1/88 7/31/89 7/31/90 7/31/91 7/31/92 7/31/93 7/31/94 7/31/95
7/31/96 7/31/97 7/31/98
hypothetical $10,000 ------- ------- ------- ------- ------- ------- ------- -------
- ------- ------- -------
investment in Zurich $10,000 $10,621 $11,238 $11,808 $12,230 $12,523 $12,814 $13,267
$13,726 $14,191 $14,683
Tax-Free Money Fund
over the past 10
fiscal years, with all
dividends reinvested.
The returns shown are
historical and do not
represent future
performance.
</TABLE>
<PAGE> 7
5
VARIABLES AFFECTING
PERFORMANCE
The investment manager invests in high-quality, short-term securities that are
consistent with each fund's specific objectives.
Our primary goal is to provide competitive yields while maintaining preservation
of principal and a high degree of liquidity. The specific securities portfolio
managers select have a major impact on reaching our goal. However, they must
continuously analyze other variables which affect share price stability and fund
performance. Traditionally, there are three important variables which are
factored into the decision-making process:
MONETARY POLICY
Monetary Policy is managed by the Federal Reserve Board (the "Fed") and has a
direct impact on short-term interest rates. If the Fed determines that inflation
is climbing, it will enact a policy to decrease or "tighten" the money supply.
With less money available, money lenders can command higher interest rates on
the money market securities they sell. On the other hand, if the Fed determines
the economy is heading toward a recession, it will increase or "ease" the money
supply. With more money for borrowers to access, the interest rates for money
market securities decline.
INTEREST RATES
Interest Rates will affect money fund yields because as investments mature, the
cash received will be reinvested at current money market rates which could be
either higher or lower. Reinvesting at higher interest rates generally means
higher yields for money funds and reinvesting at lower rates generally means
lower yields.
AVERAGE LENGTH OF MATURITY
Average Length of Maturity affects the timing of reinvesting cash from maturing
investments. If interest rates are expected to rise, decreasing the portfolio's
average length of maturity would enable the Fund to purchase higher-yielding
money market securities sooner. Conversely, if rates were expected to decrease,
the Fund would invest in money market securities with a longer length of
maturity in order to maintain higher yields longer.
(ALSO SEE "TERMS TO KNOW" SECTION)
<PAGE> 8
6
PERFORMANCE UPDATE
[RACHWALSKI PHOTO]
AN INTERVIEW WITH PORTFOLIO MANAGER FRANK RACHWALSKI
Although the U.S. economy sustained its healthy
growth trend throughout the entire report period
(8/1/97 to 7/31/98), the economic crisis in Asia
extinguished many signs of inflation. The Federal
Reserve Board held their position on interest rates
as they maintained their "wait and see" policy.
Lead portfolio manager Frank Rachwalski discusses
the market and Zurich Money Funds' performance
during that time.
---------------------------------------------------
FRANK RACHWALSKI IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC. AND
LEAD PORTFOLIO MANAGER OF ZURICH MONEY FUNDS. MR. RACHWALSKI HOLDS A B.B.A. AND
AN M.B.A. DEGREE FROM LOYOLA UNIVERSITY.
Q FRANK, IN LOOKING BACK OVER THE LAST 12 MONTHS, WE SAW STEADY ECONOMIC
GROWTH WITH MINIMAL INFLATION. WHAT FACTORS HELPED MAINTAIN THIS HEALTHY
FINANCIAL CLIMATE?
-------------------------------------------------------------------------
A Employment levels remained high throughout this period giving more
people money to spend. While this fueled the U.S. economy, the economic problems
in Asia that surfaced in October 1997 continued well into 1998, with the
Japanese Yen falling relative to the U.S. Dollar. Consequently, low-priced
exports from Asia minimized demand for American-made products causing increased
inventories. Production slowed as manufacturers sold product from existing
inventories and this, in turn, slowed the economy just enough to keep inflation
in check.
- - ------------------------------------------------------------------------------
The views expressed in this report reflect those of the portfolio manager only
through the end of the period of the report, as stated
on the cover. The manager's views are subject to change at any time, based on
market and other conditions.
<PAGE> 9
7
Q HOW DID THE FEDERAL RESERVE (THE FED) REACT TO THIS CONTINUED RUN OF
ECONOMIC GROWTH?
------------------------------------------------------------------------
A Well, ordinarily the Board of Governors (of the Federal Reserve) would
have increased the Fed Funds rate. But, with the Asian problems and low
inflation, they were content to maintain their prevailing policy. In fact, we
haven't seen them raise rates in over a year.
Q WITH ALL THESE FACTORS COMING INTO PLAY, WHAT WAS YOUR STRATEGY FOR
MANAGING THE FUNDS?
------------------------------------------------------------------------
A With no change in monetary policy, we saw a continued flattening in the
yield curve, which meant long-term interest rates fell relative to short-term
interest rates. Since we had no yield incentive to invest in securities with
longer maturities, we kept our average maturity at approximately 30 days.
Q A 30-DAY AVERAGE MATURITY IS SHORTER THAN THE INDUSTRY AVERAGE WHICH IS
APPROXIMATELY 51 DAYS FOR GENERAL PURPOSE MONEY MARKET FUNDS. WHY DID YOU STAY
IN THAT RANGE AND HOW DID THIS STRATEGY AFFECT PERFORMANCE?
-------------------------------------------------------------------------
A When there's not a big difference in yields among the investments we're
considering for the portfolio, the challenge is trying to maximize returns. With
a very short average maturity, we had the flexibility to react and take
advantage of whatever fluctuations in short-term interest rates occurred during
that time. This strategy worked well for us because we were able to invest in
the best issues possible, as they became available.
Continued
<PAGE> 10
8
Q WHERE DO YOU THINK THE ECONOMY IS GOING FROM HERE AND HOW WILL THAT
INFLUENCE YOUR INVESTMENT MANAGEMENT CHOICES?
------------------------------------------------------------------------
A I think the inventory correction we saw during the second quarter of
1998 is ending and production schedules will begin increasing. So, although we
saw a bit of a slow-down during this last quarter, I expect the second half of
1998 to be back on a stronger growth trend. Another concern is that the core CPI
(Consumer Price Index), which includes consumer products except food and energy,
increased over 2% during the last 6 months. This means we've started to see
price increases. If this trend continues, the Fed would certainly have some
concern about inflation taking hold and most likely would raise interest rates.
Based on this trend we will continue to keep the average maturity of securities
held by the Funds short in order to respond quickly to changing rates. We want
to provide the best yield possible for our shareholders, and to maintain the
flexibility to be in a position to take advantage of opportunities.
<PAGE> 11
9
TERMS TO KNOW
7-DAY AVERAGE
YIELD Every money market fund calculates its yield according
to a standardized method prescribed by the Securities
and Exchange Commission. Each day's yield is an average
taken over a 7-day period. This average helps to
minimize the effect of daily fluctuation in fund income.
YIELD CURVE Yields tend to vary directly with a security's length of
time to maturity. When the relationship between yield
and maturity is plotted on a graph it is called the
YIELD CURVE. If yields for long-term investments drop
relative to yields on short-term investments, the YIELD
CURVE will "flatten" since there will be less of a
difference in yield between shorter-term and longer-term
investments. When this happens, it also means
longer-term securities are relatively less attractive.
When long-term yields increase relative to short-term
yields and the curve steepens, longer-term securities
become relatively more desirable.
*The yield curve [SAMPLE YIELD CURVE* GRAPH]
shown is
hypothetical and 1 MO. 5.00%
does not 3 MO. 5.50%
represent the 6 MO. 5.85%
past or future 1 YR. 6.05%
performance of 5 MO. 6.17%
any security 10 MO. 6.23%
held by the 30 MO. 6.25%
Zurich Money
Funds.
CONSUMER
PRICE INDEX
(CPI) The CPI is a measure of inflation based on the cost of a
typical "market basket" of goods and services that
reflect the current lifestyle of the typical American
consumer. The Bureau of Labor Statistics compiles the
CPI every month in order to track changes in the total
cost from month to month and year to year.
<PAGE> 12
10
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
ZURICH MONEY MARKET FUND On 7/31/98*
<S> <C> <C>
Commercial paper 78%
------------------------------------------------
[PIE CHART] Domestic CD's 16
------------------------------------------------
Repurchase agreements 2
------------------------------------------------
U.S. Government agency notes 2
------------------------------------------------
Foreign CD's 2
------------------------------------------------
100%
WEIGHTED AVERAGE MATURITY+
Zurich Money Market Fund 27 days
------------------------------------------------
First Tier Money Fund Average 64 days
ZURICH GOVERNMENT MONEY FUND On 7/31/98*
Repurchase agreements 59%
------------------------------------------------
Federal agencies 41
[PIE CHART] ------------------------------------------------
100%
WEIGHTED AVERAGE MATURITY+
Zurich Government Money Fund 31 days
------------------------------------------------
Government Money Fund Average 51 days
ZURICH TAX-FREE MONEY FUND On 7/31/98*
Tax-exempt commercial paper 52%
------------------------------------------------
Variable rate demand notes 45
[PIE CHART] ------------------------------------------------
Tender securities 2
------------------------------------------------
General market obligations 1
------------------------------------------------
100%
WEIGHTED AVERAGE MATURITY+
Zurich Tax-Free Money Fund 31 days
------------------------------------------------
Tax-Free Money Fund Average 42 days
</TABLE>
* Portfolio composition and holdings are subject to change.
+ The Funds are compared to their respective IBC Financial Data category: The
First Tier Money Market Fund Average consists of all non-institutional taxable
money market funds investing in only first tier (highest rating) securities and
tracked by IBC Financial Data; Government Money Market Fund Average includes all
non-institutional government money market funds tracked by IBC Financial Data;
Tax-Free Money Market Fund Average consists of all non-institutional tax-free
money market funds tracked by IBC Financial Data.
Weighted average maturity for Zurich Money Market Fund and Zurich Government
Money Fund data is as of 7/28/98, Zurich Tax-Free Money Fund is as of 7/27/98.
<PAGE> 13
11
PORTFOLIO OF INVESTMENTS
ZURICH MONEY MARKET FUND
JULY 31, 1998 (VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
CORPORATE OBLIGATIONS
BANKING -- 2.7% RATE MATURITY VALUE
<S> <C> <C> <C>
Banco Real, S.A. 5.60% 10/16/98 $ 9,884
--------------------------------------------------------------------------
Merita, N.A. 5.58% 9/21/98 - 9/22/98 54,566
--------------------------------------------------------------------------
Nordbanken N.A., Inc. 5.57% 9/8/98 59,650
--------------------------------------------------------------------------
124,100
BUSINESS LOANS -- 19.8%
APEX Funding Corp. 5.72% 9/30/98 24,764
--------------------------------------------------------------------------
Asset Securitization
Cooperative Corp. 5.57% - 5.60% 9/2/98 - 9/21/98 74,558
--------------------------------------------------------------------------
Banner Receivables Corp. 5.78% - 5.80% 10/19/98 64,186
--------------------------------------------------------------------------
Broadway Capital Corp. 5.68% - 5.78% 8/5/98 - 10/28/98 59,306
--------------------------------------------------------------------------
Corporate Asset Funding 5.58% - 5.59% 8/21/98 - 9/18/98 59,708
--------------------------------------------------------------------------
Corporate Receivables
Corp. 5.59% - 5.60% 8/18/98 - 9/24/98 44,740
--------------------------------------------------------------------------
Falcon Asset
Securitization Corp. 5.59% 9/11/98 24,842
--------------------------------------------------------------------------
Gotham Capital Corp. 5.77% - 5.79% 10/13/98 - 10/26/98 59,276
--------------------------------------------------------------------------
International
Securitization Corp. 5.56% - 5.60% 8/20/98 - 10/15/98 74,619
--------------------------------------------------------------------------
Madison Funding Corp. 5.57% 8/17/98 24,938
--------------------------------------------------------------------------
Monte Rosa Capital Corp. 5.58% - 5.65% 8/18/98 - 8/21/98 74,783
--------------------------------------------------------------------------
Old Line Funding Corp. 5.58% - 5.60% 8/19/98 - 9/3/98 49,811
--------------------------------------------------------------------------
Preferred Receivables
Funding Corp. 5.59% - 5.61% 8/18/98 - 9/23/98 59,700
--------------------------------------------------------------------------
Quincy Capital Corp. 5.58% - 5.60% 9/18/98 - 9/21/98 59,545
--------------------------------------------------------------------------
Receivables Capital Corp. 5.57% 8/25/98 9,963
--------------------------------------------------------------------------
Sheffield Receivables
Corp. 5.56% - 5.65% 8/10/98 - 8/28/98 64,840
--------------------------------------------------------------------------
WCP Funding, Inc. 5.59% - 5.60% 8/4/98 - 8/13/98 49,942
--------------------------------------------------------------------------
Wood Street Funding Corp. 5.59% 8/11/98 19,969
--------------------------------------------------------------------------
899,490
</TABLE>
<PAGE> 14
12
ZURICH MONEY MARKET FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL AND EQUIPMENT
LENDING -- 9.8% RATE MATURITY VALUE
<S> <C> <C> <C>
Ace Overseas Corp. 5.60% - 5.66% 8/6/98 - 9/28/98 $ 49,752
--------------------------------------------------------------------------
(a)American Honda Finance
Corp. 5.63% - 5.64% 8/10/98 - 8/26/98 60,494
--------------------------------------------------------------------------
(a)Caterpillar Financial
Services Corp. 5.63% 8/17/98 25,000
--------------------------------------------------------------------------
Centric Capital Corp. 5.60% - 5.61% 10/1/98 - 10/5/98 39,614
--------------------------------------------------------------------------
(a)Ford Motor Credit Co. 5.70% 8/3/98 59,996
--------------------------------------------------------------------------
(a)IBM Credit Corp. 5.56% - 5.63% 8/3/98 - 8/28/98 54,995
--------------------------------------------------------------------------
(a)John Deere Capital
Corp. 5.56% - 5.68% 8/10/98 - 9/14/98 59,988
--------------------------------------------------------------------------
Sanwa Business Credit
Corp. 5.68% - 5.81% 8/6/98 - 10/13/98 49,690
--------------------------------------------------------------------------
(a)Sigma Finance, Inc. 5.63% 8/3/98 45,000
--------------------------------------------------------------------------
444,529
CAPTIVE BUSINESS LENDING -- 5.3%
CSW Credit, Inc. 5.56% - 5.58% 8/19/98 - 9/24/98 19,889
--------------------------------------------------------------------------
Enterprise Capital Funding
Corp. 5.59% - 5.62% 8/11/98 - 9/18/98 69,720
--------------------------------------------------------------------------
(a)FINOVA Capital Corp. 5.74% 9/11/98 55,000
--------------------------------------------------------------------------
Golden Manager's
Acceptance Corp. 5.58% 8/14/98 34,930
--------------------------------------------------------------------------
Oakland-Alameda County
Coliseum, California 5.58% - 5.60% 8/12/98 - 8/13/98 50,000
--------------------------------------------------------------------------
(a)Prudential Funding
Corp. 5.65% 8/10/98 10,000
--------------------------------------------------------------------------
239,539
CONSUMER LENDING -- 6.4%
(a)Beneficial Corp. 5.63% 8/12/98 30,000
--------------------------------------------------------------------------
Countrywide Home Loans
5.60% - 5.63% 8/11/98 - 8/31/98 44,868
(a)5.66% - 5.69% 8/26/98 - 10/26/98 35,000
--------------------------------------------------------------------------
(a)(b)GMAC Mortgage
Corporation of
Pennsylvania 5.82% 8/3/98 59,981
--------------------------------------------------------------------------
</TABLE>
<PAGE> 15
13
<TABLE>
<CAPTION>
RATE MATURITY VALUE
<S> <C> <C> <C>
(a)Household Finance Corp. 5.56% - 5.69% 8/28/98 - 8/31/98 $ 39,990
--------------------------------------------------------------------------
Household International,
Inc. 5.61% 8/14/98 14,970
--------------------------------------------------------------------------
Sears Roebuck Acceptance
Corp. 5.60% 9/4/98 64,659
--------------------------------------------------------------------------
289,468
CONSUMER PRODUCTS AND SERVICES -- 1.5%
Coca-Cola Enterprises,
Inc. 5.59% - 5.61% 8/3/98 - 8/20/98 49,904
--------------------------------------------------------------------------
Tribune Co. 5.61% - 5.63% 8/26/98 - 9/9/98 19,901
--------------------------------------------------------------------------
69,805
DIVERSIFIED FINANCE -- 14.6%
Alpine Securitization
Corp. 5.57% - 5.58% 8/11/98 - 8/25/98 59,832
--------------------------------------------------------------------------
Barton Capital Corp. 5.60% - 5.61% 8/31/98 - 10/5/98 49,634
--------------------------------------------------------------------------
(a)CIT Group Holdings,
Inc. 5.59% 8/3/98 39,992
--------------------------------------------------------------------------
CXC, Inc. 5.59% - 5.60% 9/23/98 - 9/25/98 74,372
--------------------------------------------------------------------------
Clipper Receivables Corp. 5.57% - 5.59% 8/17/98 - 8/19/98 39,894
--------------------------------------------------------------------------
Commercial Credit Co. 5.55% - 5.59% 8/20/98 - 10/8/98 39,695
--------------------------------------------------------------------------
Eksportfinans ASA 5.57% 8/10/98 39,944
--------------------------------------------------------------------------
Eureka Securitization,
Inc. 5.59% - 5.60% 8/10/98 - 10/23/98 49,647
--------------------------------------------------------------------------
General Electric Capital
Corp. 5.57% 9/17/98 49,639
--------------------------------------------------------------------------
Heller Financial, Inc. 5.83% 8/18/98 - 8/27/98 49,828
--------------------------------------------------------------------------
Thunder Bay Funding, Inc. 5.59% - 5.60% 8/20/98 - 9/1/98 54,783
--------------------------------------------------------------------------
Twin Towers, Inc. 5.60% - 5.63% 8/10/98 - 8/25/98 39,886
--------------------------------------------------------------------------
Windmill Funding Corp. 5.59% - 5.61% 8/21/98 - 10/14/98 74,430
--------------------------------------------------------------------------
661,576
FINANCIAL SERVICES -- 8.5%
(a)Bear Stearns Cos., Inc. 5.63% - 5.64% 8/6/98 - 8/18/98 55,000
--------------------------------------------------------------------------
(a)CS First Boston, Inc. 5.61% 8/3/98 54,994
--------------------------------------------------------------------------
(a)Goldman Sachs Group,
L.P. 5.60% 8/7/98 55,000
--------------------------------------------------------------------------
</TABLE>
<PAGE> 16
14
ZURICH MONEY MARKET FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
RATE MATURITY VALUE
<S> <C> <C> <C>
(a)Lehman Brothers
Holdings, Inc. 5.71% 8/20/98 $ 58,000
--------------------------------------------------------------------------
(a)Merrill Lynch & Co.,
Inc. 5.62% 8/4/98 25,000
--------------------------------------------------------------------------
(a)Morgan Stanley, Dean
Witter & Co. 5.61% - 5.76% 9/10/98 - 9/18/98 51,010
--------------------------------------------------------------------------
Salomon Smith Barney
Holdings, Inc.
