INVESTORS FUND SERIES, DEFS14A, 1997-11-03

INVESTORS FUND SERIES
DEFS14A, 1997-11-03

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<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

INVESTORS FUND SERIES
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------

(3) Filing party:

- --------------------------------------------------------------------------------

(4) Date filed:

- --------------------------------------------------------------------------------
<PAGE> 2
October, 1997

Dear Kemper Investors Life Policyowner:

As you may be aware, your Kemper Select policy invests in subaccounts that are
part of the Investors Fund Series managed by Zurich Kemper Investments, Inc.
("ZKI") and/or Zurich Kemper Value Advisors, Inc. ("ZKVA").

Zurich Insurance Company ("Zurich") has entered into an agreement with Scudder,
Stevens & Clark, Inc. ("Scudder") pursuant to which Zurich will acquire
approximately 70% of Scudder. Upon completion of the transaction, Scudder will
change its name to Scudder Kemper Investments, Inc. ("SKI"), and ZKI and ZKVA
will be combined with SKI. Because of the transaction, it is necessary for your
Portfolio to approve a new investment management agreement.

Your Fund Board has unanimously approved the proposals and recommends them for
your approval.

Your attention is greatly appreciated.

Sincerely,

John Scott
President
Chief Executive Officer
<PAGE> 3
October, 1997

Dear Kemper Investors Life Contractholder:

As you may be aware, your Kemper Passport contract invests in subaccounts that
are part of the Investors Fund Series managed by Zurich Kemper Investments,
Inc. ("ZKI") and/or Zurich Kemper Value Advisors, Inc. ("ZKVA").

Your Fund Board has unanimously approved the proposals and recommends them for
your approval.

Your attention is greatly appreciated.

Sincerely,

John Scott
President
Chief Executive Officer
<PAGE> 4
October, 1997

Dear Kemper Investors Life Contractholder:

As you may be aware, your Kemper Advantage III contract invests in
subaccounts that are part of the Investors Fund Series managed by Zurich Kemper
Investments, Inc. ("ZKI") and/or Zurich Kemper Value Advisors, Inc. ("ZKVA").

Your Fund Board has unanimously approved the proposals and recommends them for
your approval.

Your attention is greatly appreciated.

Sincerely,

John Scott
President
Chief Executive Officer

<PAGE> 5
October, 1997

Dear Kemper Investors Life Policyowner:

As you may be aware, your WMA Power V policy invests in subaccounts that are
part of the Investors Fund Series managed by Zurich Kemper Investments, Inc.
("ZKI") and/or Zurich Kemper Value Advisors, Inc. ("ZKVA").

Your Fund Board has unanimously approved the proposals and recommends them for
your approval.

Your attention is greatly appreciated.

Sincerely,

John Scott
President
Chief Executive Officer
<PAGE> 6

October 1997

Kemper

Important News

for Investor Fund Series Shareholders

WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE IS A BRIEF OVERVIEW OF MAJOR MATTERS TO BE VOTED UPON.

================================================================================

Q&A
QUESTIONS AND ANSWERS

Q WHAT IS HAPPENING?

A Zurich Insurance Company, the parent of your Portfolio's investment manager
(Zurich Kemper Investments, Inc. or "ZKI" or, for Kemper Value Portfolio and
Kemper Small Cap Value Portfolio, Zurich Kemper Value Advisors, Inc. or "ZKVA")
has entered into an agreement with Scudder, Stevens & Clark, Inc. ("Scudder")
whereby Zurich will acquire approximately 70% of Scudder. Upon completion of the
transaction, Scudder will change its name to Scudder Kemper Investments, Inc.
("SKI") and ZKI and ZKVA will be combined with SKI. Because of the transaction,
it is necessary for your Portfolio to approve a new investment management
agreement.

The following pages elaborate on Scudder, the proposed new investment management
agreement and the Fund Board's evaluation of Zurich and Scudder. A vote is also
being sought on the election of Board members, the selection of independent
auditors and an amendment to the Agreement and Declaration of Trust.

Q WHAT IS SCUDDER?

A Scudder is one of America's oldest and largest investment management firms. It
manages assets invested in equities, fixed income and money market instruments
in both developed and emerging markets. Scudder provides investment services for
open-end and closed-end funds, and private and institutional clients.

Q HOW WILL THE ZURICH/SCUDDER TRANSACTION AFFECT ME AS A PORTFOLIO SHAREHOLDER?

A Your Portfolio and your Portfolio investment will not change. You will still
own the same shares in the same Fund. If the new investment management agreement
is approved, your Portfolio shares will not change and the advisory fee rates
for your Portfolio will not change.

Zurich and Scudder have committed to provide all resources necessary to provide
your Portfolio with top quality investment management and shareholder services.

[KEMPER LOGO]
<PAGE> 7

Q WILL THE INVESTMENT ADVISORY FEE RATES BE THE SAME?

A Yes, the investment advisory fee rates for your Portfolio will remain
the same.

Q HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?

A After careful consideration, the board members of your Fund, including all of
the independent members, recommend that you vote "For" all the items on the
enclosed proxy card.

Q WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY SOLICITATION?

A ZKI -- not your Portfolio --is paying all costs of the Portfolios' shareholder
meeting and proxy solicitation.

Q WHOM DO I CALL FOR MORE INFORMATION?

A Please call Zurich Kemper Sales Support at (800) 621-5001.

ABOUT THE PROXY CARD

[PROXY CARD SAMPLE] Because each Portfolio must vote separately, you are being
sent a proxy card for each Portfolio account that you have.
Please vote all issues shown on each proxy card that you receive.

Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each proxy card. On Item 1 (election of trustees),
mark--For All, Withhold All or For All Except. If you mark an X in the For All
Except box, you should print the name(s) or number(s) relating to the
individual(s) for whom you wish to withhold authority. On all other Items,
mark--For, Against or Abstain. Then sign, date and return each of your proxy
cards in the accompanying postage-paid envelope. All registered owners of an
account, as shown in the address on the proxy card, must sign the proxy card.
If you are signing for a corporation, trust or estate, please indicate your
title or position.

We appreciate your continuing support and look forward to serving your future
investment needs.
THANK YOU FOR MAILING YOUR
PROXY CARD PROMPTLY!

<PAGE> 8

INVESTORS FUND SERIES
222 South Riverside Plaza Chicago, Illinois 60606

Telephone (800) 621-5001

October 10, 1997

Dear Investors Fund Series Shareholder:

As you read in the Questions and Answers (Q & A) on the outside cover, Zurich
Insurance Company ("Zurich") has entered into an agreement with Scudder, Stevens
& Clark, Inc. ("Scudder") pursuant to which Zurich will acquire approximately
70% of Scudder. Upon completion of the transaction, Scudder will change its name
to Scudder Kemper Investments, Inc. ("SKI"), and your Fund's investment manager
(Zurich Kemper Investments, Inc. or "ZKI" or, for the Kemper Value Portfolio and
Kemper Small Cap Value Portfolio, Zurich Kemper Value Advisors, Inc. or "ZKVA")
will be combined with SKI. Because of the transaction, it is necessary for your
Fund to approve a new investment management agreement.

If the new investment management agreement is approved, YOUR FUND SHARES WILL
NOT CHANGE, AND THE ADVISORY FEE RATES FOR YOUR FUND WILL NOT CHANGE. FURTHER,
YOU SHOULD CONTINUE TO RECEIVE THE HIGH QUALITY INVESTMENT MANAGEMENT AND
SHAREHOLDER SERVICES THAT YOU HAVE COME TO EXPECT OVER THE YEARS.

Your Fund Board has unanimously approved the proposals and recommends them for
your approval. I encourage you to vote in favor of the proposals.

As always, we thank you for your confidence and support.