(a)5.74% 8/4/98 30,000
5.58% - 5.59% 8/10/98 - 8/11/98 54,936
--------------------------------------------------------------------------
383,940
HEALTH CARE -- 1.0%
Baxter International, Inc. 5.58% - 5.63% 8/3/98 - 9/22/98 44,749
--------------------------------------------------------------------------
MANUFACTURING/INDUSTRIAL -- 2.4%
Cooper Industries, Inc. 5.68% 8/3/98 9,997
--------------------------------------------------------------------------
E.I. du Pont de Nemours 5.59% 8/13/98 - 8/14/98 74,855
--------------------------------------------------------------------------
Monsanto Co. 5.57% 9/16/98 24,823
--------------------------------------------------------------------------
109,675
MUNICIPAL OBLIGATION -- 1.2%
California, Pollution
Control Revenue 5.62% 9/11/98 55,000
--------------------------------------------------------------------------
UTILITIES -- 3.3%
Brazos River Authority,
Texas 5.62% 9/10/98 45,000
--------------------------------------------------------------------------
GTE Corp. 5.59% - 5.63% 8/24/98 - 8/26/98 79,697
--------------------------------------------------------------------------
New Hampshire Industrial
Development Authority 5.61% 9/9/98 25,000
--------------------------------------------------------------------------
149,697
--------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS -- 76.5%
(AVERAGE MATURITY: 30 DAYS) 3,471,568
</TABLE>
<PAGE> 17
15
<TABLE>
<CAPTION>
RATE MATURITY VALUE
<S> <C> <C> <C> <C>
BANK OBLIGATIONS
CERTIFICATES OF DEPOSIT AND BANK NOTES --
U.S. BANKS -- 16.0% RATE MATURITY VALUE
(a)Amex Centurian Bank 5.62% 8/5/98 $ 25,000
--------------------------------------------------------------------------
(a)AmSouth Bank of Alabama 5.54% 8/24/98 19,998
--------------------------------------------------------------------------
Bank of America N.A. 5.58% 8/24/98 65,000
--------------------------------------------------------------------------
(a)Bank One 5.60% 8/4/98 54,994
--------------------------------------------------------------------------
(a)Bankers Trust Co. 5.59% 8/3/98 49,982
--------------------------------------------------------------------------
(a)Comerica Bank 5.55% 9/22/98 14,998
--------------------------------------------------------------------------
(a)FCC National Bank 5.55% 8/3/98 54,968
--------------------------------------------------------------------------
(a)First USA Bank 5.99% 9/16/98 20,027
--------------------------------------------------------------------------
Harris Trust & Savings
Bank 5.56% 9/9/98 60,000
--------------------------------------------------------------------------
(a)Key Bank, N.A. 5.57% 8/3/98 59,996
--------------------------------------------------------------------------
MBNA America Bank, N.A. 5.65% 9/14/98 65,000
--------------------------------------------------------------------------
(a)Mellon Bank Corp. 5.60% 8/7/98 54,997
--------------------------------------------------------------------------
(a)J. P. Morgan & Co.,
Inc. 5.55% 8/7/98 54,970
--------------------------------------------------------------------------
Nationsbank, N.A.
5.62% 8/3/98 24,991
(a)5.58% 11/2/98 35,000
--------------------------------------------------------------------------
(a)Old Kent Bank 5.59% 10/13/98 24,997
--------------------------------------------------------------------------
(a)PNC Bank, N.A. 5.57% 8/3/98 39,984
--------------------------------------------------------------------------
724,902
CERTIFICATES OF DEPOSIT --
FOREIGN BANKS -- 1.5%
(a)National Bank of Canada 5.60% 8/5/98 14,998
--------------------------------------------------------------------------
(a)Royal Bank of Canada 5.55% 8/3/98 19,987
--------------------------------------------------------------------------
(a)Svenska Handelsbanken 5.64% 8/18/98 34,990
--------------------------------------------------------------------------
69,975
--------------------------------------------------------------------------
TOTAL BANK OBLIGATIONS -- 17.5%
(AVERAGE MATURITY: 32 DAYS) 794,877
</TABLE>
<PAGE> 18
16
ZURICH MONEY MARKET FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(c) REPURCHASE
AGREEMENTS -- 2.2% RATE MATURITY VALUE
(AVERAGE MATURITY: 40 DAYS)
(DATED 7/98, COLLATERALIZED BY FEDERAL HOME LOAN MORTGAGE
CORPORATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
SECURITIES)
Goldman Sachs Group, L.P.
(held at The Bank of
New York) 5.55% 9/3/98 - 9/15/98 $ 100,000
------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY NOTES
(a)Federal National
Mortgage Association 5.22% 8/4/98 54,837
--------------------------------------------------------------------------
(a)Student Loan Marketing
Association 5.29% 8/4/98 43,930
------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY NOTES -- 2.2%
(AVERAGE MATURITY: 4 DAYS) 98,767
------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.4%
(AVERAGE MATURITY: 30 DAYS) 4,465,212
------------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES -- 1.6% 73,415
------------------------------------------------------------------------------
NET ASSETS -- 100% $4,538,627
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
<PAGE> 19
ZURICH GOVERNMENT MONEY FUND
PORTFOLIO OF INVESTMENTS
July 31, 1998 (value in thousands)
<TABLE>
<CAPTION>
SHORT-TERM NOTES RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
(ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES OR
INSTRUMENTALITIES)
(a)Agency for
International Development
Government of Israel 5.63% 8/4/98 $ 3,765
-------------------------------------------------------------------------
(a)Export-Import Bank of
the United States
Cathay Pacific Airways
Ltd. 5.75% 10/16/98 2,320
KA Leasing, Ltd. 5.81% 8/13/98 13,698
Kuwait Investment
Authority 5.72% 8/13/98 11,420
VARIG Brazilian Airlines 5.81% 10/15/98 1,937
-------------------------------------------------------------------------
(a)Federal Farm Credit
Banks 5.61% 8/3/98 18,000
-------------------------------------------------------------------------
(a)Federal Home Loan Bank 5.67% 8/2/98 14,100
-------------------------------------------------------------------------
(a)Federal National
Mortgage Association 5.22% 8/4/98 47,877
-------------------------------------------------------------------------
(a)Overseas Private
Investment Corp.
International Paper Co. 5.64% 10/15/98 4,200
Omolon 5.55% 8/4/98 - 12/15/98 21,584
-------------------------------------------------------------------------
(a)Student Loan Marketing
Association 5.27% 8/4/98 141,749
-------------------------------------------------------------------------
TOTAL SHORT-TERM NOTES -- 40.8%
(AVERAGE MATURITY: 14 DAYS) 280,650
</TABLE>
17
<PAGE> 20
ZURICH GOVERNMENT MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
<TABLE>
<CAPTION>
(c) REPURCHASE AGREEMENTS RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
(DATED 6/98 - 7/98, COLLATERALIZED BY FEDERAL HOME LOAN
MORTGAGE CORPORATION, FEDERAL NATIONAL MORTGAGE ASSOCIATION AND
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION SECURITIES)
Bear Stearns Cos., Inc.
(held at The Bank of
New York) 5.56% - 5.58% 8/12/98 - 10/14/98 $ 95,000
-------------------------------------------------------------------------
CS First Boston, Inc.
(held at The Chase
Manhattan Bank) 5.63% 8/5/98 20,000
-------------------------------------------------------------------------
Chase Securities, Inc.
(held at The Chase
Manhattan Bank) 5.56% - 5.59% 8/12/98 - 10/14/98 97,000
-------------------------------------------------------------------------
Goldman, Sachs Group, L.P.
(held at The Bank of
New York) 5.55% - 5.56% 8/12/98 - 8/26/98 30,000
-------------------------------------------------------------------------
Lehman Government Securities, Inc.
(held at The Chase
Manhattan Bank) 5.65% 8/3/98 17,000
-------------------------------------------------------------------------
Morgan Stanley, Dean
Witter & Co.
(held at The Bank of
New York) 5.56% 8/10/98 - 8/11/98 33,000
-------------------------------------------------------------------------
Nomura Securities International, Inc.
(held at The Bank of
New York) 5.55% - 5.60% 9/2/98 - 10/21/98 95,000
-------------------------------------------------------------------------
Salomon Smith Barney
Holdings, Inc.
(held at The Bank of
New York) 5.55% 10/1/98 12,000
-------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS -- 58.1%
(AVERAGE MATURITY: 46 DAYS) 399,000
-------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.9%
(AVERAGE MATURITY: 33 DAYS)
679,650
-------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES -- 1.1% 7,221
-------------------------------------------------------------------------
NET ASSETS -- 100% $ 686,871
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
18
<PAGE> 21
ZURICH TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
July 31, 1998 (value in thousands)
<TABLE>
<CAPTION>
(A) VARIABLE RATE DEMAND SECURITIES
ARIZONA RATE VALUE
---------------------------------------------------------------------
<S> <C> <C>
Apache County,
Industrial Development Authority 3.55% $10,000
---------------------------------------------------------------------
Maricopa County,
Pollution Control Revenue 3.50% 9,000
CALIFORNIA
---------------------------------------------------------------------
Los Angeles,
Harbor Improvement Corp. 3.75% 11,500
---------------------------------------------------------------------
Statewide Communities
Development Authority,
Multi-Family Revenue 4.70% 5,000
DISTRICT OF COLUMBIA
---------------------------------------------------------------------
American Public
Health Association 3.50% 6,000
---------------------------------------------------------------------
General Obligation 3.80% 5,200
FLORIDA
St. Lucie County,
Pollution Control Revenue 3.70% 2,600
GEORGIA
---------------------------------------------------------------------
Cartersville,
Industrial Development Revenue 3.85% 3,600
---------------------------------------------------------------------
Fulton County
Development Authority 3.55% 7,145
Morehouse College 3.50% 6,695
---------------------------------------------------------------------
Gainesville,
Redevelopment Authority Revenue 3.60% 8,000
ILLINOIS
---------------------------------------------------------------------
Chicago,
Industrial Development Revenue 3.80% 4,000
---------------------------------------------------------------------
Cicero,
Industrial Development Revenue 3.80% 3,130
---------------------------------------------------------------------
Development Finance Authority 3.69% 35,315
---------------------------------------------------------------------
Health Facilities Authority 3.60% 8,285
</TABLE>
19
<PAGE> 22
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
RATE VALUE
<S> <C> <C>
Hillside,
Economic Development Authority 3.65% $ 6,000
McHenry,
Industrial Project Revenue 3.65% 5,500
---------------------------------------------------------------------
Mundelein,
Industrial Development Revenue 3.65% 6,500
---------------------------------------------------------------------
Springfield,
Industrial Development Revenue 3.70% 6,500
---------------------------------------------------------------------
Student Assistance Commission 3.55% 6,500
---------------------------------------------------------------------
Woodridge,
Industrial Development Revenue 3.80% 5,100
---------------------------------------------------------------------
Woodstock,
Industrial Development Revenue 3.70% 5,500
INDIANA
---------------------------------------------------------------------
Health Facility
Financing Authority 3.60% 5,000
---------------------------------------------------------------------
Ossian,
Economic Development Revenue 3.70% 4,000
---------------------------------------------------------------------
Rockport,
Pollution Control Revenue 3.60% 10,000
KANSAS
KANSAS CITY,
---------------------------------------------------------------------
Pollution Control Revenue 3.70% 4,350
KENTUCKY
---------------------------------------------------------------------
Development Finance Authority 3.65% 7,720
---------------------------------------------------------------------
Lexington-Fayette,
Urban County Government Industrial
Building Revenue 3.80% 4,500
---------------------------------------------------------------------
Mayfield,
Multi-City Lease Revenue 3.65% 6,000
LOUISIANA
---------------------------------------------------------------------
Caddo Parish,
Industrial Development Board 3.70% 8,500
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
MINNESOTA RATE VALUE
---------------------------------------------------------------------
<S> <C> <C>
Minneapolis,
Community Development Agency 4.30% $ 5,000
NEVADA
---------------------------------------------------------------------
Department of Commerce 3.90% 4,650
NEW MEXICO
---------------------------------------------------------------------
Belen,
Industrial Development Revenue 3.70% 4,765
---------------------------------------------------------------------
Farmington,
Pollution Control Revenue 3.50% 6,300
NEW YORK
---------------------------------------------------------------------
Energy Research and Development
Authority 3.65% 4,965
NORTH CAROLINA
---------------------------------------------------------------------
Medical Care Commission,
Retirement Community Revenue 3.55% 5,000
---------------------------------------------------------------------
Wake County,
Industrial Financial Authority 4.25% 3,900
PENNSYLVANIA
---------------------------------------------------------------------
Berks County,
Redevelopment Authority 4.27% 8,000
---------------------------------------------------------------------
Delaware County,
Industrial Development Authority 3.75% 5,700
---------------------------------------------------------------------
Emmaus,
General Authority Revenue 3.60% 8,000
---------------------------------------------------------------------
Philadelphia
Authority for Industrial Development 4.20% 7,670
Industrial Development Authority 3.70% 6,800
---------------------------------------------------------------------
Schuylkill County,
Industrial Development Authority 3.50% 6,200
</TABLE>
21
<PAGE> 24
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
TENNESSEE RATE VALUE
--------------------------------------------------------------------------
<S> <C> <C>
Clarksville,
Public Building Authority 3.55% $
9,000
- --------------------------------------------------------------------------
Maury
County,
Industrial Development Board 3.75%
2,500
TEXAS
- --------------------------------------------------------------------------
Bexar
County,
Housing Finance Corp. 4.42%
5,500
- --------------------------------------------------------------------------
Brazos River Authority 3.95%
12,600
- --------------------------------------------------------------------------
Harris
County,
Health Facilities Development Corp. 3.55%
9,400
- --------------------------------------------------------------------------
Trinity River Authority 3.70%
9,200
VIRGINIA
- --------------------------------------------------------------------------
Loudoun
County,
Industrial Development Authority 3.65%
6,170
WASHINGTON
- --------------------------------------------------------------------------
Port of Vancouver 3.55%
8,850
WISCONSIN
Eau
Claire,
Solid Waste Disposal Revenue 3.75%
9,000
- --------------------------------------------------------------------------
Manitowoc,
Industrial Development Revenue 3.70%
4,300
- --------------------------------------------------------------------------
TOTAL VARIABLE RATE DEMAND SECURITIES--45.4%
370,610
(AVERAGE MATURITY: 6
DAYS)
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
OTHER SECURITIES
--------------------------------------------------------------------------
ALASKA RATE MATURITY VALUE
--------------------------------------------------------------------------
<S> <C> <C> <C>
Valdez,
Marine Terminal Revenue 3.75% - 3.80% 9/14/98 $ 11,300
ARIZONA
--------------------------------------------------------------------------
Salt River Project,
Agricultural Improvement and
Power District 3.55% - 3.65% 9/22/98 - 11/13/98 15,415
FLORIDA
--------------------------------------------------------------------------
Jacksonville,
Electric Authority 3.55% - 3.80% 8/12/98 - 9/17/98 21,950
--------------------------------------------------------------------------
Orlando,
Capital Improvement Revenue 3.55% - 3.80% 8/12/98 - 8/13/98 6,500
--------------------------------------------------------------------------
Palm Beach County,
Health Facilities Authority 3.80% 8/11/98 4,700
--------------------------------------------------------------------------
Sunshine State,
Governmental Financing
Commission 3.60% - 3.80% 8/12/98 - 9/22/98 27,500
GEORGIA
--------------------------------------------------------------------------
Municipal Electric Authority 3.55% - 3.60% 8/13/98 - 9/18/98 14,650
--------------------------------------------------------------------------
Municipal Gas Authority 3.75% 8/17/98 5,000
ILLINOIS
--------------------------------------------------------------------------
Decatur,
Water Revenue 4.25% 8/20/98 7,700
--------------------------------------------------------------------------
Development Finance
Authority 4.05% 2/1/99 4,615
--------------------------------------------------------------------------
Educational Facilities
Authority 3.60% - 3.65% 8/12/98 - 10/20/98 15,260
--------------------------------------------------------------------------
Health Facilities Authority 3.80% 8/14/98 8,000
</TABLE>
23
<PAGE> 26
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
INDIANA RATE MATURITY VALUE
--------------------------------------------------------------------------
<S> <C> <C> <C>
Jasper County,
Pollution Control Revenue 3.60% - 3.65% 10/20/98 - 11/13/98 $ 31,450
--------------------------------------------------------------------------
Sullivan,
Pollution Control Revenue 3.60% - 3.75% 9/14/98 - 11/13/98 13,765
KANSAS
--------------------------------------------------------------------------
Burlington,
Pollution Control Revenue 3.60% - 3.75% 8/13/98 - 10/20/98 15,365
KENTUCKY
--------------------------------------------------------------------------
Danville,
Multi-City Lease Revenue 3.55% - 3.70% 8/13/98 - 10/14/98 13,170
--------------------------------------------------------------------------
Pendleton County,
Multi-County Lease Revenue 3.60% - 3.75% 8/12/98 - 9/22/98 14,540
MARYLAND
--------------------------------------------------------------------------
Anne Arundel County,
Port Facilities Revenue 3.55% - 3.70% 8/13/98 - 11/10/98 25,220
MISSOURI
Independence,
Water Utility Revenue 3.60% 9/22/98 10,050
NEBRASKA
--------------------------------------------------------------------------
Omaha, Public Power District 3.75% 9/11/98 5,000
--------------------------------------------------------------------------
Public Power District 3.70% 9/14/98 6,000
NEW YORK
--------------------------------------------------------------------------
Long Island Power Authority 3.70% 9/9/98 5,000
--------------------------------------------------------------------------
Power Authority of New York 3.60% 10/14/98 9,500
OHIO
--------------------------------------------------------------------------
Air Quality Development
Authority 3.60% 11/10/98 3,000
--------------------------------------------------------------------------
Water Development Authority 3.70% 8/11/98 6,550
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
OKLAHOMA RATE MATURITY VALUE
<S> <C> <C> <C>
Oklahoma County, Industrial
Authority 4.30% 9/1/98 $ 7,400
PENNSYLVANIA
Delaware County,
Industrial Development Authority 3.60% 9/23/98 7,300
TEXAS
Dallas, Area Rapid Transit 3.65% -3.75% 8/13/98 - 9/15/98 16,000
- - ---------------------------------------------------------------------------------------
Harris County, Health Facilities
Development Corp. 4.20% 8/19/98 - 8/20/98 15,000
- - ---------------------------------------------------------------------------------------
Houston, Water and Sewer System 3.70% - 3.75% 8/12/98 - 9/17/98 15,230
- - ---------------------------------------------------------------------------------------
Municipal Power Agency 3.60% - 3.70% 8/12/98 - 10/22/98 25,700
- - ---------------------------------------------------------------------------------------
Public Finance Authority 3.60% 10/19/98 3,600
- - ---------------------------------------------------------------------------------------
San Antonio,
Electric and Gas Systems 3.65% 8/14/98 7,600
Water Systems Notes 3.75% 9/15/98 9,000
- - ---------------------------------------------------------------------------------------
Tax and Revenue Anticipation Notes 3.69% 8/31/98 11,008
UTAH
General Obligation 3.75% 9/11/98 7,500
<CAPTION>
VIRGINIA
<S> <C> <C> <C>
Chesterfield County, Industrial
Development Authority 3.55% - 3.70% 8/13/98 - 11/10/98 13,650
</TABLE>
--
25
<PAGE> 28
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
WISCONSIN RATE MATURITY VALUE
--------------------------------------------------------------------------
<S> <C> <C> <C>
Health and Education
Facilities Authority Revenue 4.25% 8/20/98 $ 4,000
--------------------------------------------------------------------------
TOTAL OTHER SECURITIES -- 54.5%
(AVERAGE MATURITY: 47 DAYS) 444,188
--------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.9%
(AVERAGE MATURITY: 29 DAYS) 814,798
--------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- .1% 1,096
--------------------------------------------------------------------------
NET ASSETS -- 100% $ 815,894
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
26
<PAGE> 29
NOTES TO
PORTFOLIOS OF INVESTMENTS
- - ------------------------------------------------------------------------------
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at July 31,
1998. The dates shown represent the demand date or the next interest rate
change date. Securities in the Zurich Tax-Free Money Fund shown without a
date are payable within five business days and are backed by credit support
agreements from banks or insurance institutions.