Sincerely,

/s/ Stephen B. Timbers
Stephen B. Timbers
President [KEMPER LOGO]

<PAGE> 9

INVESTORS FUND SERIES
222 South Riverside Plaza Chicago, Illinois 60606

Telephone (800) 621-5001

NOTICE OF MEETING OF SHAREHOLDERS

DECEMBER 3, 1997 AND PROXY AND VOTING INSTRUCTION STATEMENT

October 10, 1997

To the Shareholders:

You are invited to attend a special meeting of shareholders of Investors Fund
Series (the "Fund"). The meeting will be held in the Presentation Room on the
32nd Floor at the offices of the Funds, 222 South Riverside Plaza, Chicago,
Illinois on Wednesday, December 3, 1997 at 2:30 p.m., Chicago time, for the
following purposes and to transact such other business as may properly come
before the meeting or any adjournment of the meeting:

1. To elect eight (8) Trustees to the Board of Trustees.

2. To ratify or reject the selection of Ernst & Young LLP as independent
auditors for the current fiscal year.

3. To approve or disapprove a new investment management agreement with Scudder
Kemper Investments, Inc. ("SKI") (or, in the case of any series of the Fund
except Kemper Value Portfolio and Kemper Small Cap Value Portfolio, with
Zurich Kemper Investments, Inc. ("ZKI") transferable to SKI or, in the case
of Kemper Value Portfolio and Kemper Small Cap Value Portfolio, with Zurich
Kemper Value Advisors, Inc. ("ZKVA") transferable to SKI).

4. To approve or disapprove a new sub-advisory agreement with Zurich Investment
Management Limited ("ZIML") (including approval of a subsequent assignment)
[for Kemper International Portfolio and Kemper Global Income Portfolio only].

5. To approve or disapprove a new sub-advisory agreement with Zurich Kemper
Value Advisors, Inc. ("ZKVA") [for Kemper Value+Growth Portfolio, Kemper
Horizon 20+ Portfolio, Kemper Horizon 10+ Portfolio and Kemper Horizon 5
Portfolio only].

6. To approve or disapprove an amendment to the Fund's Agreement and Declaration
of Trust.
<PAGE> 10

The Board of Trustees of the Fund has selected the close of business on
September 22, 1997 as the record date for the determination of shareholders of
the Fund entitled to notice of and to vote at the meeting. Shareholders are
entitled to one vote for each share held.

- ------------------------------------------------------------------------------

PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED CARD. SIGN, DATE AND
RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
- ------------------------------------------------------------------------------
<PAGE> 11

The accompanying proxy and voting instructions are solicited by the Board of
Trustees (the "Board") of the Fund for voting at the special meeting of
shareholders of the Fund to be held on Wednesday, December 3, 1997, and at any
and all adjournments thereof (the "Meeting"). The Fund is a "series company"
that issues various series of shares. (Each series also is sometimes described
herein as a "Fund.") Each series has its own investment objective and policies
and operates independently for purposes of investments, dividends and
redemptions. The series of the Fund are Kemper Money Market Portfolio ("KMMP"),
Kemper Total Return Portfolio ("KTRP"), Kemper High Yield Portfolio ("KHYP"),
Kemper Growth Portfolio ("KGP"), Kemper Government Securities Portfolio
("KGSP"), Kemper International Portfolio ("KIP") Kemper Small Cap Growth
Portfolio ("KSCGP"), Kemper Investment Grade Bond Portfolio ("KIGBP"), Kemper
Value Portfolio ("KVP"), Kemper Small Cap Value Portfolio ("KSCVP"), Kemper
Value+Growth Portfolio ("KVGP"), Kemper Horizon 20+ Portfolio ("KH20P"), Kemper
Horizon 10+ Portfolio ("KH10P"), Kemper Horizon 5 Portfolio ("KH5P"), Kemper
Blue Chip Portfolio ("KBCP"), Kemper Global Income Portfolio ("KGIP"), Zurich
High Yield Portfolio ("ZHYP"), and Zurich Emerging Markets Portfolio ("ZEMP").
As of September 22, 1997, ZHYP and ZEMP had not commenced operations and are not
currently available for investment.

The Fund is the funding vehicle for variable life insurance contracts ("VLI
contracts") and variable annuity contracts ("VA contracts") offered by the
separate accounts of certain life insurance companies ("Participating Insurance
Companies"). Individual VLI contract holders and VA contract holders are not the
"shareholders" of the Fund. Rather, the Participating Insurance Companies and
their separate accounts are the shareholders. To the extent required to be
consistent with interpretations of voting requirements by the staff of the
Securities and Exchange Commission, each Participating Insurance Company will
offer to contract owners the opportunity to instruct it as to how it should vote
shares held by it and the Separate Accounts on the items to be considered at the
meeting. The proxy and voting instruction statement is furnished to contract
owners entitled to give voting instructions with regard to each series of the
Fund. This proxy and voting instruction statement was first mailed to
shareholders and contract owners on or about October 10, 1997.

On Item 1 (election of trustees) and Item 2 (ratification of selection of
auditors), the Fund will vote in the aggregate and not by series. On Item 3
(approval of new investment management agreement), each series of the Fund will
vote separately. On Item 4 (approval of new sub-advisory agreement with ZIML)
and Item 5 (approval of new sub-advisory agreement with ZKVA), each affected
series of the Fund will vote separately. On Item 6 (approval of a change in the
Fund's Declaration of

2
<PAGE> 12

Trust), each series of the Fund will vote separately. The Board recommends an
affirmative vote on all items. The vote required to approve each item is
described under the section of this proxy and voting instruction statement
entitled "Miscellaneous."

3
<PAGE> 13

The following table indicates which shareholders are solicited with respect to
each Item:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
ITEM KMMP KTRP KHYP KGP KGSP KIP KSCGP KIGBP KVP KSCVP KVGP
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
1. Elect Trustees X X X X X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
2. Ratify selection of auditors X X X X X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3. Approval of New Investment Management Agreement X X X X X X X X X X X
with Scudder Kemper Investments, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
4. Approval of New Sub-Advisory Agreement with X
Zurich Investment Management Limited
- ------------------------------------------------------------------------------------------------------------------------------
5. Approval of New Sub-Advisory Agreement with X
Zurich Kemper Value Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
6. Approval of amendment to the Fund's Declaration X X X X X X X X X X X
of Trust
- ------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
ITEM KH20P KH10P KH5P KBCP KGIP
<S> <<C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
1. Elect Trustees X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
2. Ratify selection of auditors X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3. Approval of New Investment Management Agreement X X X X X
with Scudder Kemper Investments, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
4. Approval of New Sub-Advisory Agreement with X
Zurich Investment Management Limited
- ------------------------------------------------------------------------------------------------------------------------------
5. Approval of New Sub-Advisory Agreement with X X X
Zurich Kemper Value Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
6. Approval of amendment to the Fund's Declaration X X X X X
of Trust
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

4
<PAGE> 14

The Board has fixed the close of business on September 22, 1997 as the record
date for the determination of shareholders of the Fund entitled to notice of and
to vote at the Meeting. As of September 22, 1997, shares of the Fund were issued
and outstanding as follows:

<TABLE>
<CAPTION>
SERIES SHARES
- ------------------------------ -----------
<S> <C>
KMMP.......................... 117,658,647
KTRP.......................... 278,483,442
KHYP.......................... 275,185,795
KGP........................... 188,155,556
KGSP.......................... 71,199,927
KIP........................... 122,260,602
KSCGP......................... 63,144,131
KIGBP......................... 9,818,728
KVP........................... 78,089,177
KSCVP......................... 45,369,108
KVGP.......................... 32,834,005
KH20P......................... 8,777,271
KH10P......................... 13,432,232
KH5P.......................... 8,242,213
KBCP.......................... 6,973,871
KGIP.......................... 2,116,544
</TABLE>

INTRODUCTION

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 will become the
majority stockholder in Scudder with an approximately 70% interest, and ZKI will
become a wholly-owned subsidiary of, or be combined with, Scudder
("Transaction"). Upon completion of the Transaction, Scudder will change its
name to Scudder Kemper Investments, Inc. ("SKI"). Scudder, a New York-based
investment adviser and the investment manager for the Scudder and AARP Funds,
has approximately $125 billion under management. ZKI, a Chicago-based investment
adviser and the investment manager for the Kemper Funds, and its affiliates have
approximately $85 billion under management. The headquarters of SKI will be in
New York. Edmond D. Villani, Scudder's Chief Executive Officer, will continue as
Chief Executive Officer of SKI and will become a member of Zurich's Corporate
Executive Board. Some of the terms of the Transaction are also set forth in a
form of second amended and restated Security Holders Agreement ("New SHA") to be
entered into among the beneficial owners of the capital stock of Scudder, the
Scudder Representatives, Scudder, Zurich,

5
<PAGE> 15

ZKIH and the Scudder Kemper Investments, Inc. Executive Defined Contribution
Plan Trust.

Consummation of the Transaction would constitute an "assignment," as that term
is defined in the Investment Company Act of 1940 ("1940 Act"), of the Fund's
current investment management agreement with ZKI (or, in the case of KVP and
KSCVP, with Zurich Kemper Value Advisors, Inc. ("ZKVA")). As required by the
1940 Act, each current investment management agreement provides for its
automatic termination in the event of its assignment. Accordingly, as discussed
further below, a new investment management agreement between the Fund and SKI is
being proposed for approval by shareholders of the Fund.

DESCRIPTION OF THE TRANSACTION.

Under the Transaction Agreement, Zurich will pay $866.7 million in cash to
acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will then transfer a
9.6% fully diluted equity interest in SKI to a defined contribution plan for the
benefit of Scudder and ZKI employees, as well as cash and warrants on Zurich
shares for award to Scudder employees, in each case subject to five-year vesting
schedules. After giving effect to the Transaction, current Scudder stockholders
will have a 29.6% fully diluted equity interest in SKI and Zurich will have a
69.5% fully diluted interest in SKI. Scudder's name will be changed to Scudder
Kemper Investments, Inc.

The purchase price for Scudder or for ZKI in the Transaction is subject to
adjustment based on the effect on revenues of non-consenting clients, and will
be reduced if the annualized investment management fee revenues (excluding the
effect of market changes, but taking into account new assets under management)
from clients at the time of closing, as a percentage of such revenues as of June
30, 1997 (the "Revenue Run Rate Percentage"), is less than 90%.

At the closing, Zurich and the other stockholders of SKI will enter into the New
SHA. Under the New SHA, Scudder stockholders will be entitled to designate three
of the seven members of the SKI board and two of the four members of an
Executive Committee, which will be the primary management-level committee of
SKI. Zurich will be entitled to designate the other four members of the SKI
board and the other two members of the Executive Committee.

The names, addresses and principal occupations of the initial Scudder-designated
directors of SKI are as follows: LYNN S. BIRDSONG, 345 Park Avenue, New York,
New York, Managing Director of Scudder; CORNELIA M. SMALL, 345 Park Avenue, New
York, New York, Managing Director of Scudder; and EDMOND D. VILLANI, 345 Park
Avenue, New

6
<PAGE> 16

York, New York, President, Chief Executive Officer and Managing Director of
Scudder.

The names, addresses and principal occupations of the initial Zurich-designated
directors of SKI are as follows: LAWRENCE W. CHENG, Mythenquai 2, Zurich,
Switzerland, Chief Investment Officer for Investments and Institutional Asset
Management and the corporate functions of Securities and Real Estate for Zurich
and a member of the Corporate Executive Board of Zurich; STEVEN M. GLUCKSTERN,
Mythenquai 2, Zurich, Switzerland, responsible for Reinsurance, Structured
Finance, Capital Market Products and Strategic Investments, and a member of the
Corporate Executive Board of Zurich; ROLF HUEPPI, Mythenquai 2, Zurich,
Switzerland, Chairman of the Board and Chief Executive Officer of Zurich; and
MARKUS ROHRBASSER, Mythenquai 2, Zurich, Switzerland, Chief Financial Officer
and a member of the Corporate Executive Board of Zurich.

The initial Scudder-designated Executive Committee members will be Messrs.
Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.

The New SHA requires the approval of a majority of the Scudder-designated
directors for certain decisions, including changing the name of SKI, effecting a
public offering before April 15, 2005, causing SKI to engage substantially in
non-investment management and related business, making material acquisitions or
divestitures, making changes in SKI's capital structure, dissolving or
liquidating SKI, or entering into certain affiliated transactions with Zurich.
The New SHA also provides for various put and call rights with respect to SKI
stock held by current Scudder employees, limitations on Zurich's ability to
purchase other asset management companies outside of SKI, rights of Zurich to
repurchase SKI stock upon termination of employment of SKI personnel, and
registration rights for stock held by continuing Scudder stockholders.

The Transaction is subject to a number of conditions, including approval by
Scudder stockholders; the Revenue Run Rate Percentages of Scudder and ZKI being
at least 75%; Scudder and ZKI having obtained director and stockholder approvals
from U.S.-registered funds representing 90% of the assets of such funds under
management as of June 30, 1997; the absence of any restraining order or
injunction preventing the Transaction, or any litigation challenging the
Transaction that is reasonably likely to result in an injunction or invalidation
of the Transaction; and the continued accuracy of the representations and
warranties contained in the Transaction Agreement. The Transaction is expected
to close during the fourth quarter of 1997.

Subsequent to the execution of the Transaction Agreement, Zurich agreed to cause
ownership of Zurich Investment Management Limited ("ZIML") to be transferred by
Zurich (or a direct or indirect

7
<PAGE> 17

wholly-owned subsidiary of Zurich) to SKI (or a direct or indirect wholly-owned
subsidiary of SKI). ZIML is a sub-adviser for certain portfolios of the Fund.
While the amount of consideration payable to Zurich for ZIML has not yet been
finally agreed upon, it is expected that such consideration would in no event
exceed $50 million, payable in cash or shares of SKI stock or some combination
thereof at the closing of the Transaction or over some period of time after the
closing of the Transaction. Following the transfer, which is expected to take
place at the same time as the closing of the Transaction, ZIML's board of
directors would comprise representatives of Scudder and Zurich. The capital
stock of ZIML initially may be transferred to one or more wholly-owned
subsidiaries of Zurich, but ultimately will be transferred to SKI or one of its
wholly-owned subsidiaries (the "ZIML Transaction"). The ZIML Transaction will
result in an assignment of the sub-advisory agreement under the 1940 Act.

ITEM 1. ELECTION OF BOARD OF TRUSTEES

At the Meeting, eight (8) trustees are to be elected to constitute the Board of
the Fund. All the nominees (except Messrs. Daniel Pierce and Edmond Villani)
were elected to the Board of the Fund at a special meeting of shareholders held
on September 19, 1995.

It is intended that the proxies will be voted for the election of the nominees
described below. The nominees, if elected, will take office upon consummation of
the Transaction and their election and qualification is contingent upon
consummation of the Transaction. Each trustee so elected will serve as a trustee
of the Fund from the date of the consummation of the Transaction until the next
meeting of shareholders, if any, called for the purpose of electing trustees and
until the election and qualification of a successor or until such trustee sooner
dies, resigns or is removed as provided in the Agreement and Declaration of
Trust of the Fund ("Declaration of Trust"). If the transaction is not
consummated, the current trustees of the Fund will continue to serve as the
Fund's Board (which are those identified as such below, along with Mr. Stephen
B. Timbers, the president and chief executive officer of ZKI). Since the Fund
does not hold annual meetings, trustees will hold office for an indeterminate
period.

8
<PAGE> 18

All the nominees listed below have consented to serve as trustees of the Fund,
if elected. In case any nominee shall be unable or shall fail to act as a
trustee by virtue of an unexpected occurrence, the proxies may be voted for such
other person(s) as shall be determined by the persons acting under the proxies
in their discretion.