(b) Illiquid securities. At July 31, 1998, the value of illiquid securities was
$59,981,000 in the Zurich Money Market Fund, which represented 1.3% of net
assets.
(c) Repurchase agreements are fully collateralized by U.S. Government
securities. All collateral is held at the Funds' custodian bank, Investors
Fiduciary Trust Company, or at subcustodian banks, as indicated. The
collateral is monitored daily by the Funds so that its market value exceeds
the carrying value of the repurchase agreement.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE> 30
REPORT OF
INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES We have audited the accompanying statement of
AND SHAREHOLDERS assets and liabilities, including the portfolios
ZURICH MONEY FUNDS of investments, of Zurich Money Market Fund,
Zurich Government Money Fund and Zurich Tax-Free
Money Fund, comprising Zurich Money Funds, as of
July 31, 1998, and the related statements of
operations for the year then ended and changes in
net assets for each of the two years in the period
then ended, and the financial highlights for each
of the fiscal periods since 1994. These financial
statements and financial highlights are the
responsibility of the Funds' management. Our
responsibility is to express an opinion on these
financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements and financial highlights
are free of material misstatement. An audit
includes examining, on a test basis, evidence
supporting the amounts and disclosures in the
financial statements. Our procedures included
confirmation of investments owned as of July 31,
1998, by correspondence with the custodian. An
audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall
financial statement presentation. We believe that
our audits provide a reasonable basis for our
opinion.
28
<PAGE> 31
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of each of the Funds comprising Zurich
Money Funds at July 31, 1998, the results of their
operations for the year then ended, the changes in
their net assets for each of the two years in the
period then ended and the financial highlights for
each of the fiscal periods since 1994, in
conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 17, 1998
29
<PAGE> 32
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1998 (in thousands)
<TABLE>
<CAPTION>
ASSETS MONEY MARKET GOVERNMENT TAX-FREE
--------------------------------------------------------------------
<S> <C> <C> <C>
Investments, at amortized
cost:
Short-term securities $4,365,212 280,650 814,798
--------------------------------------------------------------------
Repurchase agreements 100,000 399,000 --
--------------------------------------------------------------------
Cash 25,326 4,127 --
--------------------------------------------------------------------
Receivable for:
Interest 12,812 4,411 4,029
--------------------------------------------------------------------
Fund shares sold 55,932 1,177 2,023
--------------------------------------------------------------------
TOTAL ASSETS 4,559,282 689,365 820,850
LIABILITIES AND NET ASSETS
--------------------------------------------------------------------
Cash overdraft -- -- 1,454
--------------------------------------------------------------------
Payable for:
Dividends 4,469 676 527
--------------------------------------------------------------------
Fund shares redeemed 13,385 1,458 2,564
--------------------------------------------------------------------
Management fee 1,042 156 158
--------------------------------------------------------------------
Custodian and transfer agent
fees and related expenses 1,224 101 141
--------------------------------------------------------------------
Trustees' fees and other 535 103 112
--------------------------------------------------------------------
TOTAL LIABILITIES 20,655 2,494 4,956
--------------------------------------------------------------------
NET ASSETS APPLICABLE TO
SHARES OUTSTANDING $4,538,627 686,871 815,894
THE PRICING OF SHARES
--------------------------------------------------------------------
Shares outstanding 4,538,627 686,871 815,894
--------------------------------------------------------------------
Net asset value and redemption
price per share $1.00 1.00 1.00
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE> 33
STATEMENT OF OPERATIONS
Year ended July 31, 1998 (in thousands)
<TABLE>
<CAPTION>
NET INVESTMENT INCOME MONEY MARKET GOVERNMENT TAX-FREE
- - ---------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $256,988 37,988 30,083
--------------------------------------------------------------------
Expenses:
Management fee 12,086 1,815 2,156
--------------------------------------------------------------------
Custodian and transfer agent
fees and related expenses 8,646 871 520
--------------------------------------------------------------------
Reports to shareholders 431 69 65
--------------------------------------------------------------------
Registration costs 91 80 80
--------------------------------------------------------------------
Professional fees 98 16 19
--------------------------------------------------------------------
Trustees' fees and other 101 24 29
--------------------------------------------------------------------
Total expenses 21,453 2,875 2,869
--------------------------------------------------------------------
Net investment income $235,535 35,113 27,214
</TABLE>
31
<PAGE> 34
ZURICH MONEY FUNDS FINANCIAL STATEMENTS, CONTINUED
Years ended July 31, 1998 and 1997 (in thousands)
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
----------------------------------------------------------------
<S> <C>
Net investment income
----------------------------------------------------------------
Dividends to shareholders from net investment income
----------------------------------------------------------------
Capital share transactions
(dollar amounts and number of shares are the same):
Shares sold
----------------------------------------------------------------
Shares issued in reinvestment of dividends
----------------------------------------------------------------
----------------------------------------------------------------
Shares redeemed
----------------------------------------------------------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS AND
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS
----------------------------------------------------------------
Beginning of year
----------------------------------------------------------------
END OF YEAR
</TABLE>
32
<PAGE> 35
<TABLE>
<CAPTION>
MONEY MARKET GOVERNMENT TAX-FREE
- - ------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
- - ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 235,535 223,327 35,113 36,194 27,214 25,635
- - ------------------------------------------------------------------------
(235,535) (223,327) (35,113) (36,194) (27,214) (25,635)
- - ------------------------------------------------------------------------
7,670,002 6,067,490 646,450 704,736 851,664 861,149
- - ------------------------------------------------------------------------
227,005 215,732 33,991 34,766 26,435 25,063
- - ------------------------------------------------------------------------
7,897,007 6,283,222 680,441 739,502 878,099 886,212
- - ------------------------------------------------------------------------
(7,720,315) (6,147,062) (664,709) (740,404) (833,520) (843,915)
- - ------------------------------------------------------------------------
176,692 136,160 15,732 (902) 44,579 42,297
4,361,935 4,225,775 671,139 672,041 771,315 729,018
- - ------------------------------------------------------------------------
$ 4,538,627 4,361,935 686,871 671,139 815,894 771,315
</TABLE>
33
<PAGE> 36
NOTES TO
FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUNDS
Zurich Money Funds (the Trust) is an open-end management investment company
organized as a business trust under the laws of Massachusetts currently offering
three investment funds ("Funds"). Zurich Money Market Fund invests primarily in
short-term high quality obligations of major banks and corporations. Zurich
Government Money Fund invests exclusively in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and repurchase agreements
thereon. Zurich Tax-Free Money Fund invests in short-term high quality municipal
securities.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION. Investments are stated at amortized cost, which
approximates market value. In the event that a deviation of 1/2 of 1% or more
exists between a Fund's $1.00 per share net asset value, calculated at amortized
cost, and the net asset value calculated by reference to market-based values, or
if there is any other deviation that the Board of Trustees believes would result
in a material dilution to shareholders or purchasers, the Board of Trustees will
promptly consider what action should be initiated.
INVESTMENT TRANSACTIONS AND INTEREST INCOME. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed).
Interest income is recorded on the accrual basis and includes amortization of
premium and discount on investments.
EXPENSES. Expenses arising in connection with a Fund are allocated to that Fund.
Other Trust expenses are allocated among the Funds in proportion to their
relative net assets.
FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS. Fund shares are sold and
redeemed on a continuous basis at net asset value. On each day that the New York
Stock Exchange is open for trading, each Fund determines its net asset value per
share (NAV) by dividing the total value of the Fund's investments and other
assets, less liabilities, by the number of Fund shares outstanding. The NAV is
determined at 11:00 a.m., 1:00 p.m. and 3:00 p.m. Central time for Zurich Money
Market Fund and Zurich Government Money Fund and at 11:00 a.m. and 3:00 p.m.
Central time for Zurich Tax-Free Money Fund. Each Fund declares a daily
dividend, equal to its net investment income for that day, payable monthly. Net
investment income consists of all
34
<PAGE> 37
interest income plus (minus) all realized gains (losses) on portfolio
securities, minus all expenses of the Fund.
FEDERAL INCOME TAXES. Each Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies, and to distribute all of its taxable income to its
shareholders. Accordingly, each Fund paid no federal income taxes and no federal
income tax provision was required.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT. The Funds have a management agreement with Scudder Kemper
Investments, Inc. (Scudder Kemper) and pay a monthly investment management fee
of 1/12 of the annual rate of .50% of the first $215 million of combined average
daily net assets declining to .25% of combined average daily net assets in
excess of $800 million. During the year ended July 31, 1998, the Funds incurred
management fees of $16,057,000.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a services agreement with the Funds'
transfer agent, Kemper Service Company (KSvC) is the shareholder service agent
of the Trust. Under the agreement, KSvC received shareholder services fees of
$6,375,000 for the year ended July 31, 1998.
OFFICERS AND TRUSTEES. Certain officers or trustees of the Trust are also
officers or directors of Scudder Kemper. During the year ended July 31, 1998,
the Trust made no payments to its officers and incurred trustees' fees of
$70,000 to independent trustees.
35
<PAGE> 38
FINANCIAL HIGHLIGHTS
ZURICH MONEY MARKET FUND
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE
YEAR ENDED JULY 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 1.00 1.00 1.00 1.00
-------------------------------------------------------------------------------------
Net investment income .05 .05 .05 .05 .03
-------------------------------------------------------------------------------------
Less dividends
declared .05 .05 .05 .05 .03
-------------------------------------------------------------------------------------
Net asset value, end
of year $1.00 1.00 1.00 1.00 1.00
-------------------------------------------------------------------------------------
TOTAL RETURN 5.38% 5.27 5.34 5.34 3.20
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------------------
Expenses .48% .45 .50 .52 .52
-------------------------------------------------------------------------------------
Net investment income 5.24% 5.14 5.20 5.19 3.14
-------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of
year (in thousands) $4,538,627 4,361,935 4,225,775 4,025,098 4,148,789
</TABLE>
Note: Zurich Money Market Fund's total return for the year ended July 31, 1995
includes the effect of a capital contribution from the investment manager.
Without the capital contribution, the total return would have been 4.62%.
36
<PAGE> 39
ZURICH GOVERNMENT MONEY FUND
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE
YEAR ENDED JULY 31,
----------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
Net investment income .05 .05 .05 .05 .03
----------------------------------------------------------------------------
Less dividends
declared .05 .05 .05 .05 .03
----------------------------------------------------------------------------
Net asset value, end
of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
TOTAL RETURN 5.33% 5.26 5.34 5.36 3.20
RATIOS TO AVERAGE NET ASSETS
Expenses .43% .44 .46 .46 .47
----------------------------------------------------------------------------
Net investment income 5.20% 5.13 5.20 5.21 3.15
SUPPLEMENTAL DATA
Net assets at end of
year (in thousands) $686,871 671,139 672,041 603,601 707,368
</TABLE>
37
<PAGE> 40
FINANCIAL HIGHLIGHTS, CONTINUED
ZURICH TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE
YEAR ENDED JULY 31,
----------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
Net investment income .03 .03 .03 .03 .02
----------------------------------------------------------------------------
Less dividends
declared .03 .03 .03 .03 .02
----------------------------------------------------------------------------
Net asset value, end
of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
TOTAL RETURN 3.46% 3.39 3.44 3.53 2.33
RATIOS TO AVERAGE NET ASSETS
Expenses .36% .37 .39 .40 .41
----------------------------------------------------------------------------
Net investment income 3.39% 3.33 3.38 3.46 2.30
SUPPLEMENTAL DATA
Net assets at end of
year (in thousands) $815,894 771,315 729,018 760,143 792,131
</TABLE>
38
<PAGE> 41
TAX INFORMATION
All of the dividends from Zurich Money Market Fund and Zurich Government Money
Fund are taxable as ordinary income. These dividends, whether received in cash
or reinvested in shares, must be included in your federal income tax return and
must be reported by the Fund to the Internal Revenue Service in accordance with
U.S. Treasury Department Regulations.
Of the dividends paid from Zurich Tax-Free Money Fund for the taxable year ended
July 31, 1998, 100% are designated as exempt interest dividends for federal
income tax purposes. However, a portion of the dividends may be includable in
the alternative minimum tax calculation.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Zurich account, please call 1-888-987-4241.
39
<PAGE> 42
(This page intentionally left blank)
<PAGE> 43
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
DANIEL PIERCE MARK S. CASADY
Chairman and Trustee President
DAVID W. BELIN PHILIP J. COLLORA
Trustee Vice President and
Secretary
LEWIS A. BURNHAM
Trustee JERARD K. HARTMAN
Vice President
DONALD L. DUNAWAY
Trustee THOMAS W. LITTAUER
Vice President
ROBERT B. HOFFMAN
Trustee ANN M. MCCREARY
Vice President
DONALD R. JONES
Trustee ROBERT C. PECK, JR.
Vice President
SHIRLEY D. PETERSON
Director KATHRYN L. QUIRK
Vice President
WILLIAM P. SOMMERS
Trustee FRANK J. RACHWALSKI, JR.
Vice President
EDMOND D. VILLANI
Trustee LINDA J. WONDRACK
Vice President
JOHN R. HEBBLE
Treasurer
MAUREEN E. KANE
Assistant Secretary
CAROLINE PEARSON
Assistant Secretary
ELIZABETH C. WERTH
Assistant Secretary
Brenda Lyons
ASSISTANT TREASURER
- - ------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- - ------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419066
Kansas City, MO 64141-6066
- - ------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania
Kansas City, MO 64105
- - ------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
This report must be preceded
or accompanied by a Zurich Money
Funds prospectus.
[RECYCLED LOGO]
Printed in the U.S.A. on recycled paper.
ZMF-2 (9/98) 1055260 [ZURICH LOGO]
<PAGE>
ZURICH MONEY FUNDS
PART C.
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(i) Financial Statements included in Part A of the
Registration Statement: Financial Highlights, Zurich
Money Market Fund, Zurich Government Money Fund and
Zurich Tax-Free Money Fund.
(ii) Financial Statements included in Part B of the
Registration Statement: The Annual Report for Zurich
Money Market Fund, Zurich Government Money Fund and
Zurich Tax Free Money Fund, for the fiscal year ended
July 31, 1998, is incorporated herein by reference
to the fund's Statement of Additional Information and
was filed on October 6, 1998 pursuant to Rule 30d-1
under the Investment Company Act of 1940 and are
incorporated herein by reference.
<TABLE>
<CAPTION>
(b) Exhibits
<S> <C> <C>
99.B1(a) Amended and Restated Declaration of Trust (1)
99.B1(b) Written Instrument Amending the Agreement and Declaration of Trust.(1)
99.B1(c) Written Instrument Amending the Agreement and Declaration of Trust.(1)
99.B1(d) Written Instrument Amending the Agreement and Declaration of Trust (3)
99.B1(e) Written Instrument Amending the Agreement and Declaration of Trust (4)
99.B1(f) Amended and Restated Declaration of Trust. Submitted herewith.
99.B2 By-Laws.(1)
99.B3 Inapplicable.
99.B4(a) Text of Share Certificate.(1)
99.B4(b) Written Instrument Changing Name of Series of the Trust (3)
99.B4(c) Written Instrument Changing Name of Series of the Trust (4)
99.B5(a) Investment Management Agreement for Zurich Money Market Fund, Zurich Government Money Fund and
Zurich Tax Free Money Fund. Submitted herewith.
99.B6 Selling Group Agreement. (1)
99.B6(a) Underwriting Agreement. Submitted herewith.
99.B7 Inapplicable.
99.B8(a) Custody Agreement.(1)
99.B9(a) Agency Agreement.(1)
99.B9(b) Supplement to Agency Agreement (3)
99.B9(c) Fund Accounting Services Agreement for Money Market Fund. Submitted herewith.
99.B9(d) Fund Accounting Services Agreement for Government Money Fund. Submitted herewith.
99.B9(e) Fund Accounting Services Agreement for Tax-Free Money Fund. Submitted herewith.
99.B10 Inapplicable.
99.B11 Report and Consent of Independent Auditors. Submitted herewith.
99.B12 Inapplicable.
99.B13 Inapplicable.
99.B14(a) Kemper Retirement Plan Prototype. (1)
99.B14(b) Model Individual Retirement Account. (1)
99.B15 Inapplicable.
99.B16 Performance Calculations. (2)
99.B18 Inapplicable.
99.B24 Inapplicable.
27.1 Financial Data Schedule for Money Market Fund. Submitted herewith.
27.2 Financial Data Schedule for Government Money Fund. Submitted herewith.
27.3 Financial Data Schedule for Tax-Free Money Fund. Submitted herewith.
</TABLE>
Part C - Page 1
<PAGE>
(1) Incorporated herein by reference to Amendment No. 41 on Form N-1A filed
on November 16, 1995.
(2) Incorporated herein by reference to Amendment No. 40 on Form N-1A filed
on or about October 31, 1994.
(3) Incorporated herein by reference to Amendment No. 42 on Form N-1A filed
on or about November 6, 1996.
(4) Incorporated herein by reference to Amendment No. 43 on Form N-1A filed
on or about November 14, 1997.
Item 25. Persons Controlled by or Under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
As of November 20, 1998, there were 236,881 holders of record of the
Money Market Fund, 27,928 holders of record of the Government Money Fund and
15,840 holders of record of Tax-Exempt Fund.
Item 27. Indemnification
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI Holding
Corp. ("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"), Scudder, Stevens &
Clark, Inc. ("Scudder") and the representatives of the beneficial owners of the
capital stock of Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich became the majority
stockholder in Scudder with an approximately 70% interest, and ZKI was combined
with Scudder ("Transaction"). In connection with the trustees' evaluation of the
Transaction, Zurich agreed to indemnify the Registrant and the trustees who were
not interested persons of ZKI or Scudder (the "Independent Trustees") for and
against any liability and expenses based upon any action or omission by the
Independent Trustees in connection with their consideration of and action with
respect to the Transaction. In addition, Scudder has agreed to indemnify the
Registrant and the Independent Trustees for and against any liability and
expenses based upon any misstatements or omissions by Scudder to the Independent
Trustees in connection with their consideration of the Transaction.
Item 28. Business or Other Connections of Investment Adviser
Scudder Kemper Investments, Inc. has stockholders and employees who are
denominated officers but do not as such have corporation-wide responsibilities.
Such persons are not considered officers for the purpose of this Item 28.
Part C - Page 2
<PAGE>
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------
<S> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
William H. Bolinder Director, Scudder Kemper Investments, Inc.**
Member Group Executive Board, Zurich Financial Services, Inc. ##
Chairman, Zurich-American Insurance Company o
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland ##
Director, ZKI Holding Corporation xx
Gunther Gose Director, Scudder Kemper Investments, Inc.**
CFO, Member Group Executive Board, Zurich Financial Services, Inc. ##
CEO/Branch Offices, Zurich Life Insurance Company ##
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Chairman of the Board, Zurich Holding Company of America o
Director, ZKI Holding Corporation xx
Kathryn L. Quirk Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services, Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc.***
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Part C - Page 3
<PAGE>
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President and Secretary, Scudder Brokerage Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Cornelia M. Small Director and Vice President, Scudder Kemper Investments, Inc.**
Edmond D. Villani Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President and Director, Scudder, Stevens & Clark Overseas Corporation oo
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
xx 222 S. Riverside, Chicago, IL
o Zurich Towers, 1400 American Ln., Schaumburg, IL
+ P.O. Box 309, Upland House, S. Church St., Grand Cayman, British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
</TABLE>
Item 29. Principal Underwriters
(a) Kemper Distributors, Inc. acts as principal underwriter of the
Registrant's shares and acts as principal underwriter of the Kemper Funds.
(b) Information on the officers and directors of Kemper Distributors,
Inc., principal underwriter for the Registrant is set forth below. The principal
business address is 222 South Riverside Plaza, Chicago, Illinois 60606.
<TABLE>
<CAPTION>
(1) (2) (3)
Position and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
<S> <C> <C> <C>
James L. Greenawalt President None
Thomas W. Littauer Director, Chief Executive Officer Vice President
Kathryn L. Quirk Director, Secretary, Chief Legal Vice President
Officer & Vice President
James J. McGovern Chief Financial Officer & Vice None
President
Linda J. Wondrack Vice President & Chief Compliance None
Officer
Part C - Page 4
<PAGE>
Position and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
Paula Gaccione Vice President None
Michael E. Harrington Vice President None
Robert A. Rudell Vice President None
William M. Thomas Vice President None
Elizabeth C. Werth Vice President Assistant Secretary
Todd N. Gierke Assistant Treasurer None
Philip J. Collora Assistant Secretary Vice President and
Secretary
Paul J. Elmlinger Assistant Secretary None
Diane E. Ratekin Assistant Secretary None
Daniel Pierce Director, Chairman Trustee
Mark S. Casady Director, Vice Chairman President
Stephen R. Beckwith Director None
</TABLE>
(c) Not applicable
Item 30. Location of Accounts and Records
Accounts, books and other documents are maintained at the offices of
the Registrant, the offices of Registrant's investment adviser, Scudder Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, at the
offices of the Registrant's principal underwriter, Kemper Distributors, Inc.,
222 South Riverside Plaza, Chicago, Illinois 60606 or, in the case of records
concerning custodial functions, at the offices of the custodian, Investors
Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri
64105 or, in the case of records concerning transfer agency functions, at the
offices of IFTC and of the shareholder service agent, Kemper Service Company,
811 Main Street, Kansas City, Missouri 64105.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
Part C - Page 5
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago and State of Illinois, on the 24th day
of November, 1998.
Zurich Money Funds
By /s/Mark S. Casady
-----------------
Mark S. Casady, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on November 24, 1998 on behalf of
the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Daniel Pierce November 24, 1998
- --------------------------------------
Daniel Pierce* Chairman and Trustee
/s/David W. Belin November 24, 1998
- --------------------------------------
David W. Belin* Trustee
/s/Lewis A. Burnham November 24, 1998
- --------------------------------------
Lewis A. Burnham* Trustee
/s/Donald L. Dunaway November 24, 1998
- --------------------------------------
Donald L. Dunaway* Trustee
/s/Robert B. Hoffman November 24, 1998
- --------------------------------------
Robert B. Hoffman* Trustee
/s/Donald R. Jones November 24, 1998
- --------------------------------------
Donald R. Jones* Trustee
/s/Shirley D. Peterson November 24, 1998
- --------------------------------------
Shirley D. Peterson* Trustee
/s/William P. Sommers November 24, 1998
- --------------------------------------
William P. Sommers* Trustee
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
/s/Edmond D. Villani November 24, 1998
- --------------------------------------
Edmond D. Villani* Trustee
/s/John R. Hebble November 24, 1998
- --------------------------------------
John R. Hebble Treasurer (Principal Financial and
Accounting Officer)
</TABLE>
*By: /s/Philip J. Collora
--------------------
Philip J. Collora**
** Philip J. Collora signs this document
pursuant to powers of attorney contained in
Post-Effective Amendment No. 44 to the
Registration Statement filed with the
Securities and Exchange Commission on
September 30, 1998.
2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits
<S> <C> <C>
99.B1(a) Amended and Restated Declaration of Trust (1)
99.B1(b) Written Instrument Amending the Agreement and Declaration of Trust.(1)
99.B1(c) Written Instrument Amending the Agreement and Declaration of Trust.(1)
99.B1(d) Written Instrument Amending the Agreement and Declaration of Trust (3)
99.B1(e) Written Instrument Amending the Agreement and Declaration of Trust (4)
99.B1(f) Amended and Restated Declaration of Trust. Submitted herewith.
99.B2 By-Laws.(1)
99.B3 Inapplicable.
99.B4(a) Text of Share Certificate.(1)
99.B4(b) Written Instrument Changing Name of Series of the Trust (3)
99.B4(c) Written Instrument Changing Name of Series of the Trust (4)
99.B5(a) Investment Management Agreement for Zurich Money Market Fund, Zurich Government Money
Fund and Zurich Tax-Free Money Fund. Submitted herewith.
99.B6 Selling Group Agreement. (1)
99.B6(a) Underwriting Agreement. Submitted herewith.
99.B7 Inapplicable.
99.B8(a) Custody Agreement.(1)
99.B9(a) Agency Agreement.(1)
99.B9(b) Supplement to Agency Agreement (3)
99.B9(c) Fund Accounting Services Agreement for Money Market Fund. Submitted herewith.
99.B9(d) Fund Accounting Services Agreement for Government Money Fund. Submitted herewith.
99.B9(e) Fund Accounting Services Agreement for Tax-Free Money Fund. Submitted herewith.
99.B10 Inapplicable.
99.B11 Report and Consent of Independent Auditors. Submitted herewith.
99.B12 Inapplicable.
99.B13 Inapplicable.
99.B14(a) Kemper Retirement Plan Prototype. (1)
99.B14(b) Model Individual Retirement Account. (1)
99.B15 Inapplicable.
99.B16 Performance Calculations. (2)
99.B18 Inapplicable.
99.B24 Inapplicable.
27.1 Financial Data Schedule for Money Market Fund. Submitted herewith.
27.2 Financial Data Schedule for Government Money Fund. Submitted herewith.
27.3 Financial Data Schedule for Tax-Free Money Fund. Submitted herewith
</TABLE>
(1) Incorporated herein by reference to Amendment No. 41 on Form N-1A filed
on November 16, 1995.
(2) Incorporated herein by reference to Amendment No. 40 on Form N-1A filed
on or about October 31, 1994.
(3) Incorporated herein by reference to Amendment No. 42 on Form N-1A filed
on or about November 6, 1996.
(4) Incorporated herein by reference to Amendment No. 43 on Form N-1A filed
on or about November 14, 1997.
ZURICH MONEY FUNDS
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
WHEREAS, Article IX, Section 4 of the Agreement and Declaration of Trust of
Zurich Money Funds dated August 9, 1985, as amended, provides that the Agreement
and Declaration of Trust may be amended at any time by an instrument in writing
signed by a majority of the then Trustees when authorized so to do by vote of
Shareholders holding a majority of the Shares entitled to vote; and
WHEREAS, the holders of a majority of the Shares entitled to vote have
authorized this Amendment and Restatement of said Agreement and Declaration of
Trust;
NOW, THEREFORE, said Agreement and Declaration of Trust is amended and
restated to read in its entirety as follows:
WITNESSETH
WHEREAS, the Trustees hereunder are desirous of forming a trust for the
purposes of carrying on the business of a management investment company; and
WHEREAS, in furtherance of such purposes, the Trustees are acquiring and
may hereafter acquire assets and properties, to hold and manage as trustees of a
Massachusetts voluntary association with transferable shares in accordance with
the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets and properties which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of
the same upon the following terms and conditions for the pro rata benefit of the
holders from time to time of shares in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Name and Registered Agent
Section 1. This Trust shall be known as Zurich Money Funds and the Trustees
shall conduct the business of the Trust under that name or any other name as
they may from time to time determine. The registered agent for the Trust in
Massachusetts shall be CT Corporation System whose address is 2 Oliver Street,
Boston, Massachusetts or such other person as the Trustees may from time to time
designate.
<PAGE>
Definitions
Section 2. Whenever used herein, unless otherwise required by the context
or specifically provided:
a) The "Trust" refers to the Massachusetts voluntary association
established by this Agreement and Declaration of Trust, as amended from time to
time, pursuant to Massachusetts General Laws, Chapter 182;
(b) "Trustees" refers to the Trustees of the Trust named herein or elected
in accordance with Article IV and then in office;
(c) "Shares" mean the equal proportionate transferable units of interest
into which the beneficial interest in the Trust shall be divided from time to
time or, if more than one series or class of shares is authorized under or
pursuant to Article III, the equal proportionate transferable units of interest
into which each such series or class shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 (and any
successor statute) and the Rules and Regulations thereunder, all as amended from
time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Principal Underwriter" and "vote of a majority of the outstanding
voting securities" shall have the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time;
(i) "Net asset value" shall have the meaning set forth in Section 6 of
Article VI hereof;
(j) The terms "series" or "series of Shares" refers to the one or more
separate investment portfolios of the Trust authorized under or pursuant to
Article III into which the assets and liabilities of the Trust may be divided
and the Shares of the Trust representing the beneficial interest of Shareholders
in such respective portfolios; and
(k) The terms "class" or "class of Shares" refers to the division of Shares
representing any series into two or more classes authorized under or pursuant to
Article III.
ARTICLE II
Nature and Purpose
The Trust is a voluntary association (commonly known as a business trust)
of the type referred to in Chapter 182 of the General Laws of the Commonwealth
of Massachusetts. The Trust is not intended to be, shall not be deemed to be,
and shall not be treated as, a general or a
2
<PAGE>
limited partnership, joint venture, corporation or joint stock company, nor
shall the Trustees or Shareholders or any of them for any purpose be deemed to
be, or be treated in any way whatsoever as though they were, liable or
responsible hereunder as partners or joint venturers. The purpose of the Trust
is to engage in, operate and carry on the business of an open-end management
investment company and to do any and all acts or things as are necessary,
convenient, appropriate, incidental or customary in connection therewith.
ARTICLE III
Shares
Division of Beneficial Interest
Section 1. The Shares of the Trust shall be issued in one or more series as
the Trustees may, without Shareholder approval, authorize from time to time.
Each series shall be preferred over all other series in respect of the assets
allocated to that series as hereinafter provided. The beneficial interest in
each series shall at all times be divided into Shares (without par value) of
such series, each of which shall, except as provided in the following sentence,
represent an equal proportionate interest in such series with each other Share
of the same series, none having priority or preference over another Share of the
same series. The Trustees may, without Shareholder approval, divide the Shares
of any series into two or more classes, Shares of each such class having such
preferences and special or relative rights or privileges (including conversion
rights, if any) as the Trustees may determine. The number of Shares authorized
shall be unlimited, and the Shares so authorized may be represented in part by
fractional Shares. The Trustees may from time to time divide or combine the
shares of any series or class into a greater or lesser number without thereby
changing the proportionate beneficial interests in the series or class. Without
limiting the authority of the Trustees set forth in this Section 1 to establish
and designate any further series or class, the Trustees hereby establish and
designate three series of Shares to be known as the "Zurich Money Market Fund,"
"Zurich Government Money Fund" and "Zurich Tax-Free Money Fund." The
establishment and designation of any series or class of Shares in addition to
the foregoing shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation and
the relative rights and preferences of such series or class. As provided in
Article IX, Section 1 hereof, any series or class of Shares (whether or not
there shall then be Shares outstanding of said series or class) may be
terminated by the Trustees by written notice to the Shareholders of such series
or class or by the vote of the Shareholders of such series or class entitled to
vote more than fifty percent (50%) of the votes entitled to be cast on the
matter. In the event of any such termination, a majority of the then Trustees
shall execute an instrument setting forth the termination of such series or
class.
Ownership of Shares
Section 2. The ownership and transfer of Shares shall be recorded on the
books of the Trust or its transfer or similar agent. No certificates certifying
the ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent of the Trust, as the case may be, shall be conclusive
as to who are the Shareholders
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of each series or class and as to the number of Shares of each series or class
held from time to time by each Shareholder.
Investment in the Trust; Assets of a Series
Section 3. The Trustees may issue Shares of the Trust to such persons and
on such terms and, subject to any requirements of law, for such consideration,
which may consist of cash or tangible or intangible property or a combination
thereof, as they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of
a particular series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall, irrevocably belong to such
series of Shares for all purposes, subject only to the rights of creditors, and
shall be so handled upon the books of account of the Trust and are herein
referred to as "assets of" such series. Any allocation of the assets of a series
among any classes of Shares of such series shall be made in a manner consistent
with the preferences and special or relative rights or privileges of such
classes.
Right to Refuse Orders
Section 4. The Trust by action of its Trustees shall have the right to
refuse to accept any subscription for its Shares at any time without any cause
or reason therefore whatsoever. Without limiting the foregoing, the Trust shall
have the right not to accept subscriptions under circumstances or in amounts as
the Trustees in their sole discretion consider to be disadvantageous to existing
Shareholders and the Trust may from time to time set minimum and/or maximum
amounts which may be invested in Shares by a subscriber.
Order in Proper Form
Section 5. The criteria for determining what constitutes an order in proper
form and the time of receipt of such an order by the Trust shall be prescribed
by resolution of the Trustees.
When Shares Become Outstanding
Section 6. Shares subscribed for and for which an order in proper form has
been received shall be deemed to be outstanding as of the time of acceptance of
the order therefor and the determination of the net price thereof, which price
shall be then deemed to be an asset of the Trust.
Merger or Consolidation
Section 7. In connection with the acquisition of all or substantially all
the assets or stock of another investment company, investment trust, or of a
company classified as a personal holding company under Federal Income Tax laws,
the Trustees may issue or cause to be issued Shares of a series or class and
accept in payment therefor, in lieu of cash, such assets at their
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market value, or such stock at the market value of the assets held by such
investment company or investment trust, either with or without adjustment for
contingent costs or liabilities.
No Preemptive Rights, Etc.
Section 8. Shareholders shall have no preemptive or other right to receive,
purchase or subscribe for any additional Shares or other securities issued by
the Trust. The Shareholders shall have no appraisal rights with respect to their
Shares and, except as otherwise determined by the Trustees in their sole
discretion, shall have no exchange or conversion rights with respect to their
Shares.