<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A BOARD MEMBER
------------------------------- -----------------
<S> <C>
James B. Akins (10/15/26) 1995
Consultant on International, Political and
Economic Affairs; formerly, a career United
States Foreign Service Officer; Energy Adviser
for the White House; United States Ambassador to
Saudi Arabia.
Arthur R. Gottschalk (02/13/25) 1989
Retired; formerly, President, Illinois
Manufacturers Association; Trustee, Illinois
Masonic Medical Center; formerly, Illinois State
Senator; formerly, Vice President, The Reuben H.
Donnelly Corp.
Frederick T. Kelsey (04/25/27) 1989
Retired; formerly, consultant to Goldman, Sachs
& Co.; formerly, President, Treasurer and
Trustee of Institutional Liquid Assets and its
affiliated mutual funds; Trustee of the
Benchmark Funds; Trustee of the Pilot Funds
(through 1997).
*Daniel Pierce (03/18/34) Nominee
Chairman of the Board and Managing Director,
Scudder; Director, Fiduciary Trust Company;
Director, Fiduciary Company Incorporated; Board
member of 14 investment companies advised by
Scudder.
Fred B. Renwick (02/01/30) 1995
Professor of Finance, New York University, Stern
School of Business; Director, TIFF Investment
Program, Inc.; Director, the Wartburg Home
Foundation; Chairman, Investment Committee of
Morehouse College Board of Trustees; Chairman,
American Bible Society Investment Committee;
formerly, member of the Investment Committee of
Atlanta University Board of Trustees; formerly,
Director of Board of Pensions Evangelical
Lutheran Church of America.
</TABLE>

9
<PAGE> 19

<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A BOARD MEMBER
- ------------------------------------------------ -----------------
<S> <C>
John B. Tingleff (05/04/35) 1991
Retired; formerly, President, Tingleff &
Associates (management consulting firm);
formerly, Senior Vice President, Continental
Illinois National Bank & Trust Company.
*Edmond D. Villani (03/04/47) Nominee
President, Chief Executive Officer and Managing
Director, Scudder.
John G. Weithers (08/08/33) 1993
Retired; formerly, Chairman of the Board and
Chief Executive Officer, Chicago Stock Exchange;
Director, Federal Life Insurance Company;
President of the Members of the Corporation and
Trustee, DePaul University; Director, Systems
Imagineering, Inc.
</TABLE>

- ---------------
* Interested persons of Scudder as defined in the Investment Company Act of
1940.

All the nominees, except Messrs. Pierce and Villani, serve as board members of
13 Kemper Funds. Mr. Pierce and Mr. Villani have each been nominated to serve as
a board member of 39 Kemper Funds. A "Kemper Fund" is an investment company for
which ZKI, ZKVA or their affiliates serve as investment manager.

The Board has an audit and governance committee that is composed of Messrs.
Akins, Gottschalk, Kelsey, Renwick, Tingleff and Weithers. The committee of the
Fund met three times during the fiscal year ended December 31, 1996. The
committee makes recommendations regarding the selection of independent auditors
for the Fund, confers with the independent auditors regarding the Fund's
financial statements, the results of audits and related matters, seeks and
reviews Board nominees and performs such other tasks as the Board assigns. The
committee proposed the nominees for election by the shareholders; and the Board
of Trustees, including the non-interested trustees, concurred. Shareholders
wishing to submit the name of a candidate for consideration by the committee
should submit their recommendations to the secretary of the Fund.

The Fund pays trustees who are not "interested persons" of the Fund an annual
retainer fee, plus expenses, and an attendance fee for each Board meeting and
committee meeting attended. As reflected above, the trustees currently serve as
Board members of various investment companies for which ZKI or its affiliates
serve as investment manager. Trustees or officers who are "interested persons"
receive no compensation from the Fund. The Board met six times during the fiscal
year ended December 31, 1996. Each then current trustee attended 75% or more of
the respective meetings of the Board and the audit and governance committee (if
a member thereof) held during the fiscal year ended December 31, 1996.

10
<PAGE> 20

The table below shows, for each trustee entitled to receive compensation from
the Fund, the aggregate compensation paid or accrued during the Fund's fiscal
year ended December 31, 1996 and the total compensation that Kemper Funds paid
or accrued to each trustee during the calendar year 1996.

<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION KEMPER FUNDS
PAID BY PAID TO
NAME OF TRUSTEE THE FUND TRUSTEES(2)
- -------------------------------------- ------------ ------------
<S> <C> <C>
James E. Akins........................ $ 32,900 $ 94,300
Arthur R. Gottschalk(1)............... 36,000 102,700
Frederick T. Kelsey(1)................ 37,700 106,800
Fred B. Renwick....................... 32,900 94,300
John B. Tingleff...................... 32,900 94,300
John G. Weithers...................... 32,900 94,300
</TABLE>

- ---------------
(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with the Fund. Deferred amounts accrue interest
monthly at a rate equal to the yield of Zurich Money Funds --Zurich Money
Market Fund. Total deferred fees and interest accrued for the latest and
prior fiscal years for this Fund are $69,600 for Mr. Gottschalk and $111,900
for Mr. Kelsey.

(2) Includes compensation for service on the boards of 13 Kemper Funds with 36
fund portfolios during the calendar year 1996. Each trustee currently serves
as a Board member of 13 Kemper Funds with 39 fund portfolios.

FUND OFFICERS. Information about the executive officers of the Fund, with their
respective dates of birth and terms of office indicated, is set forth below.

Daniel J. Bukowski (05/06/63), vice president of the Fund since 03/06/96, is
senior vice president and director of quantitative research.

David H. Burshtan (10/24/61), vice president of the Fund since 01/17/97, is vice
president of ZKI.

Robert S. Cessine (01/05/50), vice president of the Fund since 03/06/96, is
senior vice president of ZKI since January 1993; formerly, senior corporate bond
analyst at an investment management company.

Philip J. Collora (11/15/45) vice president of the Fund since 02/28/92, and
secretary of the Fund since 03/02/95, is senior vice president and assistant
secretary of ZKI.

Jerome L. Duffy (06/29/36), treasurer of the Fund since 01/22/87, is senior vice
president of ZKI.

11
<PAGE> 21

Thomas H. Forester (12/15/58), vice president of the Fund since 07/15/97, is
managing director of ZKVA.

William M. Knapp (04/23/61), vice president of the Fund since 01/17/97, is first
vice president of ZKI.

Gary A. Langbaum (12/16/48), vice president of the Fund since 06/20/95, is
executive vice president of ZKI.

Maureen P. Lentz (08/26/61), vice president of the Fund since 01/17/97, is vice
president of ZKI.

Charles R. Manzoni, Jr. (01/23/47), vice president of the Fund since 09/04/96,
is executive vice president, secretary and general counsel of ZKI; secretary,
ZKI Holding Corp.; secretary, ZKI Agency, Inc., and formerly, Partner, Gardner,
Carton & Douglas.

Michael A. McNamara (12/28/44), vice president of the Fund since 02/28/92, is
senior vice president of ZKI.

John E. Neal (03/09/50), vice president of the Fund since 01/17/97, is president
of Kemper Funds Group, a unit of ZKI, and director of ZKI, ZKVA and Zurich
Kemper Distributors, Inc. ("ZKDI").

Robert C. Peck, Jr. (10/01/46), vice president of the Fund since 07/15/97, is
executive vice president, chief investment officer-fixed income of ZKI, and
formerly, executive vice president and chief investment officer of an
unaffiliated investment management firm.

Frank J. Rachwalski, Jr. (03/26/45), vice president of the Fund since 03/02/95,
is senior vice president of ZKI.

Harry E. Resis, Jr. (11/24/45), vice president of the Fund since 03/02/95, is
senior vice president of ZKI.

Steven H. Reynolds (09/11/43), vice president of the Fund since 11/10/95, is
executive vice president and chief investment officer-equities of ZKI.

Kurt R. Stalzer (05/01/58), vice president of the Fund since 01/17/97, is senior
vice president of ZKI.

Steven T. Stokes (07/18/62) vice president of the Fund since 01/17/97, is
managing director of ZKVA.

Stephen B. Timbers (08/08/44), president of the Fund since 03/11/95, is
president, chief executive officer, chief investment officer and director of ZKI
and director of ZKDI, ZKVA and LTV Corporation; formerly, president and chief
operating officer of Kemper Corporation. Mr. Timbers is also Trustee of the
Fund.

Richard L. Vandenberg (11/16/49), vice president of the Fund since 01/17/97 is
senior vice president of ZKI; prior thereto, senior vice president and portfolio
manager of an investment management firm.