Status of Shares and Limitation of Personal Liability
Section 9. Shares shall be deemed to be personal property giving only the
rights provided in this instrument. Every Shareholder by virtue of having become
a Shareholder shall be held to have expressly assented and agreed to the terms
of the Declaration of Trust and to have become a party thereto. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the same nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the Trust or the
Trustees, but only to the rights of said decedent under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, nor except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
Shareholder Inspection Rights
Section 10. Any Shareholder or his agent may inspect and copy during normal
business hours any of the following documents of the Trust: By-Laws, minutes of
the proceedings of the Shareholders and annual financial statements of the
Trust, including a balance sheet and financial statements of operations. The
foregoing rights of inspection of Shareholders of the Trust are the exclusive
and sole rights of the Shareholders with respect thereto and no Shareholder of
the Trust shall have, as a Shareholder, the right to inspect or copy any of the
books, records or other documents of the Trust except as specifically provided
in this Section 10 of this Article III or except as otherwise determined by the
Trustees.
ARTICLE IV
The Trustees
Number, Designation, Election, Term, Etc.
Section 1.
(a) Initial Trustee. Charles M. Kierscht, the initial Trustee, appointed
other Trustees pursuant to subsection (c) of this Section 1 and then resigned.
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(b) Number. The Trustees serving as such, whether named above or hereafter
becoming Trustees, may increase or decrease the number of Trustees to a number
other than the number theretofore determined which number shall not be less than
three nor more than fifteen except during the period prior to any sale of Shares
pursuant to any public offering. No decrease in the number of Trustees shall
have the effect of removing any Trustee from office prior to the expiration of
his term, but the number of Trustees may be decreased in conjunction with the
removal of a Trustee pursuant to subsection (e) of this Section 1.
(c) Term and Election. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee until the next meeting of
Shareholders, if any, called for the purpose of considering the election or
re-election of such Trustee or of a successor to such Trustee, and until the
election and qualification of his successor, if any, elected at such meeting, or
until such Trustee sooner dies, resigns, retires or is removed. Upon the
election and qualification of a new Trustee, the Trust estate shall vest in the
new Trustee (together with the continuing or other new Trustees) without any
further act or conveyance. Prior to any sale of Shares pursuant to any public
offering, the initial Trustee named above (and any individual appointed by such
initial Trustee to act as sole Trustee) shall have the right to appoint other
persons as Trustees each to serve as Trustees as aforesaid until the first
meeting of Shareholders called for the purpose of the election or re-election of
such Trustee or of a successor to such Trustee.
(d) Resignation and Retirement. Any Trustee may resign his trust or retire
as a Trustee, by written instrument signed by him and delivered to the other
Trustees or to the Chairman of the Board, if any, the President or the Secretary
of the Trust, and such resignation or retirement shall take effect upon such
delivery or upon such later date as is specified in such instrument.
(e) Removal. Any Trustee may be removed for cause at any time by written
instrument, signed by at least a majority of the number of Trustees prior to
such removal, specifying the date upon which such removal shall become
effective. Any Trustee may be removed with or without cause (i) by the vote of
the Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter voting together without regard to series or
class at any meeting called for such purpose, or (ii) by a written consent filed
with the custodian of the Trust's portfolio securities and executed by the
Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter voting together without regard to series or
class.
Whenever ten or more Shareholders of record who have been such for at least
six months preceding the date of application, and who hold in the aggregate
Shares constituting at least one percent of the outstanding Shares of the Trust,
shall apply to the Trustees in writing, stating that they wish to communicate
with other Shareholders with a view to obtaining signatures to a request for a
meeting to consider removal of a Trustee and accompanied by a form of
communication and request that they wish to transmit, the Trustees shall within
five business days after receipt of such application inform such applicants as
to the approximate cost of mailing to the Shareholders of record the proposed
communication and form of request. Upon the written request of such applicants,
accompanied by a tender of the material to be mailed and of the reasonable
expenses of mailing, the Trustees shall, within reasonable promptness, mail such
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material to all Shareholders of record at their addresses as recorded on the
books of the Trust. Notwithstanding the foregoing, the Trustees may refuse to
mail such material on the basis and in accordance with the procedures set forth
in the last two paragraphs of Section 16(c) of the 1940 Act.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but so long as there are at least
three remaining Trustees at all times subsequent to any sale of Shares pursuant
to any public offering, need not unless required by the 1940 Act) be filled
either by a majority of the remaining Trustees, even if less than a quorum,
through the appointment in writing of such other person as such remaining
Trustees in their discretion shall determine or, whenever deemed appropriate by
the remaining Trustees, by the election by the Shareholders, at a meeting called
for such purpose, of a person to fill such vacancy. Upon the appointment or
election and qualification of a new Trustee as aforesaid, the Trust estate shall
vest in the new Trustee, together with the continuing Trustees, without any
further act or conveyance, except that any such appointment or election in
anticipation of a vacancy to occur by reason of retirement, resignation, or
increase in number of Trustees to be effective at a later date shall become
effective only at or after the effective date of said retirement, resignation,
or increase in number of Trustees.
(g) Mandatory Election by Shareholders. Notwithstanding the foregoing
provisions of this Section 1, the Trustees shall call a meeting of the
Shareholders for the election of one or more Trustees at such time or times as
may be required in order that the provisions of the 1940 Act may be complied
with, and the authority hereinabove provided for the Trustees to appoint any
successor Trustee or Trustees shall be restricted if such appointment would
result in failure of the Trust to comply with any provision of the 1940 Act.
(h) Effect of Death, Resignation, Etc. The death, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall not operate to
annul or terminate the Trust or to revoke or terminate any existing agency or
contract created or entered into pursuant to the terms of this Declaration of
Trust.
(i) No Accounting. Except under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as a result of his death,
resignation, retirement, removal or incapacity (nor the estate of any such
person) shall be required to make an accounting to the Shareholders or remaining
Trustees upon such cessation.
Powers
Section 2. The Trustees, subject only to the specific limitations contained
in this Declaration of Trust or otherwise imposed by the 1940 Act or other
applicable law, shall have, without further or other authorization and free from
any power or control of the Shareholders, full, absolute and exclusive power,
control and authority over the Trust assets and the business and affairs of the
Trust to the same extent as if the Trustees were the sole and absolute owners
thereof in their own right and to do all such acts and things as in their sole
judgment and discretion are necessary and incidental to, or desirable for the
carrying out of any of the purposes of the Trust or conducting the business of
the Trust. Any determination made in good faith by the Trustees of the purposes
of the Trust or the existence of any power or authority hereunder shall
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be conclusive. In construing the provisions of this Declaration of Trust, there
shall be a presumption in favor of the grant of power and authority to the
Trustees. Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust containing provisions relating to
the business of the Trust, the conduct of its affairs, its rights or powers and
the rights or powers of its Shareholders, Trustees, officers, employees and
other agents and may amend and repeal them to the extent that such By-Laws do
not reserve that right to the Shareholders; fill vacancies in their number,
including vacancies resulting from increases in their number, unless a vote of
the Trust's Shareholders is required to fill such vacancies pursuant to the 1940
Act; elect and remove such officers and appoint and terminate such agents as
they consider appropriate; appoint from their own number, and terminate, any one
or more committees consisting of two or more Trustees, including an executive
committee which may, when the Trustees are not in session, exercise some or all
of the powers and authority of the Trustees as the Trustees may determine;
appoint an advisory board, the members of which shall not be Trustees and need
not be Shareholders; employ one or more investment advisers or managers as
provided in Section 6 of this Article IV; employ one or more custodians of the
assets of the Trust and authorize such custodians to employ subcustodians and to
deposit all or any part of such assets in a system or systems for the central
handling of securities; retain a transfer agent or a Shareholder services agent,
or both; provide for the distribution of Shares by the Trust, through one or
more principal underwriters or otherwise; set record dates for the determination
of Shareholders with respect to various matters; and in general delegate such
authority as they consider desirable to any officer of the Trust, to any
committee of the Trustees and to any agent or employee of the Trust or to any
such custodian or underwriter.
In furtherance of and not in limitation of the foregoing, the Trustees
shall have power and authority:
(a) To invest and reinvest in, to buy or otherwise acquire, to hold, for
investment or otherwise, to sell or otherwise dispose of, to lend or to pledge,
to trade in or deal in securities or interests of all kinds, however evidenced,
or obligations of all kinds, however evidenced, or rights, warrants, or
contracts to acquire such securities, interests, or obligations, of any private
or public company, corporation, association, general or limited partnership,
trust or other enterprise or organization, foreign or domestic, or issued or
guaranteed by any national or state government, foreign or domestic, or their
agencies, instrumentalities or subdivisions (including but not limited to,
bonds, debentures, bills, time notes and all other evidences of indebtedness);
negotiable or non-negotiable instruments; any and all futures contracts;
government securities and money market instruments (including but not limited
to, bank certificates of deposit, finance paper, commercial paper, bankers
acceptances, and all kinds of repurchase agreements);
(b) To invest and reinvest in, to buy or otherwise acquire, to hold, for
investment or otherwise, to sell or otherwise dispose of foreign currencies, and
funds and exchanges, and make deposits in banks, savings banks, trust companies,
and savings and loan associations, foreign or domestic;
(c) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop, and dispose of (by sale or otherwise) any property, real or
personal, and any interest therein;
(d) To sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
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(e) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(f) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(g) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or in the name of a custodian, subcustodian or other
depositary or a nominee or nominees or otherwise;
(h) Subject to the provisions of Article III, to allocate assets,
liabilities, income and expenses of the Trust to a particular series of Shares
or to apportion the same among two or more series, provided that any liabilities
or expenses incurred by a particular series shall be payable solely out of the
assets of that series; and to the extent necessary or appropriate to give effect
to the preferences and special or relative rights or privileges of any classes
of Shares, to allocate assets, liabilities, income and expenses of a series to a
particular class of Shares of that series or to apportion the same among two or
more classes of Shares of that series;
(i) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or property
of which is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer, and to pay
calls or subscriptions with respect to any security held in the Trust;
(j) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(k) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to
claims for taxes;
(l) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(m) To borrow funds;
(n) To endorse or guarantee the payment of any notes or other obligations
of any person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property or
any part thereof to secure any of or all such obligations;
(o) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business,
including, without limitation,
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insurance policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, investment advisers or
managers, principal underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or manager,
principal underwriter, or independent contractor, including any action taken or
omitted that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such person against such liability; and
(p) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees of common law trusts.
Except as otherwise provided herein or from time to time in the By-Laws, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (if a quorum by present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can communicate with each other simultaneously and participation by
such means shall constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office.
Payment of Expenses, Allocation of Liabilities
Section 3. The Trustees are authorized to pay or to cause to be paid out of
the principal or income of the Trust, or partly out of principal and partly out
of income, as they deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, investment adviser or manager, principal underwriter, auditor,
counsel, custodian, transfer agent, shareholder servicing agent, and such other
agents or independent contractors and such other expenses and charges as the
Trustees may deem necessary or proper to incur.
The assets of a particular series of Shares shall be charged with the
liabilities (including, in the discretion of the Trustees or their delegate,
accrued expenses and reserves) incurred in respect of such series (but not with
liabilities incurred in respect of any other series) and such series shall also
be charged with its share of any other liabilities. Any allocation of the
liabilities of a series among classes of Shares of that series shall be done in
a manner consistent with the preferences and special or relative rights or
privileges of such classes. The determination of the Trustees shall be final and
conclusive as to the amount of liabilities to be charged to one or more
particular series or class. The Trustees may delegate from time to time the
power to make such allocation to one or more Trustees or to an agent of the
Trust appointed for such purpose. The liabilities with which a series is so
charged are herein referred to as the "liabilities of" such series.
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Section 4. The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder to pay directly, in advance or arrears, for
charges for the Trust's custodian or transfer or shareholder service or similar
agent, an amount fixed from time to time by the Trustees, by setting off such
charges due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such charges due from such Shareholder.
Ownership of Assets of the Trust
Section 5. Title to all of the assets of each series of the Trust and of
the Trust shall at all times be considered as vested in the Trustees.
Advisory, Management and Distribution
Section 6. Subject to a favorable vote of a majority of the outstanding
voting securities of a series of the Trust, the Trustees may on behalf of such
series, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services for such series with a
corporation, trust, association or other organization, every such contract to
comply with such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms interpretive of or
in addition to said requirements and restrictions as the Trustees may determine,
including, without limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what portion, if
any, of the assets of such series shall be held uninvested and to make changes
in such series' investments. The Trustees may also, at any time and from time to
time, contract with a corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or principal underwriter for
the Shares, every such contract to comply with such requirements and
restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
The fact that:
(a) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, advisor,
principal underwriter, or distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent or affiliate of any
organization, with which an advisory or management or principal underwriter's or
distributor's contract, or transfer, shareholder services or other agency
contract may have been or may hereafter be made, or that any such organization,
or any parent or affiliate thereof, is a Shareholder or has an interest in the
Trust, or that
(b) any corporation, trust, association or other organization with which an
advisory or management or principal underwriter's or distributor's contract, or
transfer, shareholder services or other agency contract may have been or may
hereafter be made also has an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, shareholder services or
other agency contract with one or more other corporations, trusts, associations,
or other organizations, or has other businesses or interests shall not affect
the validity of any such
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contract or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders.
ARTICLE V
Shareholders, Voting Powers and Meetings
Voting Powers
Section 1. Subject to the voting provisions of one or more classes of
Shares, the Shareholders shall have power to vote only: (a) for the election or
removal of Trustees as provided in Article IV, Section 1; (b) with respect to
any investment adviser or manager as provided in Article IV, Section 6; (c) with
respect to any termination or reorganization of the Trust or any series or class
thereof to the extent and as provided in Article IX, Section 1; (d) with respect
to any amendment of this Declaration of Trust to the extent and as provided in
Article IX, Section 4; and (e) with respect to such additional matters relating
to the Trust as may be required by law, the 1940 Act, this Declaration of Trust,
the By-Laws or any registration of the Trust with the Securities and Exchange
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which it
is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. Notwithstanding any other provision of the
Declaration of Trust, on any matter submitted to a vote of Shareholders all
Shares of the Trust then entitled to vote shall, except to the extent otherwise
required or permitted by the preferences and special or relative rights or
privileges of any classes of Shares, be voted by individual series and not in
the aggregate or by class, except (a) when required by the 1940 Act, Shares
shall be voted in the aggregate and not by individual series; and (b) when the
Trustees have determined that the matter affects only the interests of one or
more series or classes, then only Shareholders of such series or class shall be
entitled to vote thereon. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the exercise
of the proxy the Trust receives a specific written notice to the contrary from
any one of them. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger.
Until Shares of any series or class are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by Shareholders of such series
or class.
Shareholder Meetings
Section 2. Meetings of Shareholders (including meetings involving only one
or more but less than all series or classes) may be called and held from time to
time for the purpose of taking action upon any matter requiring the vote or
authority of the Shareholders as herein provided or upon any other matter deemed
by the Trustees to be necessary or desirable. Such
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meetings shall be held at the principal office of the Trust as set forth in the
By-Laws of the Trust or at any such other place within the United States as may
be designated in the call thereof, which call shall be made by the Trustees or
the President of the Trust. Meetings of Shareholders may be called by the
Trustees or such other person or persons as may be specified in the By-Laws upon
written application by Shareholders holding at least twenty-five percent (25%)
(or ten percent (10%) if the purpose of the meeting is to determine if a Trustee
is to be removed from office) of the Shares then outstanding of all series and
classes entitled to vote at such meeting requesting a meeting be called for a
purpose requiring action by the Shareholders as provided herein or in the
By-Laws which purpose shall be specified in any such written application.
Shareholders shall be entitled to at least seven days' written notice of
any meeting of the Shareholders.
Quorum and Required Vote
Section 3. The presence at a meeting of Shareholders in person or by proxy
of Shareholders entitled to vote at least thirty percent (30%) of all votes
entitled to be cast at the meeting of each series or class entitled to vote as a
series or class shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that the holders of Shares shall vote
in the aggregate and not as a series or class, then the presence in person or by
proxy of Shareholders entitled to vote at least thirty percent (30%) of all
votes entitled to be cast at the meeting (without regard to series or class)
shall constitute a quorum. Any lesser number, however, shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a reasonable
time after the date set for the original meeting without the necessity of
further notice.
Except when a larger vote is required by any provisions of the 1940 Act,
this Declaration of Trust or the By-Laws, a majority of the Shares of each
series or class voted on the matter shall decide that matter insofar as that
series or class is concerned, provided that where any provision of law, this
Declaration of Trust or the By-Laws permits or requires that the holders of
Shares vote in the aggregate and not as a series or class, then a majority of
the Shares voted on any matter (without regard to series or class) shall decide
such matter and a plurality shall elect a Trustee.
Action by Written Consent
Section 4. Any action taken by Shareholders may be taken without a meeting
if Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter of each series or class or, where any
provision of law, this Declaration of Trust or the By-Laws permits or requires
that the holders of Shares vote in the aggregate and not as a series or class,
if Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast thereon (without regard to series or class) (or in either
case such larger vote as shall be required by any provision of this Declaration
of Trust or the By-Laws) consent to the action in writing and such written
consents are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
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Additional Provisions
Section 5. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters not inconsistent with the provisions
hereof.
ARTICLE VI
Distributions, Redemptions and Repurchases,
and Determination of Net Asset Value
Distributions
Section 1. The Trustees may in their sole discretion from time to time
distribute to the Shareholders of any series such income and gains, accrued or
realized, as the Trustees may determine, after providing for actual and accrued
expenses and liabilities of such series (including such reserves as the Trustees
may establish) determined in accordance with this Declaration of Trust and good
accounting practices. The Trustees shall have full discretion to determine which
items shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Distributions to any
series, if any be made, shall be in Shares of such series, in cash or otherwise
and on a date or dates determined by the Trustees. At any time and from time to
time in their discretion, the Trustees may distribute to the Shareholders of any
series as of a record date or dates determined by the Trustees, in Shares of
such series, in cash or otherwise, all or part of any gains realized on the sale
or disposition of property of the series or otherwise, or all or part of any
other principal of the Trust attributable to the series. Except to the extent
otherwise required or permitted by the preferences and special or relative
rights or privileges of any classes of Shares of that series, each distribution
pursuant to this Section 1 shall be made ratably according to the number of
Shares of the series held by the several Shareholders on the applicable record
date thereof, provided that distributions from assets of a series may only be
made to the holders of the Shares of such series and provided that no
distributions need be made on Shares purchased pursuant to orders received, or
for which payment is made, after such time or times as the Trustees may
determine. Any distribution to the Shareholders of a particular class of Shares
shall be made to such Shareholders pro rata in proportion to the number of
Shares of such class held by each of them. Any distribution paid in Shares will
be paid at the net asset value thereof as determined in accordance with this
Declaration of Trust. The Trustees have the power, in their discretion, to
distribute for any year amounts sufficient to enable the Trust to qualify as a
"regulated investment company" under the Internal Revenue Code as amended (or
any successor thereto) to avoid any liability for federal income tax in respect
of that year.