12
<PAGE> 22

The officers of the Fund are elected by the Board of the Fund on an annual basis
to serve until their successors are elected and qualified. It is anticipated
that, after consummation of the Transaction, the Board of the Fund will elect
new officers who are expected to include persons currently affiliated with
Scudder.

SHAREHOLDINGS. As of September 22, 1997, shares of each series of the Fund were
owned of record by the Participating Insurance Companies as set forth on Exhibit
A.

ITEM 2. SELECTION OF INDEPENDENT AUDITORS

A majority of the members of the Board who are not "interested" persons of the
Fund has selected Ernst & Young LLP, independent auditors, to audit the books
and records of the Fund for the current fiscal year. This firm has served in
this capacity for the Fund since the Fund was organized and has no direct or
indirect financial interest in the Fund except as independent auditors. The
selection of Ernst & Young LLP as independent auditors of the Fund is being
submitted to the shareholders for ratification. A representative of Ernst &
Young LLP is expected to be present at the Meeting and will be available to
respond to any appropriate questions raised at the Meeting and may make a
statement.

BOARD OF TRUSTEES RECOMMENDATION

The Board recommends that shareholders vote FOR the ratification of the
selection of independent auditors.

ITEM 3. NEW INVESTMENT MANAGEMENT AGREEMENT

INTRODUCTION

Zurich Kemper Investments, Inc. ("ZKI") is the investment adviser and manager
for each series of INFS other than KVP and KSCVP. Zurich Kemper Value Advisors,
Inc. ("ZKVA") is the investment adviser and manager for KVP and KSCVP. ZKI and
its indirect parent, Zurich Insurance Company ("Zurich"), entered into a
transaction agreement with Scudder, Stevens & Clark, Inc. ("Scudder") whereby
Zurich will acquire approximately 70% of Scudder. Upon completion of the
Transaction, Scudder will change its name to Scudder Kemper Investments, Inc.
("SKI") and ZKI and ZKVA will be combined with SKI.

As discussed above, consummation of the Transaction would constitute an
"assignment," as that term is defined in the Investment Company Act of 1940 (the
"1940 Act"), of the Fund's current investment management agreement with ZKI (or
ZKVA in the case of KVP and KSCVP). As required by the 1940 Act, each current
investment management agreement provides for its automatic termination in the
event of its assignment.

13
<PAGE> 23

In anticipation of the Transaction, a new investment management agreement
("management agreement") between the Fund and SKI is being proposed for approval
by shareholders of the Fund. (Depending on the timing of the combination of the
Scudder, ZKI and ZKVA organizations, the new investment management agreement may
initially be between the Fund and ZKI (or ZKVA in the case of KVP and KSCVP) for
some period following the Transaction and then be transferred to SKI without
further action on the part of shareholders of the Fund. Accordingly, approval of
the new agreement with SKI would also include approval of any interim agreement
with ZKI or ZKVA following the assignment of the current agreement. SKI, ZKI or
ZKVA as party to the new investment management agreement, is sometimes referred
to in this proxy statement as the "investment manager.") A copy of the form of
the new management agreement is attached hereto as Exhibit B.

BOARD OF TRUSTEES RECOMMENDATION

The Board of the Fund met on July 8, 1997, July 15, 1997, August 18-19, 1997 and
September 19-20, 1997 to consider the Transaction and its anticipated effects
upon ZKI and ZKVA and the investment management and other services provided to
the Fund by ZKI, ZKVA and its affiliates. In addition, the Independent Trustees
also met separately with counsel on a number of occasions to discuss the
Transaction. On September 20, 1997 the Board of the Fund, including a majority
of the Board members who are not parties to such agreement or interested persons
of any such party, voted unanimously to approve the new management agreement and
to recommend it to shareholders for their approval.

For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Trustees Evaluation" near the end of this
Item 3.

The Board recommends that shareholders vote FOR approval of the new management
agreement.

THE CURRENT INVESTMENT MANAGEMENT AGREEMENT

The current management agreement provides that the Fund's investment manager
acts as investment adviser, manages the Fund's investments, administers the
Fund's business affairs, furnishes offices, necessary facilities and equipment,
provides clerical, bookkeeping and administrative services, provides shareholder
and information services and permits any of its officers or employees to serve
without compensation as trustees or officers of the Fund if duly elected to such
positions. Under the current management agreement, the Fund agrees to assume and
pay the charges and expenses of its operations including, by way of example, the
compensation of the trustees other than those affiliated with the investment

14
<PAGE> 24

manager, charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, of any registrar of the Fund and of the
custodian (including fees for safekeeping of securities), costs of calculating
net asset value, all costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by the Fund, costs of share
certificates, membership dues in the Investment Company Institute or any similar
organization, reports and notices to shareholders, other like miscellaneous
expenses and all taxes and fees to federal, state or other governmental
agencies.

For the services and facilities furnished, the Fund pays an investment
management fee as a percentage of average daily net assets, payable monthly at
the annual rates shown below. Exhibit G reflects the management fees paid by the
Fund for the fiscal year ended December 31, 1996 (except for KBCP and KGIP,
which commenced operations on May 1, 1997).

<TABLE>
<CAPTION>
SERIES MANAGEMENT FEE
------ --------------
<S> <C>
KMMP............................................. .50%
KTRP............................................. .55%
KHYP............................................. .60%
KGP.............................................. .60%
KGSP............................................. .55%
KIP.............................................. .75%
KSCGP............................................ .65%
KIGBP............................................ .60%
KVP.............................................. .75%
KSCVP............................................ .75%
KVGP............................................. .75%
KH20P............................................ .60%
KH10P............................................ .60%
KH5P............................................. .60%
KBCP............................................. .65%
KGIP............................................. .75%
</TABLE>

The management agreement provides that the Fund's investment manager will
reimburse the Fund should the operating expenses of the Fund, including the
investment management fee, but excluding taxes, interest, distribution fees,
extraordinary expenses, brokerage commissions or transaction costs and any other
properly excludable expenses, exceed on an annual basis the most restrictive
applicable state expense limitation. Currently, the Fund is not subject to any
state expense limitation.

The management agreement provides that the Fund's investment manager shall not
be liable for any error of judgment or of law, or for any loss

15
<PAGE> 25

suffered by the Fund in connection with the matters to which the management
agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Fund's investment manager in the
performance of its obligations and duties or by reason of its reckless disregard
of its obligations and duties under the management agreement.

The management agreement may be terminated for the Fund or series thereof
without penalty upon sixty (60) days written notice by either party, or by a
majority vote of the outstanding shares of the Fund or series thereof, and
automatically terminates in the event of its assignment.

ZKI or ZKVA, as the case may be, has acted as investment adviser and manager for
each series since it commenced public offering of its shares as shown below.
Also shown is the date of each current management agreement, the date when the
current management agreement was last approved by the trustees and shareholders
of each series, the purpose of the last submission to shareholders of the
current management agreement, and the date to which the current management
agreement continues.

<TABLE>
<CAPTION>
COMMENCEMENT APPROVAL OF CURRENT CURRENT
OF DATE OF AGREEMENT BY AGREEMENT
INVESTMENT CURRENT ----------------------- CONTINUED BY
SERIES OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS TRUSTEES TO
- ----------------------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
KMMP....... 09/03/87 01/04/96 03/11/97 09/19/95(a) 04/01/98
KTRP....... 09/03/87 01/04/96 03/11/97 09/19/95(a) 04/01/98
KHYP....... 09/03/87 01/04/96 03/11/97 09/19/95(a) 04/01/98
KGP........ 09/03/87 01/04/96 03/11/97 09/19/95(a) 04/01/98
KGSP....... 09/03/87 01/04/96 03/11/97 09/19/95(a) 04/01/98
KIP........ 01/06/92 01/04/96 03/11/97 09/19/95(a) 04/01/98
KSCGP...... 05/01/94 01/04/96 03/11/97 09/19/95(a) 04/01/98
KIGBP...... 05/01/96 01/04/96 03/11/97 04/30/96(b) 04/01/98
KVP........ 05/01/96 01/04/96 03/11/97 04/30/96(b) 04/01/98
KSCVP...... 05/01/96 01/04/96 03/11/97 04/30/96(b) 04/01/98
KVGP....... 05/01/96 01/04/96 03/11/97 04/30/96(b) 04/01/98
KH20P...... 05/01/96 01/04/96 03/11/97 04/30/96(b) 04/01/98
KH10P...... 05/01/96 01/04/96 03/11/97 04/30/96(b) 04/01/98
KH5P....... 05/01/96 01/04/96 03/11/97 04/30/96(b) 04/01/98
KBCP....... 05/01/97 01/04/96 03/11/97 04/30/97(b) 04/01/98
KGIP....... 05/01/97 01/04/96 03/11/97 04/30/97(b) 04/01/98
</TABLE>

- ---------------
(a) The current management agreement was last submitted to shareholders for
approval in connection with the Zurich/Kemper merger.