Redemptions and Repurchases
Section 2. Any holder of Shares of the Trust may, by presentation of a
request in proper form, together with his certificates, if any, for such Shares,
in proper form for transfer to the Trust or duly authorized agent of the Trust,
request redemption of his shares for the net asset value thereof determined and
computed in accordance with the provisions of this Section 2 and the provisions
of Section 6 of this Article VI.
Upon receipt by the Trust or its duly authorized agent, as the case may be,
of such a request for redemption of Shares in proper form, such Shares shall be
redeemed at the net asset
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<PAGE>
value per share of the particular series or class next determined after such
request is received or determined as of such other time fixed by the Trustees as
may be permitted or required by the 1940 Act. The criteria for determining what
constitutes a request for redemption in proper form and the time of receipt of
such request shall be fixed by the Trustees.
The obligation of the Trust to redeem its Shares as set forth above in this
Section 2 shall be subject to the condition that such obligation may be
suspended by the Trust by or under authority of the Trustees during any period
or periods when and to the extent permissible under the 1940 Act. If there is
such a suspension, any Shareholder may withdraw any request for redemption which
has been received by the Trust during any such period and the applicable net
asset value with respect to which would but for such suspension be calculated as
of a time during such period. Upon such withdrawal, the Trust shall return to
the Shareholder the certificates therefor, if any.
The Trust may also purchase, repurchase or redeem Shares in accordance with
such other methods, upon such other terms and subject to such other conditions
as the Trustee may from time to time authorize at a price not exceeding the net
asset value of such Shares in effect when the purchase or repurchase or any
contract to purchase or repurchase is made. Shares redeemed or repurchased by
the Trust hereunder shall be canceled upon such redemption or repurchase without
further action by the Trust or the Trustees and the number of issued and
outstanding Shares of the relevant series and class shall thereupon be reduced
by such amount.
Payment for Shares Redeemed
Section 3. Payment of the redemption price for Shares redeemed pursuant to
this Article VI shall be made by the Trust or its duly authorized agent after
receipt by the Trust or its duly authorized agent of a request for redemption in
proper form (together with any certificates for such Shares as provided in
Section 2 above) in accordance with procedures and subject to conditions
prescribed by the Trustees; provided, however, that payment may be postponed
during the period in which the redemption of Shares is suspended under Section 2
above. Subject to any generally applicable limitation imposed by the Trustees,
any payment on redemption, purchase or repurchase by the Trust of Shares may, if
authorized by the Trustees, be made wholly or partly in kind, instead of in
cash. Such payment in kind shall be made by distributing securities or other
property, constituting, in the opinion of the Trustees, a fair representation of
the various types of securities and other property then held by the series of
Shares being redeemed, purchased or repurchased (but not necessarily involving a
portion of each of the series' holdings) and taken at their value used in
determining the net asset value of the Shares in respect of which payment is
made.
Redemptions at the Option of the Trust
Section 4. The Trust shall have the right at its option and at any time and
from time to time to redeem Shares of any Shareholder at the net asset value
thereof as determined in accordance with Section 6 of this Article VI, if at
such time such Shareholder owns fewer shares of a series or class than, or
Shares of a series or class having an aggregate net asset value of less than, an
amount determined from time to time by the Trustees. Any such redemption at the
option of the Trust shall be made in accordance with such other criteria and
procedures for determining
15
<PAGE>
the Shares to be redeemed, the redemption date and the means of effecting such
redemption as the Trustees may from time to time authorize.
Additional Provisions Relating to Dividends, Redemptions and Repurchases
Section 5. The completion of redemption, purchase or repurchase of Shares
shall constitute a full discharge of the Trust and the Trustees with respect to
such Shares. No dividend or distribution (including, without limitation, any
distribution paid upon termination of the Trust or of any series or class) with
respect to, nor any redemption or repurchase of, the Shares of any series or
class shall be effected by the Trust other than from the assets of such series.
Determination of Net Asset Value
Section 6. The term "net asset value" of each Share of a series or class as
of any particular time shall be the quotient obtained by dividing the value, as
at such time, of the net assets of such series or class (i.e., the value of the
assets of such series or class less the liabilities of such series or class,
exclusive of liabilities represented by the Shares of such series or class) by
the total number of Shares of such series or class outstanding at such time, all
determined and computed in accordance with the Trust's current prospectus.
The Trustees, or any officer, or officers or agent of the Trust designated
for the purpose by the Trustees shall determine the net asset value of the
Shares of each series or class, and the Trustees shall fix the time or times as
of which the net asset value of the Shares of each series or class shall be
determined and shall fix the periods during which any such net asset value shall
be effective as to sales, redemptions and repurchases of, and other transactions
in, the Shares of such series or class, except as such times and periods for any
such transaction may be fixed by other provisions of this Declaration of Trust
or by the By-Laws.
Determinations in accordance with this Section 6 made in good faith shall
be binding on all parties concerned.
How Long Shares are Outstanding
Section 7. Shares of the Trust surrendered to the Trust for redemption by
it pursuant to the provisions of Section 2 of this Article VI shall be deemed to
be outstanding until the redemption price thereof is determined pursuant to this
Article VI and, thereupon and until paid, the redemption price thereof shall be
deemed to be a liability of the Trust. Shares of the Trust purchased by the
Trust in the open market shall be deemed to be outstanding until confirmation of
purchase thereof by the Trust and, thereupon and until paid, the purchase price
thereof shall be deemed to be a liability of the Trust. Shares of the Trust
redeemed by the Trust pursuant to Section 4 of this Article VI shall be deemed
to be outstanding until said Shares are deemed to be redeemed in accordance with
procedures adopted by the Trustees pursuant to said Section 4.
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<PAGE>
ARTICLE VII
Compensation and Limitation of Liability
of Trustees and Shareholders
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust if the rate thereof is prescribed by such Trustees.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust, it being recognized that such employment
may result in such Trustee being considered an Affiliated Person or an
Interested Person.
Limitation of Liability
Section 2. The Trustees shall not be responsible or liable in any event for
any neglect or wrongdoing of any officer, agent, employee, investment adviser or
manager, principal underwriter or custodian, nor shall any Trustee be
responsible for the act or omission of any other Trustee. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his capacity as Trustees or Trustee and neither such Trustees or
Trustee nor the Shareholders shall be personally liable thereon.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust by them as Trustees or Trustee or as officers or officer and
not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust or a particular series of Shares, and may
contain such further recital as he or they may deem appropriate, but the
omission thereof shall not operate to bind any Trustees or Trustee or officers
or officer or Shareholders or Shareholder individually.
All persons extending credit to, contracting with or having any claim
against the Trust or a particular series of Shares shall look only to the assets
of the Trust or the assets of that particular series of Shares, as the case may
be, for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
Trustees' Good Faith Action, Expert Advice, No Bond or Surety
Section 3. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
only for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct
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<PAGE>
of the office of Trustee, and for nothing else, and shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees hereunder, and shall be under
no liability for any act or omission in accordance with such advice or for
failing to follow such advice. In discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of the
Trust and upon written reports made to the Trustees by any officer appointed by
them, any independent public accountant and (with respect to the subject matter
of the contract involved) any officer, partner or responsible employee of any
other party to any contract entered into pursuant to Section 2 of Article IV.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is required.
Liability of Third Persons Dealing with Trustees
Section 4. No person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
ARTICLE VIII
Indemnification
Subject to the exceptions and limitations contained in this Article, every
person who is, or has been, a Trustee or officer of the Trust (including persons
who serve at the request of the Trust as directors, officers or trustees of
another organization in which the Trust has an interest as a shareholder,
creditor or otherwise) hereinafter referred to as a "Covered Person", shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been such a
Trustee, director or officer and against amounts paid or incurred by him in
settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding was
brought that he engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a payment by
a Covered Person, unless there has been either a determination that such Covered
Person did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or a
reasonable
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<PAGE>
determination, based on a review of readily available facts (as opposed to a
full trial-type inquiry) that he did not engage in such conduct:
(1) by a vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be such a Covered Person and shall
inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Covered Persons may be entitled by contract or
otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Article
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he is not entitled to indemnification under this
Article provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any such
advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the matter)
or independent legal counsel in a written opinion shall determine, based upon a
review of the readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the recipient ultimately will be found
entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one (a) who is not an
"interested person" of the Trust, as defined in the 1940 Act (including anyone
who has been exempted from being an "interested person" by any rule, regulation
or order of the Commission), and (b) against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending.
As used in this Article, the words "claim", "action", "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include without limitation, attorneys' fees,
cost, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled to be
held harmless from and indemnified against all loss and expense arising from
such liability but only out of the assets of the particular series of Shares of
which he or she is or was a Shareholder; provided, however, there
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<PAGE>
shall be no liability or obligation of the Trust arising hereunder to reimburse
any Shareholder for taxes paid by reason of such Shareholder's ownership of
Shares or for losses suffered by reason of any changes in value of any Trust
assets.
ARTICLE IX
Miscellaneous
Duration, Termination and Reorganization of Trust
Section 1. Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by the
Trustees by written notice to the Shareholders without a vote of the
Shareholders of the Trust or by the vote of the Shareholders entitled to vote
more than fifty percent (50%) of the votes of each series or class entitled to
be cast on the matter. Any series or class of Shares may be terminated at any
time by the Trustees by written notice to the Shareholders of such series or
class without a vote of the Shareholders of such series or class or by the vote
of the Shareholders of such series or class entitled to vote more than fifty
percent (50%) of the votes entitled to be cast on the matter.
Upon termination of the Trust or of any one or more series or classes of
Shares, after paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated, of the particular series or
class as may be determined by the Trustees, the Trust shall in accordance with
such procedures as the Trustees consider appropriate reduce to the extent
necessary the remaining assets of the particular series to distributable form in
cash or other securities, or any combination thereof, and distribute the
proceeds to the Shareholders of the series or class involved, ratably according
to the number of Shares of such series or class held by the several Shareholders
of such series or class on the date of termination. Any such distributions with
respect to any series which has one or more classes of Shares outstanding shall
be made ratably to such classes in the same proportion as the number of Shares
of each class bears to the total number of Shares of the series, except to the
extent otherwise required or permitted by the preferences and special or
relative rights or privileges of any classes of Shares of any such series.
At any time by the affirmative vote of the Shareholders of the affected
series entitled to vote more than fifty percent (50%) of the votes entitled to
be cast on the matter, the Trustees may sell, convey and transfer the assets of
the Trust, or the assets belonging to any one or more series, to another trust,
partnership, association or corporation organized under the laws of any state of
the United States, or to the Trust to be held as assets belonging to another
series of the Trust, in exchange for cash, shares or other securities
(including, in the case of a transfer to another series of the Trust, Shares of
such other series) with such transfer being made subject to or with the
assumption by the transferee of, the liabilities belonging to each series the
assets of which are so distributed. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among the various
series the assets belonging to which have so been transferred) among the
Shareholders of the series the assets belonging to which have been so
transferred; and if all the assets of the Trust have been so distributed, the
Trust shall be terminated.
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Filing of Copies, References, Headings
Section 2. The original or a copy of this instrument and of each amendment
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each amendment hereto shall be
filed by the Trust with the Secretary of State of The Commonwealth of
Massachusetts and with the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by any officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection with
the Trust hereunder; and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof", and "hereunder", shall be deemed to refer to this instrument as
amended from time to time. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Applicable Law
Section 3. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type commonly called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Amendments
Section 4. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
so to do by vote of Shareholders holding more than fifty percent (50%) of the
Shares of each series entitled to vote, except that an amendment which in the
determination of the Trustees shall affect the holders of one or more series or
classes of Shares but not the holders of all outstanding series and classes
shall be authorized by vote of the Shareholders holding more than fifty percent
(50%) of the Shares entitled to vote of each series or class affected and no
vote of Shareholders of a series or class not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
provision which is defective or inconsistent with the 1940 Act or with the
requirements of the Internal Revenue Code and the regulations thereunder for the
Trust's obtaining the most favorable treatment thereunder available to regulated
investment companies shall not require authorization by Shareholder vote.
21
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
for themselves and their assigns, as of this 20th day of January, 1998.
/s/Daniel Pierce
----------------------
Daniel Pierce, Trustee
345 Westfield Street
Dedham Massachusetts, 02026
The address of the Trust is:
c/o Scudder Kemper Investments, Inc.
222 South Riverside Plaza
Chicago, Illinois 60606
(SIGNATURES FOLLOW)
22
<PAGE>
/s/David W. Belin, Trustee
--------------------------
David W. Belin
1705 Plaza Circle
Des Moines, Iowa 50322
/s/Lewis A. Burnham
--------------------------
Lewis A. Burnham
164 10 Avila Boulevard
Tampa, Florida 33613
/s/Donald Dunaway
--------------------------
Donald Dunaway
235A North Elm Grove Road
Brookfield, Wisconsin 53005
/s/Robert B. Hoffman
--------------------------
Robert B. Hoffman
10045 Litzsinger Road
St. Louis, Missouri 63124-1131
/s/Donald R. Jones
--------------------------
Donald R. Jones
182 Old Wick Lane
Inverness, Illinois 60067
/s/Shirley D. Peterson
--------------------------
Shirley D. Peterson
401 Rosemont Avenue
Frederick, Maryland 21701-8575
/s/William P. Sommers
--------------------------
William P. Sommers
555 Laurel Avenue
San Mateo, California 94401-4154
23
<PAGE>
County of Cook )
) ss
State of Illinois )
Then personally appeared the afore-named David W. Belin, Lewis A. Burnham,
Donald Dunaway, Robert B. Hoffman, Donald R. Jones, Shirley D. Peterson, William
P. Sommers and Daniel Pierce who acknowledged the foregoing instrument to be
their free act and deed, before me this 20th day of January, 1998.
/s/Laura M. Pandola
-------------------
Notary Public
My Commission Expires: 3-14-01
24
Exhibit B5(a)
INVESTMENT MANAGEMENT AGREEMENT
Zurich Money Funds
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
Ladies and Gentlemen:
ZURICH MONEY FUNDS (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 (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, has selected you to act as the investment
manager of the Funds and to provide certain other services, as more fully set
forth below, and you have indicated that you are willing to act as such
investment manager and to perform such services under the terms and conditions
hereinafter set forth. In the event the Trust establishes one or more additional
series with respect to which it desires to retain you to render the services
described hereunder, it shall notify you in writing. If you are willing to
render such services, you shall notify the Trust in writing, whereupon such
series shall become a Fund hereunder. Accordingly, the Trust on behalf of the
Funds agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of investing and
reinvesting the assets of each 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 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:
(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 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, as applicable.
<PAGE>
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, you
shall provide continuing investment management of the assets of the Funds 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 Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Funds shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Funds 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'
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 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 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 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 such office space and facilities in the United States as the Funds 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 necessary for operating as an open end investment company and not
provided by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Fund
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Funds' 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 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 Fund under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Funds all books, records and reports and any other information required
under the
2
<PAGE>
1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Funds' custodian or other agents of the
Funds; assisting in establishing the accounting policies of the Funds; assisting
in the resolution of accounting issues that may arise with respect to the Funds'
operations and consulting with the Funds' independent accountants, legal counsel
and the Funds' other agents as necessary in connection therewith; establishing
and monitoring each Fund's operating expense budgets; reviewing each Fund's
bills; processing the payment of bills that have been approved by an authorized
person; assisting the Funds 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 the Trust as
it may reasonably request in the conduct of the Funds' 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 or any other person not a party to this Agreement which is
obligated to provide services to the Funds.
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 Fund's share of
payroll taxes) who are affiliated persons of you, and you shall make available,
without expense to the Funds, 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 other than those
specifically allocated to you in this section 4. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Funds' Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of each Fund: organization expenses of each
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' 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 in connection with membership in investment company trade
organizations; fees and expenses of the Funds' 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 Fund; expenses relating to
investor and public relations; expenses and fees of registering or qualifying
Shares of each Fund for sale; interest charges, bond premiums and other
insurance expense; freight, insurance and other charges in connection with the
shipment of each 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; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of each Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Trustees and officers of the Trust; and costs of
shareholders' and other meetings.
You shall not be required to pay expenses of any activity which is primarily
intended to result in sales of Shares of a Fund if and to the extent that (i)
such expenses are required to be borne by a principal underwriter which acts as
the distributor of a Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such expenses, or (ii)
the Trust on behalf of a Fund shall have adopted a plan in conformity with Rule
12b-1 under the 1940 Act providing that a Fund (or some other party) shall
assume some or all of such expenses. You shall be required to pay such of the
foregoing sales expenses as are not required to be paid by the
3
<PAGE>
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by a Fund (or some other party) pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3, and 4 hereof, the Trust
on behalf of the Funds 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
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 and unpaid.
The "average daily net assets" of a Fund shall mean the average of the values
placed on a 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 Fund shall always be determined
pursuant to the applicable provisions of the Declaration and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 5, the value of the net
assets of such Fund as last determined shall be deemed to be the value of its
net assets as of 4:00 p.m. (New York time), or as of such other time as the
value of the net assets of the Fund's portfolio may be lawfully determined on
that day. If a 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 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' 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
4
<PAGE>
portfolio securities and other investments for the account of the Funds, 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 Fund's account with brokers or dealers selected by you in
accordance with Fund policies as expressed in the Registration Statement. If any
occasion should arise in which you give any advice to clients of yours
concerning the Shares of a Fund, you shall act solely as investment counsel for
such clients and not in any way on behalf of such Fund.
Your services to the Funds pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and services to others. In acting under this Agreement, you shall be an
independent contractor and not an agent of the Trust. Whenever a Fund and one or
more other accounts or investment companies advised by you have available 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 recognize that in some cases this
procedure may adversely affect the size of the position that may be acquired or
disposed of for the Funds.