(b) The current management agreement was last submitted to shareholders for
approval by the initial shareholder (i.e., ZKI) immediately prior to the
commencement of the public offering of shares.

16
<PAGE> 26

SUB-ADVISER--ZIML

KTRP, KHYP, KGP, KIP, KSCGP, KIGBP, KVGP, KH20P, KH10P, KH5P, KBCP and KGIP each
use the investment management services of Zurich Investment Management Limited
("ZIML"), 1 Fleet Place, London, UK, ECM4 7RQ, an indirect subsidiary of Zurich
and an affiliate of ZKI, with respect to investments in foreign securities
pursuant to the sub-advisory agreements between ZKI and ZIML described below.
The current sub-advisory agreements are dated December 1, 1996, were last
approved for continuation by the Board on March 11, 1997, and will continue,
unless replaced or otherwise terminated, until April 1, 1998.

As with the investment management agreements, the sub-advisory agreements with
ZIML will terminate upon consummation of the Transaction. As discussed below,
new sub-advisory agreements are proposed for KIP and KGIP (series of the Fund).
(See "Item 4. New Sub-Advisory Agreement with Zurich Investment Management
Limited.") For KTRP, KHYP, KGP, KSCGP, KIGBP, KVGP, KH20P, KH10P, KH5P and KBCP
however, new sub-advisory agreements are not being proposed; rather, it is
expected that the investment manager would assume responsibility for the portion
of those Funds' assets invested in foreign securities. In addition, as described
above, it is expected that ownership of ZIML will be transferred to SKI or to a
direct or indirect wholly-owned subsidiary of SKI upon consummation of the
Transaction.

Under the terms of the Sub-Advisory Agreement for a Fund, ZIML renders
investment advisory and management services with regard to that portion of the
Fund's portfolio as may be allocated to ZIML by ZKI from time to time for
management of foreign securities, including foreign currency transactions and
related investments. For its services, ZIML receives from ZKI (not from the
Funds) a monthly fee at the annual rate of .35% for KTRP, KGP, KIP, KSCGP, KVGP,
KH20P, KH10P, KH5P and KBCP and .30% for KHYP, KIGBP, and KGIP on the portion of
the average daily net assets allocated by ZKI to ZIML for management.

Each Sub-Advisory Agreement provides that ZIML will not be liable for any error
of judgment or mistake of law or for any loss suffered by any Fund in connection
with matters to which the Sub-Advisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
ZIML in the performance of its duties or from reckless disregard by ZIML of its
obligations and duties under the Sub-Advisory Agreement.

Each Sub-Advisory Agreement continues in effect from year to year so long as its
continuation is approved at least annually (a) by a majority of the Board
members who are not parties to such agreement or interested persons of any such
party except in their capacity as Board members of the Fund and (b) by the
shareholders or the Board. Each Sub-Advisory

17
<PAGE> 27

Agreement may be terminated at any time for a Fund upon 60 days notice by ZKI,
ZIML or the Board or by a majority vote of the outstanding shares of the Fund,
and will terminate automatically upon assignment or upon the termination of the
Fund's investment management agreement. No sub-advisory fees were paid by ZKI to
ZIML for each Fund's 1996 fiscal year, although in prior fiscal years ZKI has
paid ZIML for its services to ZKI with respect to foreign securities investments
of certain Funds.

SUB-ADVISER--ZKVA

KVGP, KH20P, KH10P and KH5P use the investment management services of Zurich
Kemper Value Advisors, Inc. ("ZKVA") with respect to investments in the value
portion of KVGP, KH20P, KH10P and KH5P pursuant to the sub-advisory agreement
between ZKI and ZKVA described below. ZKVA is a wholly-owned subsidiary of ZKI
and is located at 280 Park Avenue, New York, New York 10017. The current sub-
advisory agreement is dated December 1, 1996, was approved on April 30, 1996, by
ZKI as the initial shareholder, was last approved for continuation by the Board
on March 11, 1997, and will continue, unless replaced or otherwise terminated,
until April 1, 1998.

As with the investment management agreements, upon consummation of the
Transaction, the sub-advisory agreement with ZKVA will terminate. As discussed
below, a new sub-advisory agreement with ZKVA is being proposed. (See "Item 5.
New Sub-Advisory Agreement with Zurich Kemper Value Advisors, Inc.") However, it
is expected that, upon consummation of the Transaction or soon thereafter, ZKVA
will be combined with SKI, the separate sub-advisory agreement with ZKVA will be
terminated, and all ZKVA functions will be provided by SKI.

Under the terms of the Sub-Advisory Agreement, ZKVA manages the value portion of
KVGP, KH20P, KH10P and KH5P and provides such investment advice, research and
assistance as ZKI may, from time to time, reasonably request. For its services,
ZKVA receives from ZKI (not from the Fund) a monthly fee at the annual rate of
.25% of average daily net assets, in the case of KVGP, and .25% on the portion
of average daily net assets of KH20P, KH10P and KH5P allocated by ZKI to ZKVA.

The Sub-Advisory Agreement provides that ZKVA will not be liable for any error
of judgment or mistake of law or for any loss suffered by a Fund in connection
with matters to which the Sub-Advisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
ZKVA in the performance of its duties or from reckless disregard by ZKVA of its
obligations and duties under the Sub-Advisory Agreement.

The Sub-Advisory Agreement continues by its terms from year to year if such
continuance is specifically approved at least annually (a) by a

18
<PAGE> 28

majority of Board members who are not parties to such agreement or interested
persons of any such party except in their capacity as Board members of the Fund,
and (b) by the shareholders or the Board of the Fund. The Sub-Advisory Agreement
may be terminated at any time upon 60 days' notice by ZKI, ZKVA or the Board of
the Fund or by a majority vote of the outstanding shares of a Fund, and will
terminate automatically upon assignment or upon termination of the Fund's
investment management agreement.

The sub-advisory fees paid by ZKI to ZKVA for each series for the fiscal year
ended December 31, 1996 were $7,233, $0, $0, and $0 for KVGP, KH20P, KH10P and
KH5P, respectively.

NEW INVESTMENT MANAGEMENT AGREEMENT

The new investment management agreement for the Fund is substantially similar to
the current investment management agreement. While the form of the agreement is
different (i.e., a form generally used by Scudder), there is no material
difference in the substance of the obligations of the investment manager under
the agreement except that, under a separate agreement with Scudder Fund
Accounting Corporation ("SFAC"), a subsidiary of Scudder, SFAC, rather than the
Fund's investment manager, will compute the net asset value for each Fund. SFAC
will not charge the Fund for this service and has no current intention to do so;
however, subject to Board approval, at some time in the future, SFAC may seek
payment for its services under the agreement. In addition, the management fee
under the new agreement is paid at the end of each month and is computed as 1/12
of the applicable annual rate based upon the average daily net assets for such
month; whereas, under the current agreement, the management fee is paid at the
end of each month and is computed at the annual rate based upon the average
daily net assets. While the annual rates are the same under the current and new
agreements, depending upon the level of net assets at any time, the fees paid
may differ.

The new management agreement will be dated as of the date of the consummation of
the Transaction, which is expected to occur in the fourth quarter of 1997, but
in no event later than February 28, 1998. The new management agreement will be
in effect for an initial term ending on the same date as would the current
management agreement but for the Transaction, and may continue thereafter from
year to year if specifically approved at least annually by the vote of "a
majority of the outstanding voting securities" of the Fund, as defined under the
1940 Act, or by the Board and, in either event, the vote of a majority of the
trustees who are not parties to the agreement or interested persons of any such
party, cast in person at a meeting called for such purpose.

19
<PAGE> 29

BOARD OF TRUSTEES EVALUATION

On June 27, 1997, the Board of the Fund was informed of the Transaction.
Thereafter, the Board was given extensive information about the Transaction and
Scudder. The Board met with senior management personnel of Zurich and Scudder
and had extended discussions regarding Zurich's and Scudder's plans for ZKI,
ZKVA, SKI and the Fund. Throughout the process, the Independent Trustees of the
Board had the assistance of legal counsel, who prepared, among other things, an
analysis of the Board's fiduciary obligations. The Board met on July 8, 1997,
July 15, 1997, August 18-19, 1997 and September 19-20, 1997 to consider the
Transaction and its effects on the Fund. The Independent Trustees also met
separately with counsel on a number of occasions to discuss the Transaction. As
a result of its review and consideration of the Transaction and the proposed new
management agreements, at its meeting on September 20, 1997, the Board of the
Fund voted unanimously to approve the new management agreement and to recommend
it to the shareholders of the Fund for their approval.

In connection with its review, the Board obtained substantial information
regarding: the management, financial position and business of Scudder; the
history of Scudder's business and operations; the investment performance of the
investment companies and private accounts advised by Scudder; the anticipated
effect of the Transaction on the Fund and its shareholders; and future plans of
Zurich and Scudder with respect to ZKI, ZKVA, SKI and the Fund. The Board also
received information regarding the terms of the Transaction and comprehensive
financial information, including: employment agreements with senior Scudder
executives; incentive stock compensation to be given to key ZKI personnel; and
anticipated SKI management and board of directors.

In connection with their deliberations, the Board of the Fund obtained certain
assurances from Zurich and Scudder, including the following:

- - Zurich and Scudder have provided to the Board such information as is
reasonably necessary to evaluate the new management and other agreements.

- - Zurich looks upon SKI as the core of Zurich's global asset management
strategy. With that focus, Zurich will devote to SKI and its affairs all
attention and resources that are necessary to provide for the Fund top quality
investment management, shareholder, administrative and product distribution
services.

- - Scudder looks upon the Kemper Funds as a core part of Scudder's global asset
management strategy. With that focus, Scudder will devote to the Kemper Funds
and their affairs all attention and resources that

20
<PAGE> 30

are necessary to provide for the Fund top quality investment management,
shareholder, administrative and product distribution services.

- - The Transaction will not result in any change in the Fund's investment
objectives or policies.

- - The Transaction is not expected to result in any adverse change in the
investment management or operations of the Fund; and neither Zurich nor
Scudder plans to make any material change in the manner in which investment
advisory services or other services are rendered to the Fund which has the
potential to have a material adverse effect upon the Fund.

- - Zurich and Scudder are committed to the continuance, without interruption, of
services to the Fund of the type and quality currently provided by ZKI and its
subsidiaries, or superior thereto.

- - Zurich and Scudder plan to maintain or enhance the SKI facilities and
organization.

- - In order to retain and attract key personnel, Zurich and Scudder intend for
SKI to maintain overall compensation policies and practices at market levels
or better.

- - Zurich and Scudder intend to maintain the distinct brand identity of the
Kemper and Scudder Funds and are committed to strengthening and enhancing both
brands and the distribution channels for both families of Funds, while
maintaining their separate brand identity.

- - Scudder has in place a detailed and comprehensive plan of action to
effectively deal with the year 2000 issue for all SKI operations. The Kemper
Funds will not be transferred from their current systems unless certain
conditions are met.

- - Zurich and Scudder will promptly advise the Board of decisions materially
affecting the SKI organization as they relate to the Fund. Neither this, nor
any of the other above commitments will be altered by Zurich or Scudder
without the Board's prior consideration.

Zurich and Scudder assured the Board that they intend to comply with Section
15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of its affiliated persons to
receive any amount or benefit in connection with a change in control of the
investment adviser so long as two conditions are met. First, for a period of
three years after the Transaction, at least 75% of the board members of the
investment company must not be "interested persons" of such investment adviser.
The composition of the Board of the Fund, currently and as proposed, would be in
compliance with this provision of Section 15(f). (See Item 1--"Election of Board
of Trustees.") Second, an "unfair burden" must not be imposed upon the
investment company as a result of such transaction or any express or

21
<PAGE> 31

implied terms, conditions or understandings applicable thereto. The term "unfair
burden" is defined in Section 15(f) to include any arrangement during the
two-year period after the Transaction whereby the investment adviser, or any
interested person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
shareholders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter for such
investment company). Zurich and Scudder are not aware of any express or implied
term, condition, arrangement or understanding that would impose an "unfair
burden" on any Fund as a result of the Transaction. Zurich and Scudder have
agreed that they, and their affiliates, will take no action that would have the
effect of imposing an "unfair burden" on any Fund as a result of the
Transaction. In furtherance thereof, ZKI has undertaken to pay the costs of
preparing and distributing proxy materials to and of holding the meetings of the
Fund's shareholders as well as other fees and expenses in connection with the
Transaction, including the fees and expenses of legal counsel to the Fund and
the Independent Trustees, and Zurich has agreed to indemnify the Fund and 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 Fund 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.

In evaluating the new management agreement, the Board took into account that the
fees and expenses payable by the Fund under the new management agreement are the
same as under the current management agreement, that the services provided to
the Fund are the same (except for services to be provided under a separate Fund
Accounting Agreement as described above) and that the other terms are
substantially similar. The Board also took into consideration the extent to
which portfolio managers and research personnel would continue their functions
with SKI. The Board also considered Scudder's representation that the Fund's
shareholder service providers and the terms of the shareholder service
agreements were not being proposed to be changed. The Board noted that, in
previously approving the continuation of the current management agreement, the
Board had considered a number of factors, including the nature and quality of
services provided by ZKI and ZKVA; investment performance, both of the Fund
itself and relative to that of competitive investment companies; investment
management fees and expense ratios of the Fund and competitive investment
companies; ZKI profitability from managing the Fund; fall-out benefits to ZKI
from its relationship to the

22
<PAGE> 32

Fund, including revenues derived from services provided to the Fund by
affiliates of ZKI; and the potential benefits to ZKI and to the Fund and its
shareholders of receiving research services from broker/dealer firms in
connection with the allocation of portfolio transactions to such firms. The
Board also considered that while Scudder is authorized to pay a commission that
is higher than the lowest available in order to receive research assistance,
Scudder does not negotiate arrangements pursuant to which Scudder receives
specific research products or services in exchange for the expectation that
Scudder will direct a specified amount of brokerage commissions to particular
broker-dealers.

The Board discussed the Transaction with the senior management of ZKI, Scudder
and Zurich and among themselves. The Board considered that Zurich is a large,
well-established company with substantial resources, and, as noted above, has
undertaken to devote such resources to SKI as are necessary to provide the Fund
with top quality services. The Board also considered that Scudder is a large,
well-established investment advisory firm with a substantial number of highly
rated funds.

As a result of their review and consideration of the Transaction and the new
management agreement, at its meeting on September 20, 1997, the Board of the
Fund voted unanimously to approve the new management agreement and to recommend
it to the shareholders of the Fund for their approval.

The Board of the Fund recommends that shareholders vote FOR approval of the new
management agreement.

ITEM 4. NEW SUB-ADVISORY AGREEMENT WITH
ZURICH INVESTMENT MANAGEMENT LIMITED
(FOR KIP AND KGIP ONLY.)