7. Limitation of Liability of Manager. As an inducement to your undertaking to
render services pursuant to this Agreement, the Trust agrees that you shall not
be liable under this Agreement for any error of judgment or mistake of law or
for any loss suffered by a Fund in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect you against any liability to the Trust, the Funds
or their 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 December 1, 1998, 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 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 Fund at any time, without the
payment of any penalty, by the vote of a majority of the outstanding voting
securities of such 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 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 Fund in the event that it shall have been
established by a court of competent jurisdiction that you or any of your
officers or directors has taken any action which results in a breach of your
covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that the name "Zurich Money
Funds" refers to the Trustees under the Declaration collectively as Trustees and
not as individuals or
5
<PAGE>
personally, and that no shareholder of a Fund, or Trustee, officer, employee or
agent of the Trust, shall be subject to claims against or obligations of the
Trust or of a Fund to any extent whatsoever, but that the Trust estate only
shall be liable.
You are hereby expressly put on notice of the limitation of liability as set
forth in the Declaration and you agree that the obligations assumed by the Trust
on behalf of each Fund pursuant to this Agreement shall be limited in all cases
to each Fund and its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of a Fund or any other
series of the Trust, or from any Trustee, officer, employee or agent of the
Trust. You understand that the rights and obligations of each 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
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.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
ZURICH MONEY FUNDS, on behalf of
Zurich Money Market Fund
Zurich Government Money Fund
Zurich Tax-Free Money Fund
By:/s/Mark S. Casady
--------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:/s/S. R. Beckwith
--------------------
Treasurer
6
Exhibit B6(a)
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this 7th day of September, 1998, between ZURICH MONEY FUNDS,
a Massachusetts business trust (the "Fund"), and KEMPER DISTRIBUTORS, INC., a
Delaware corporation ("KDI").
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KDI to act as agent for distribution of shares
of beneficial interest (hereinafter called "shares") of the Fund in
jurisdictions wherein shares of the Fund may legally be offered for sale;
provided, however, that the Fund in its absolute discretion may (a) issue or
sell shares directly to holders of shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; or (b) issue or
sell shares at net asset value to the shareholders of any other investment
company, for which KDI shall act as exclusive distributor, who wish to exchange
all or a portion of their investment in shares of such other investment company
for shares of the Fund. KDI shall appoint various financial service firms
("Firms") to provide distribution services to investors. The Firms shall provide
such office space and equipment, telephone facilities, personnel, literature
distribution, advertising and promotion as is necessary or beneficial for
providing information and distribution services to existing and potential
clients of the Firms. KDI may also provide some of the above services for the
Fund.
KDI accepts such appointment as distributor and principal underwriter and
agrees to render such services and to assume the obligations herein set forth
for the compensation herein provided. KDI shall for all purposes herein provided
be deemed to be an independent contractor and, unless expressly provided herein
or otherwise authorized, shall have no authority to act for or represent the
Fund in any way. KDI, by separate agreement with the Fund, may also serve the
Fund in other capacities. The services of KDI to the Fund under this Agreement
are not to be deemed exclusive, and KDI shall be free to render similar services
or other services to others so long as its services hereunder are not impaired
thereby.
In carrying out its duties and responsibilities hereunder, KDI will,
pursuant to separate written contracts, appoint various Firms to provide
advertising, promotion and other distribution services contemplated hereunder
directly to or for the benefit of existing and potential shareholders who may be
clients of such Firms. Such Firms shall at all times be deemed to be independent
contractors retained by KDI and not the Fund.
KDI shall use its best efforts with reasonable promptness to sell such part
of the authorized shares of the Fund remaining unissued as from time to time
shall be effectively registered under the Securities Act of 1933 ("Securities
Act"), at prices determined as hereinafter
<PAGE>
provided and on terms hereinafter set forth, all subject to applicable federal
and state laws and regulations and to the Fund's organizational documents.
2. KDI shall sell shares of the Fund to or through qualified Firms in such
manner, not inconsistent with the provisions hereof and the then effective
registration statement (and related prospectus) of the Fund under the Securities
Act, as KDI may determine from time to time, provided that no Firm or other
person shall be appointed or authorized to act as agent of the Fund without
prior consent of the Fund. In addition to sales made by it as agent of the Fund,
KDI may, in its discretion, also sell shares of the Fund as principal to persons
with whom it does not have selling group agreements.
Shares of any class of any series of the Fund offered for sale or sold by
KDI shall be so offered or sold at a price per share determined in accordance
with the then current prospectus. The price the Fund shall receive for all
shares purchased from it shall be the net asset value used in determining the
public offering price applicable to the sale of such shares. Any excess of the
sales price over the net asset value of the shares of the Fund sold by KDI as
agent shall be retained by KDI as a commission for its services hereunder. KDI
may compensate Firms for sales of shares at the commission levels provided in
the Fund's prospectus from time to time. KDI may pay other commissions, fees or
concessions to Firms, any may pay them to others in its discretion, in such
amounts as KDI shall determine from time to time. KDI shall be entitled to
receive and retain any applicable contingent deferred sales charge as described
in the Fund's prospectus. KDI shall also receive any distribution services fee
payable by the Fund as provided in the Fund's Amended and Restated 12b-1 Plan,
as amended from time to time (the "Plan").
KDI will require each Firm to conform to the provisions hereof and the
Registration Statement (and related prospectus) at the time in effect under the
Securities Act with respect to the public offering price or net asset value, as
applicable, of the Fund's shares, and neither KDI nor any such Firms shall
withhold the placing of purchase orders so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively registered under
the Securities Act for sale as herein contemplated such shares as KDI shall
reasonably request and as the Securities and Exchange Commission shall permit to
be so registered. Notwithstanding any other provision hereof, the Fund may
terminate, suspend or withdraw the offering of shares whenever, in its sole
discretion, it deems such action to be desirable.
4. The Fund will execute any and all documents and furnish any and all
information that may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund as
a dealer where necessary or advisable) in such states as KDI may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to KDI from time to time such information
with respect to the Fund and its shares as KDI may reasonably request for use in
connection with the sale of shares of the Fund.
<PAGE>
5. KDI shall issue and deliver or shall arrange for various Firms to issue
and deliver on behalf of the Fund such confirmations of sales made by it
pursuant to this Agreement as may be required. At or prior to the time of
issuance of shares, KDI will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
KDI may specify.
6. KDI shall order shares of the Fund from the Fund only to the extent that
it shall have received purchase orders therefor. KDI will not make, or authorize
Firms or others to make (a) any short sales of shares of the Fund; or (b) any
sales of such shares to any Board member or officer of the Fund or to any
officer or Board member of KDI or of any corporation or association furnishing
investment advisory, managerial or supervisory services to the Fund, or to any
corporation or association, unless such sales are made in accordance with the
then current prospectus relating to the sale of such shares. KDI, as agent of
and for the account of the Fund, may repurchase the shares of the Fund at such
prices and upon such terms and conditions as shall be specified in the current
prospectus of the Fund. In selling or reacquiring shares of the Fund for the
account of the Fund, KDI will in all respects conform to the requirements of all
state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., relating to such sale or reacquisition,
as the case may be, and will indemnify and save harmless the Fund from any
damage or expense on account of any wrongful act by KDI or any employee,
representative or agent of KDI. KDI will observe and be bound by all the
provisions of the Fund's organizational documents (and of any fundamental
policies adopted by the Fund pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), notice of which shall have been given to KDI) which
at the time in any way require, limit, restrict, prohibit or otherwise regulate
any action on the part of KDI hereunder.
7. The Fund shall assume and pay all charges and expenses of its operations
not specifically assumed or otherwise to be provided by KDI under this Agreement
or the Plan. The Fund will pay or cause to be paid expenses (including the fees
and disbursements of its own counsel) of any registration of the Fund and its
shares under the United States securities laws and expenses incident to the
issuance of shares of beneficial interest, such as the cost of share
certificates, issue taxes, and fees of the transfer agent. KDI will pay all
expenses (other than expenses which one or more Firms may bear pursuant to any
agreement with KDI) incident to the sale and distribution of the shares issued
or sold hereunder, including, without limiting the generality of the foregoing,
all (a) expenses of printing and distributing any prospectus and of preparing,
printing and distributing or disseminating any other literature, advertising and
selling aids in connection with the offering of the shares for sale (except that
such expenses need not include expenses incurred by the Fund in connection with
the preparation, typesetting, printing and distribution of any registration
statement or prospectus, report or other communication to shareholders in their
capacity as such), (b) expenses of advertising in connection with such offering
and (c) expenses (other than the Fund's auditing expenses) of qualifying or
continuing the qualification of the shares for sale and, in connection
therewith, of qualifying or continuing the qualification of the Fund as a dealer
or broker under the laws of such states as may be
<PAGE>
designated by KDI under the conditions herein specified. No transfer taxes, if
any, which may be payable in connection with the issue or delivery or shares
sold as herein contemplated or of the certificates for such shares shall be
borne by the Fund, and KDI will indemnify and hold harmless the Fund against
liability for all such transfer taxes.
8. This Agreement shall become effective on the date hereof and shall
continue until December 1, 1999; and shall continue from year to year thereafter
only so long as such continuance is approved in the manner required by the
Investment Company Act.
This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the Fund
or by KDI on sixty (60) days' written notice to the other party. The Fund may
effect termination with respect to any class of any series of the Fund by a vote
of (i) a majority of the Board members who are not interested persons of the
Fund and who have no direct or indirect financial interest in the operation of
the Plan, this Agreement, or in any other agreement related to the Plan, or (ii)
a majority of the outstanding voting securities of such series or class. Without
prejudice to any other remedies of the Fund, the Fund may terminate this
Agreement at any time immediately upon KDI's failure to fulfill any of its
obligations hereunder.
All material amendments to this Agreement must be approved by a vote of a
majority of the Board, and of the Board members who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan, this Agreement or in any other agreement related to the
Plan, cast in person at a meeting called for such purpose.
The terms "assignment," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the
Investment Company Act and the rules and regulations thereunder.
KDI shall receive such compensation for its distribution services as set
forth in the Plan. Termination of this Agreement shall not affect the right of
KDI to receive payments on any unpaid balance of the compensation earned prior
to such termination, as set forth in the Plan.
9. KDI will not use or distribute, or authorize the use, distribution or
dissemination by Firms or others in connection with the sale of Fund shares any
statements other than those contained in the Fund's current prospectus, except
such supplemental literature or advertising as shall be lawful under federal and
state securities laws and regulations. KDI will furnish the Fund with copies of
all such material.
10. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for
<PAGE>
the receipt of such notice.
12. All parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust, and all amendments thereto, all of which are on file
with the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the Trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund. With
respect to any claim by KDI for recovery of any liability of the Fund arising
hereunder allocated to a particular series or class, whether in accordance with
the express terms hereof or otherwise, KDI shall have recourse solely against
the assets of that series or class to satisfy such claim and shall have no
recourse against the assets of any other series or class for such purpose.
13. This Agreement shall be construed in accordance with applicable federal
law and with the laws of The Commonwealth of Massachusetts.
14. This Agreement is the entire contract between the parties relating to
the subject matter hereof and supersedes all prior agreements between the
parties relating to the subject matter hereof.
[SIGNATURES APPEAR ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the Fund and KDI have caused this Agreement to be
executed as of the day and year first above written.
ZURICH MONEY FUNDS
By:/s/Mark S. Casady
-------------------------
Title:
----------------------
ATTEST:
- ----------------------------
Title:
---------------------
KEMPER DISTRIBUTORS, INC.
By:/s/James L. Greenawalt
-------------------------
Title: President
----------------------
ATTEST:
/s/Joan V. Pearson
- ---------------------------
Title: Executive Assistant
---------------------
Exhibit B9(c)
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between Zurich Money
Funds (the "Fund"), on behalf of Zurich Money Market Fund (hereinafter called
the "Portfolio"), a registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza, Chicago, Illinois
60606 and Scudder Fund Accounting Corporation, with its principal place of
business in Boston, Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value which service
FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein made, the Fund and
FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this Agreement
to calculate the net asset value of the Portfolio as provided in the
prospectus of the Portfolio and in connection therewith shall:
a. Maintain and preserve all accounts, books, financial records and
other documents as are required of the Fund under Section 31 of
the Investment Company Act of 1940 (the "1940 Act") and Rules
31a-1, 31a-2 and 31a-3 thereunder, applicable federal and state
laws and any other law or administrative rules or procedures
which may be applicable to the Fund on behalf of the Portfolio,
other than those accounts, books and financial records required
to be maintained by the Fund's investment adviser, custodian or
transfer agent and/or books and records maintained by all other
service providers necessary for the Fund to conduct its business
as a registered open-end management investment company. All such
books and records shall be the property of the Fund and shall at
all times during regular business hours be open for inspection
by, and shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and records shall
at all times during regular business hours be open for
inspection, upon request of duly authorized officers of the Fund,
by employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission.
b. Record the current day's trading activity and such other proper
bookkeeping entries as are necessary for determining that day's
net asset value and net income.
<PAGE>
c. Render statements or copies of records as from time to time are
reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent public
accountants or by any other auditors employed or engaged by the
Fund or by any regulatory body with jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or its daily
dividend rates and money market yields, if applicable, in
accordance with Section 3 of the Agreement and notify the Fund
and such other persons as the Fund may reasonably request of the
net asset value per share, the public offering price and/or its
daily dividend rates and money market yields.
f. Perform a mark-to-market appraisal in accordance with procedures
by the Board of Trustees pursuant to Rule 2a-7 under the 1940
Act.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time to time
(hereinafter referred to as the "Registration Statement"); (b) the
resolutions of the Board of Trustees of the Fund at the time in force
and applicable, as they may from time to time be delivered to FUND
ACCOUNTING, and (c) Proper Instructions from such officers of the Fund
or other persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to computation
and determination of the net asset value. FUND ACCOUNTING may use one
or more external pricing services, including broker-dealers, provided
that an appropriate officer of the Fund shall have approved such use in
advance.
Section 3. Computation of Net Asset Value, Public Offering Price, Daily
Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset value,
including net income, in a manner consistent with the specific
provisions of the Registration Statement. Such computation shall be
made as of the time or times specified in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and money market
yields, if applicable, in accordance with the methodology set forth in
the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
2
<PAGE>
In maintaining the Portfolio's books of account and making the
necessary computations FUND ACCOUNTING shall be entitled to receive,
and may rely upon, information furnished it by means of Proper
Instructions, including but not limited to:
a. The manner and amount of accrual of expenses to be recorded on the
books of the Portfolio;
b. The source of quotations to be used for such securities as may
not be available through FUND ACCOUNTING's normal pricing
services;
c. The value to be assigned to any asset for which no price
quotations are readily available;
d. If applicable, the manner of computation of the public offering
price and such other computations as may be necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be entitled to
rely upon, as conclusive proof of any fact or matter required to be
ascertained by it hereunder, a certificate, letter or other instrument
signed by an authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon advice of
Counsel for the Fund at the reasonable expense of the Portfolio and
shall be without liability for any action taken or thing done in good
faith in reliance upon such advice.
FUND ACCOUNTING shall be entitled to receive, and may rely upon,
information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate, letter or
other instrument or telephone call reasonably believed by FUND
ACCOUNTING to be genuine and to have been properly made or signed by
any authorized officer of the Fund or person certified to FUND
ACCOUNTING as being authorized by the Board of Trustees. The Fund, on
behalf of the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices as from time
to time agreed to by an authorized officer of the Fund and FUND
ACCOUNTING.
3
<PAGE>
The Fund, on behalf of the Portfolio, agrees to furnish to the
appropriate person(s) within FUND ACCOUNTING a copy of the Registration
Statement as in effect from time to time. FUND ACCOUNTING may
conclusively rely on the Fund's most recently delivered Registration
Statement for all purposes under this Agreement and shall not be liable
to the Portfolio or the Fund in acting in reliance thereon.
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence in the
performance of its duties hereunder. The Fund agrees that FUND
ACCOUNTING shall not be liable under this Agreement for any error of
judgment or mistake of law made in good faith and consistent with the
foregoing standard of care, provided that nothing in this Agreement
shall be deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its shareholders to
which FUND ACCOUNTING would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed
upon in writing by the two parties. FUND ACCOUNTING shall be entitled,
if agreed to by the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all other
reasonable out-of-pocket, expenses as incurred, including, without
limitation, reasonable attorneys' fees and reasonable fees for pricing
services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until terminated
as hereinafter provided, may be amended at any time by mutual agreement
of the parties hereto and may be terminated by an instrument in writing
delivered or mailed to the other party. Such termination shall take
effect not sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date is to be no
earlier than four months from the effective date
4
<PAGE>
hereof. Upon termination, FUND ACCOUNTING will turn over to the Fund
or its designee and cease to retain in FUND ACCOUNTING files, records
of the calculations of net asset value and all other records
pertaining to its services hereunder; provided, however, FUND
ACCOUNTING in its discretion may make and retain copies of any and all
such records and documents which it determines appropriate or for its
protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are not to be
deemed to be exclusive, and it is understood that FUND ACCOUNTING may
perform fund accounting services for others. In acting under this
Agreement, FUND ACCOUNTING shall be an independent contractor and not
an agent of the Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as amended to
date (the "Declaration"), a copy of which, together with all amendments
thereto, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts, provides that the name "Zurich Money
Funds" refers to the Trustees under the Declaration collectively as
trustees and not as individuals or personally, and that no shareholder
of the Fund or the Portfolio, or Trustee, officer, employee or agent of
the Fund shall be subject to claims against or obligations of the Trust
or of the Portfolio to any extent whatsoever, but that the Trust estate
only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation of
liability as set forth in the Declaration and FUND ACCOUNTING agrees
that the obligations assumed by the Fund and/or the Portfolio under
this Agreement shall be limited in all cases to the Portfolio and its
assets, and FUND ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund or the
Portfolio or any other series of the Fund, or from any Trustee,
officer, employee or agent of the Fund. FUND ACCOUNTING understands
that the rights and obligations of the Portfolio under the Declaration
are separate and distinct from those of any and all other series of the
Fund.
Section 11. Notices
5
<PAGE>
Any notice shall be sufficiently given when delivered or mailed to the
other party at the address of such party set forth below or to such
other person or at such other address as such party may from time to
time specify in writing to the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Zurich Money Funds
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
6
<PAGE>
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING without the
consent of the Fund as authorized or approved by resolution of its
Board of Trustees.
In connection with the operation of this Agreement, the Fund and FUND
ACCOUNTING may agree from time to time on such provisions interpretive
of or in addition to the provisions of this Agreement as in their joint
opinions may be consistent with this Agreement. Any such interpretive
or additional provisions shall be in writing, signed by both parties
and annexed hereto, but no such provisions shall be deemed to be an
amendment of this Agreement.
This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
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.
This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes any and all prior
understandings.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized and its seal to be
hereunder affixed as of the date first written above.
[SEAL] ZURICH MONEY FUNDS
on behalf of Zurich Money
Market Fund
By: /s/Mark S. Casady
--------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By: /s/John R. Hebble
--------------------
Vice President
8
Exhibit B9(d)
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between Zurich Money
Funds (the "Fund"), on behalf of Zurich Government Money Fund (hereinafter
called the "Portfolio"), a registered open-end management investment company
with its principal place of business in 222 South Riverside Plaza, Chicago,
Illinois 60606 and Scudder Fund Accounting Corporation, with its principal place
of business in Boston, Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value which service
FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein made, the Fund and
FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this Agreement
to calculate the net asset value of the Portfolio as provided in the
prospectus of the Portfolio and in connection therewith shall:
a. Maintain and preserve all accounts, books, financial records
and other documents as are required of the Fund under Section
31 of the Investment Company Act of 1940 (the "1940 Act") and
Rules 31a-1, 31a-2 and 31a-3 thereunder, applicable federal
and state laws and any other law or administrative rules or
procedures which may be applicable to the Fund on behalf of
the Portfolio, other than those accounts, books and financial
records required to be maintained by the Fund's investment
adviser, custodian or transfer agent and/or books and records
maintained by all other service providers necessary for the
Fund to conduct its business as a registered open-end
management investment company. All such books and records
shall be the property of the Fund and shall at all times
during regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly authorized
officers of the Fund. All such books and records shall at all
times during regular business hours be open for inspection,
upon request of duly authorized officers of the Fund, by
employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission.
b. Record the current day's trading activity and such other
proper bookkeeping entries as are necessary for determining
that day's net asset value and net income.
<PAGE>
c. Render statements or copies of records as from time to time
are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent public
accountants or by any other auditors employed or engaged by
the Fund or by any regulatory body with jurisdiction over the
Fund.
e. Compute the Portfolio's public offering price and/or its daily
dividend rates and money market yields, if applicable, in
accordance with Section 3 of the Agreement and notify the Fund
and such other persons as the Fund may reasonably request of
the net asset value per share, the public offering price
and/or its daily dividend rates and money market yields.
f. Perform a mark-to-market appraisal in accordance with
procedures by the Board of Trustees pursuant to Rule 2a-7
under the 1940 Act.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time to time
(hereinafter referred to as the "Registration Statement"); (b) the
resolutions of the Board of Trustees of the Fund at the time in force
and applicable, as they may from time to time be delivered to FUND
ACCOUNTING, and (c) Proper Instructions from such officers of the Fund
or other persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to computation
and determination of the net asset value. FUND ACCOUNTING may use one
or more external pricing services, including broker-dealers, provided
that an appropriate officer of the Fund shall have approved such use in
advance.
Section 3. Computation of Net Asset Value, Public Offering Price, Daily Dividend
Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset value,
including net income, in a manner consistent with the specific
provisions of the Registration Statement. Such computation shall be
made as of the time or times specified in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and money market
yields, if applicable, in accordance with the methodology set forth in
the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
2
<PAGE>
In maintaining the Portfolio's books of account and making the
necessary computations FUND ACCOUNTING shall be entitled to receive,
and may rely upon, information furnished it by means of Proper
Instructions, including but not limited to:
a. The manner and amount of accrual of expenses to be recorded on
the books of the Portfolio;
b. The source of quotations to be used for such securities as may
not be available through FUND ACCOUNTING's normal pricing
services;
c. The value to be assigned to any asset for which no price
quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be entitled to
rely upon, as conclusive proof of any fact or matter required to be
ascertained by it hereunder, a certificate, letter or other instrument
signed by an authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon advice of
Counsel for the Fund at the reasonable expense of the Portfolio and
shall be without liability for any action taken or thing done in good
faith in reliance upon such advice.
FUND ACCOUNTING shall be entitled to receive, and may rely upon,
information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate, letter or
other instrument or telephone call reasonably believed by FUND
ACCOUNTING to be genuine and to have been properly made or signed by
any authorized officer of the Fund or person certified to FUND
ACCOUNTING as being authorized by the Board of Trustees. The Fund, on
behalf of the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices as from time
to time agreed to by an authorized officer of the Fund and FUND
ACCOUNTING.
3
<PAGE>
The Fund, on behalf of the Portfolio, agrees to furnish to the
appropriate person(s) within FUND ACCOUNTING a copy of the Registration
Statement as in effect from time to time. FUND ACCOUNTING may
conclusively rely on the Fund's most recently delivered Registration
Statement for all purposes under this Agreement and shall not be liable
to the Portfolio or the Fund in acting in reliance thereon.
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence in the
performance of its duties hereunder. The Fund agrees that FUND
ACCOUNTING shall not be liable under this Agreement for any error of
judgment or mistake of law made in good faith and consistent with the
foregoing standard of care, provided that nothing in this Agreement
shall be deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its shareholders to
which FUND ACCOUNTING would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed
upon in writing by the two parties. FUND ACCOUNTING shall be entitled,
if agreed to by the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all other
reasonable out-of-pocket, expenses as incurred, including, without
limitation, reasonable attorneys' fees and reasonable fees for pricing
services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until terminated
as hereinafter provided, may be amended at any time by mutual agreement
of the parties hereto and may be terminated by an instrument in writing
delivered or mailed to the other party. Such termination shall take
effect not sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date is to be no
earlier than four months from the effective date
4
<PAGE>
hereof. Upon termination, FUND ACCOUNTING will turn over to the Fund or
its designee and cease to retain in FUND ACCOUNTING files, records of
the calculations of net asset value and all other records pertaining to
its services hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such records and
documents which it determines appropriate or for its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are not to be
deemed to be exclusive, and it is understood that FUND ACCOUNTING may
perform fund accounting services for others. In acting under this
Agreement, FUND ACCOUNTING shall be an independent contractor and not
an agent of the Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as amended to
date (the "Declaration"), a copy of which, together with all amendments
thereto, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts, provides that the name "Zurich Money
Funds" refers to the Trustees under the Declaration collectively as
trustees and not as individuals or personally, and that no shareholder
of the Fund or the Portfolio, or Trustee, officer, employee or agent of
the Fund shall be subject to claims against or obligations of the Trust
or of the Portfolio to any extent whatsoever, but that the Trust estate
only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation of
liability as set forth in the Declaration and FUND ACCOUNTING agrees
that the obligations assumed by the Fund and/or the Portfolio under
this Agreement shall be limited in all cases to the Portfolio and its
assets, and FUND ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund or the
Portfolio or any other series of the Fund, or from any Trustee,
officer, employee or agent of the Fund. FUND ACCOUNTING understands
that the rights and obligations of the Portfolio under the Declaration
are separate and distinct from those of any and all other series of the
Fund.
Section 11. Notices
5
<PAGE>
Any notice shall be sufficiently given when delivered or mailed to the
other party at the address of such party set forth below or to such
other person or at such other address as such party may from time to
time specify in writing to the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Zurich Money Funds
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
6
<PAGE>
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING without the
consent of the Fund as authorized or approved by resolution of its
Board of Trustees.
In connection with the operation of this Agreement, the Fund and FUND
ACCOUNTING may agree from time to time on such provisions interpretive
of or in addition to the provisions of this Agreement as in their joint
opinions may be consistent with this Agreement. Any such interpretive
or additional provisions shall be in writing, signed by both parties
and annexed hereto, but no such provisions shall be deemed to be an
amendment of this Agreement.
This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
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.
This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes any and all prior
understandings.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized and its seal to be
hereunder affixed as of the date first written above.
[SEAL] ZURICH MONEY FUNDS
on behalf of Zurich Government
Money Fund
By:/s/Mark S. Casady
--------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By: /s/John R. Hebble
--------------------
Vice President
8
Exhibit B(9)(e)
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between Zurich Money
Funds (the "Fund"), on behalf of Zurich Tax-Free Money Fund (hereinafter called
the "Portfolio"), a registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza, Chicago, Illinois
60606 and Scudder Fund Accounting Corporation, with its principal place of
business in Boston, Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value which service
FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein made, the Fund and
FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this Agreement
to calculate the net asset value of the Portfolio as provided in the
prospectus of the Portfolio and in connection therewith shall:
a. Maintain and preserve all accounts, books, financial records and
other documents as are required of the Fund under Section 31 of
the Investment Company Act of 1940 (the "1940 Act") and Rules
31a-1, 31a-2 and 31a-3 thereunder, applicable federal and state
laws and any other law or administrative rules or procedures
which may be applicable to the Fund on behalf of the Portfolio,
other than those accounts, books and financial records required
to be maintained by the Fund's investment adviser, custodian or
transfer agent and/or books and records maintained by all other
service providers necessary for the Fund to conduct its business
as a registered open-end management investment company. All
such books and records shall be the property of the Fund and
shall at all times during regular business hours be open for
inspection by, and shall be surrendered promptly upon request
of, duly authorized officers of the Fund. All such books and
records shall at all times during regular business hours be open
for inspection, upon request of duly authorized officers of the
Fund, by employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission.
b. Record the current day's trading activity and such other
proper bookkeeping entries as are necessary for determining
that day's net asset value and net income.
<PAGE>
c. Render statements or copies of records as from time to time are
reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent public
accountants or by any other auditors employed or engaged by the
Fund or by any regulatory body with jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or its daily
dividend rates and money market yields, if applicable, in
accordance with Section 3 of the Agreement and notify the Fund
and such other persons as the Fund may reasonably request of
the net asset value per share, the public offering price
and/or its daily dividend rates and money market yields.
f. Perform a mark-to-market appraisal in accordance with
procedures by the Board of Trustees pursuant to Rule 2a-7
under the 1940 Act.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time to time
(hereinafter referred to as the "Registration Statement"); (b) the
resolutions of the Board of Trustees of the Fund at the time in force
and applicable, as they may from time to time be delivered to FUND
ACCOUNTING, and (c) Proper Instructions from such officers of the Fund
or other persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to computation
and determination of the net asset value. FUND ACCOUNTING may use one
or more external pricing services, including broker-dealers, provided
that an appropriate officer of the Fund shall have approved such use in
advance.
Section 3. Computation of Net Asset Value, Public Offering Price, Daily
Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset value,
including net income, in a manner consistent with the specific
provisions of the Registration Statement. Such computation shall be
made as of the time or times specified in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and money market
yields, if applicable, in accordance with the methodology set forth in
the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
2
<PAGE>
In maintaining the Portfolio's books of account and making the
necessary computations FUND ACCOUNTING shall be entitled to receive,
and may rely upon, information furnished it by means of Proper
Instructions, including but not limited to:
a. The manner and amount of accrual of expenses to be recorded on
the books of the Portfolio;
b. The source of quotations to be used for such securities as may
not be available through FUND ACCOUNTING's normal pricing
services;
c. The value to be assigned to any asset for which no price
quotations are readily available;
d. If applicable, the manner of computation of the public offering
price and such other computations as may be necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be entitled to
rely upon, as conclusive proof of any fact or matter required to be
ascertained by it hereunder, a certificate, letter or other instrument
signed by an authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon advice of
Counsel for the Fund at the reasonable expense of the Portfolio and
shall be without liability for any action taken or thing done in good
faith in reliance upon such advice.
FUND ACCOUNTING shall be entitled to receive, and may rely upon,
information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate, letter or
other instrument or telephone call reasonably believed by FUND
ACCOUNTING to be genuine and to have been properly made or signed by
any authorized officer of the Fund or person certified to FUND
ACCOUNTING as being authorized by the Board of Trustees. The Fund, on
behalf of the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices as from time
to time agreed to by an authorized officer of the Fund and FUND
ACCOUNTING.
3
<PAGE>
The Fund, on behalf of the Portfolio, agrees to furnish to the
appropriate person(s) within FUND ACCOUNTING a copy of the Registration
Statement as in effect from time to time. FUND ACCOUNTING may
conclusively rely on the Fund's most recently delivered Registration
Statement for all purposes under this Agreement and shall not be liable
to the Portfolio or the Fund in acting in reliance thereon.
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence in the
performance of its duties hereunder. The Fund agrees that FUND
ACCOUNTING shall not be liable under this Agreement for any error of
judgment or mistake of law made in good faith and consistent with the
foregoing standard of care, provided that nothing in this Agreement
shall be deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its shareholders to
which FUND ACCOUNTING would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed
upon in writing by the two parties. FUND ACCOUNTING shall be entitled,
if agreed to by the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all other
reasonable out-of-pocket, expenses as incurred, including, without
limitation, reasonable attorneys' fees and reasonable fees for pricing
services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until terminated
as hereinafter provided, may be amended at any time by mutual agreement
of the parties hereto and may be terminated by an instrument in writing
delivered or mailed to the other party. Such termination shall take
effect not sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date is to be no
earlier than four months from the effective date
4
<PAGE>
hereof. Upon termination, FUND ACCOUNTING will turn over to the Fund
or its designee and cease to retain in FUND ACCOUNTING files, records
of the calculations of net asset value and all other records
pertaining to its services hereunder; provided, however, FUND
ACCOUNTING in its discretion may make and retain copies of any and all
such records and documents which it determines appropriate or for its
protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are not to be
deemed to be exclusive, and it is understood that FUND ACCOUNTING may
perform fund accounting services for others. In acting under this
Agreement, FUND ACCOUNTING shall be an independent contractor and not
an agent of the Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as amended to
date (the "Declaration"), a copy of which, together with all amendments
thereto, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts, provides that the name "Zurich Money
Funds" refers to the Trustees under the Declaration collectively as
trustees and not as individuals or personally, and that no shareholder
of the Fund or the Portfolio, or Trustee, officer, employee or agent of
the Fund shall be subject to claims against or obligations of the Trust
or of the Portfolio to any extent whatsoever, but that the Trust estate
only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation of
liability as set forth in the Declaration and FUND ACCOUNTING agrees
that the obligations assumed by the Fund and/or the Portfolio under
this Agreement shall be limited in all cases to the Portfolio and its
assets, and FUND ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund or the
Portfolio or any other series of the Fund, or from any Trustee,
officer, employee or agent of the Fund. FUND ACCOUNTING understands
that the rights and obligations of the Portfolio under the Declaration
are separate and distinct from those of any and all other series of the
Fund.
Section 11. Notices
5
<PAGE>
Any notice shall be sufficiently given when delivered or mailed to the
other party at the address of such party set forth below or to such
other person or at such other address as such party may from time to
time specify in writing to the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Zurich Money Funds
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
6
<PAGE>
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING without the
consent of the Fund as authorized or approved by resolution of its
Board of Trustees.
In connection with the operation of this Agreement, the Fund and FUND
ACCOUNTING may agree from time to time on such provisions interpretive
of or in addition to the provisions of this Agreement as in their joint
opinions may be consistent with this Agreement. Any such interpretive
or additional provisions shall be in writing, signed by both parties
and annexed hereto, but no such provisions shall be deemed to be an
amendment of this Agreement.
This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
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.
This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes any and all prior
understandings.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized and its seal to be
hereunder affixed as of the date first written above.
[SEAL] ZURICH MONEY FUNDS
on behalf of Zurich Tax-Free
Money Fund
By: Mark S. Casady
-------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By: /s/John R. Hebble
-------------------
Vice President
8
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors and Reports to Shareholders" and to the
use of our report dated September 17, 1998 in the Registration Statement (Form
N-1A) of Zurich Money Funds and its incorporation by reference in the related
Prospectus and Statement of Additional Information filed with the Securities and
Exchange Commission in this Post-Effective Amendment No. 45 to the Registration
Statement under the Securities Act of 1933 (File No. 2-51992) and in this
Amendment No. 45 to the Registration Statement under the Investment Company Act
of 1940 (File No. 811-2527).
ERNST & YOUNG LLP
Chicago, Illinois
November 25, 1998
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Zurich Money Funds
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of Zurich Money Market Fund, Zurich Government
Money Fund and Zurich Tax-Free Money Fund, comprising Zurich Money Funds, as of
July 31, 1998, and the related statements of operations for the year then ended
and changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the fiscal periods since 1989. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of July
31, 1998, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds comprising Zurich Money Funds at July 31, 1998, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended and the financial highlights for
each of the fiscal periods since 1989, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 17, 1998
2
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
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SUCH FINANCIAL STATEMENTS.
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<NAME> ZURICH MONEY FUNDS
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 4,465,212
<INVESTMENTS-AT-VALUE> 4,465,212
<RECEIVABLES> 68,744
<ASSETS-OTHER> 25,326
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,559,282
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20,655
<TOTAL-LIABILITIES> 20,655
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,538,627
<SHARES-COMMON-STOCK> 4,538,627
<SHARES-COMMON-PRIOR> 4,361,935
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<INTEREST-INCOME> 256,988
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<EXPENSES-NET> (21,453)
<NET-INVESTMENT-INCOME> 235,535
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<NET-CHANGE-FROM-OPS> 235,535
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<SHARES-REINVESTED> 227,005
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
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SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000055189
<NAME> ZURICH MONEY FUNDS
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<NUMBER> 02
<NAME> ZURICH GOVERNMENT MONEY FUND
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
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<INVESTMENTS-AT-VALUE> 679,650
<RECEIVABLES> 5,588
<ASSETS-OTHER> 4,127
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 689,365
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,494
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<PAID-IN-CAPITAL-COMMON> 686,871
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<SHARES-COMMON-PRIOR> 671,139
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37,988
<OTHER-INCOME> 0
<EXPENSES-NET> (2,875)
<NET-INVESTMENT-INCOME> 35,113
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 35,113
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (35,113)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 646,450
<NUMBER-OF-SHARES-REDEEMED> (664,709)
<SHARES-REINVESTED> 33,991
<NET-CHANGE-IN-ASSETS> 15,732
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<GROSS-EXPENSE> 2,875
<AVERAGE-NET-ASSETS> 675,103
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000055189
<NAME> ZURICH MONEY FUNDS
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<NUMBER> 03
<NAME> ZURICH TAX-FREE MONEY FUND
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<INVESTMENTS-AT-VALUE> 814,798
<RECEIVABLES> 6,052
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<NET-INVESTMENT-INCOME> 27,214
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<DISTRIBUTIONS-OF-GAINS> 0
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