Zurich Investment Management Limited ("ZIML") is the sub-adviser for KIP and
KGIP. As noted above, the consummation of the Transaction and the ZIML
Transaction each would constitute an "assignment," as defined in the 1940 Act,
of each Fund's current sub-advisory agreement with ZIML. As required by the 1940
Act, each current sub-advisory agreement provides for its automatic termination
in the event of its assignment. In anticipation of the Transaction and the ZIML
Transaction, a new sub-advisory agreement with ZIML is being proposed for
approval by the shareholders of KIP and KGIP. The new sub-advisory agreement
with ZIML is on the same terms as the current sub-advisory agreement. A vote in
favor of Item 4 will approve both the new sub-advisory agreement with ZIML to be
effective at the time of the Transaction as well as the sub-advisory agreement
with ZIML to be effective at the time of the ZIML Transaction. A copy of the new
sub-advisory agreement is attached hereto as Exhibit C.

23
<PAGE> 33

A new sub-advisory agreement will be dated as of the date of the consummation of
the Transaction or the ZIML Transaction and will be in effect for an initial
term ending on the same date as would the current sub-advisory agreement but for
the Transaction (or ZIML Transaction), and may continue thereafter from year to
year if such continuance is specifically approved at least annually by the vote
of a "majority of the outstanding voting securities" of each of the Funds, as
defined under the 1940 Act, or the Board, including, in either event, the vote
of a majority of the Board members who are not parties to the agreement or
interested persons of any such party, cast in person at a meeting called for
such a purpose.

BOARD OF TRUSTEES RECOMMENDATION

The Board of the Fund recommends that shareholders of KIP and KGIP vote FOR
approval of the new sub-advisory agreement with ZIML.

ITEM 5. NEW SUB-ADVISORY AGREEMENT WITH
ZURICH KEMPER VALUE ADVISORS, INC.
(FOR KVGP, KH20P, KH10P AND KH5P ONLY.)

Zurich Kemper Value Advisors, Inc. ("ZKVA") is the sub-adviser for KVGP, KH20P,
KH10P and KH5P. As noted above, the consummation of the Transaction would
constitute an "assignment," as defined in the 1940 Act, of KHF's current
sub-advisory agreement with ZKVA. As required by the 1940 Act, the current
sub-advisory agreement provides for its automatic termination in the event of
its assignment. In anticipation of the Transaction, a new sub-advisory agreement
with ZKVA is being proposed for approval by the shareholders of KVGP, KH20P,
KH10P and KH5P. The new sub-advisory agreement with ZKVA is on the same terms as
the current sub-advisory agreement. A copy of the new sub-advisory agreement is
attached hereto as Exhibit D.

The new sub-advisory agreement for each Fund will be dated as of the date of the
consummation of the Transaction and will be in effect for an initial term ending
on the same date as would the current sub-advisory agreement but for the
Transaction, and may continue thereafter from year to year if such continuance
is specifically approved at least annually by vote of a "majority of the
outstanding voting securities" of the Fund, as defined under the 1940 Act, or
the Board, including, in either event, the vote of a majority of the Board
members who are not parties to the agreement or interested persons of any such
party, cast in person at a meeting called for such purpose. It is expected,
however, that upon consummation of the Transaction or soon thereafter, ZKVA will
be combined with SKI, the separate sub-advisory agreement with ZKVA will be
terminated and all ZKVA functions will be provided by SKI.

24
<PAGE> 34

BOARD OF TRUSTEES RECOMMENDATION

The Board of the Fund recommends that shareholders of KVGP, KH20P, KH10P and
KH5P vote FOR approval of the new sub-advisory agreement with ZKVA.

ITEM 6. AMENDMENT OF AGREEMENT AND DECLARATION OF TRUST

The Board, including a majority of the non-interested Board Members (as defined
in the 1940 Act), considered and approved, subject to shareholder approval, an
amendment to each Fund's Agreement and Declaration of Trust that would allow the
establishment of a multiple class fund structure. This would permit the Fund to
issue classes that would differ as to the allocation of certain expenses, such
as distribution and administrative expenses, permitting, among other things,
different levels of services or methods of distribution among various classes.
While neither the Board nor ZKI has determined that the Funds should offer a
multi-class fund structure, the Board believes it to be in the best interests of
each Fund to have the flexibility to adopt such a structure at a future date.

Each share of a class of a Series would represent an identical legal interest in
the investment portfolio of that Series and have the same rights, except that
each class may bear certain expenses specifically related to the distribution of
its shares and each class may bear certain other expenses specifically allocated
to that class such as transfer agency fees and administrative services fees.
Although the legal rights of the classes would be identical, it is likely that
the different expenses borne by each class would result in different net asset
values and dividends. Each class would have exclusive voting rights with respect
to any plan of distribution adopted for such class pursuant to Rule 12b-1 under
the 1940 Act. The classes would also have different exchange privileges. The
implementation of a multi-class fund structure would not alter the rights and
privileges of the current shareholders, nor would it affect the net asset value
of a current shareholder's investment.

If the shareholders approve this proposal, the Declaration of Trust will be
amended to allow for the creation of separate classes of shares and to define
the effects of the creation of separate classes. The principal change is that
Article III, Section 1, entitled "Division of Beneficial Interest," would be
amended to provide, in part, that "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."
Thereafter, in general, references to "series" would be changed as appropriate
to reflect the existence of series and

25
<PAGE> 35

classes and to recognize the preferences, rights and privileges that may arise
as a result of the creation of a particular class. By the amendment,
shareholders would be giving the Board authority, without further shareholder
approval, to create separate classes of shares in the future with such
preferences, rights and privileges as the Board may determine. A class of shares
may or may not be available to any particular group or type of investor.

In connection with the above amendment of the Declaration of Trust, a clarifying
amendment to the Declaration of Trust will be made. The Declaration of Trust
currently provides that shareholders may vote to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Fund or the shareholders. If
this proposal is approved, the Declaration of trust will be amended to delete
this provision. This deletion would clarify that issues concerning the
institution or maintenance of class action or derivative legal proceedings
related to the Fund are not subject to shareholder consideration but will be
considered by the Board, the appropriate judicial forum or the plaintiffs,
depending upon the circumstances.

BOARD OF TRUSTEES RECOMMENDATION.

The Board of the Fund recommends that shareholders vote FOR approval of the
amendment of the Fund's Agreement and Declaration of Trust.

OTHER INFORMATION

ZKI. Zurich Kemper Investments, Inc. ("ZKI"), 222 South Riverside Plaza,
Chicago, Illinois 60606, is the investment manager of each Fund and provides
each Fund with continuous professional investment supervision. ZKI is one of the
largest investment managers in the country and has been engaged in the
management of investment funds for more than forty-nine years. ZKI and its
affiliates provide investment advice and manage investment portfolios for the
Kemper Funds, affiliated insurance companies and other corporate, pension,
profit-sharing and individual accounts representing approximately $85 billion
under management. ZKI acts as investment manager or principal underwriter for 32
open-end and seven closed-end investment companies, with 86 separate investment
portfolios, representing more than 2.5 million shareholder accounts. ZKI is an
indirect subsidiary of Zurich Insurance Company, a leading internationally
recognized provider of insurance and financial services in property/casualty and
life insurance, reinsurance and structured financial solutions as well as asset
management ("Zurich").

26
<PAGE> 36

The investment companies to which ZKI and its affiliates render investment
management services, and the related management fees, are identified in Exhibit
E.

The names, addresses and principal occupations of the principal executive
officer and the directors of ZKI are as follows:

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Stephen B. Timbers, Chief President, Chief Executive
Executive Officer and Director Officer and Chief Investment
222 South Riverside Plaza Officer, ZKI
Chicago, Illinois 60606
John E. Neal, Director President, Kemper Funds Group
222 South Riverside Plaza
Chicago, Illinois 60606
William E. Chapman II, President, Kemper Retirement
Director Plans Group
222 South Riverside Plaza
Chicago, Illinois 60606
</TABLE>

ZIML. Zurich Investment Management Limited ("ZIML"), 1 Fleet Place, London, U.K.
EC4M 7RQ, is an indirect subsidiary of Zurich. The names, addresses and
principal occupations of the principal executive officer and the directors of
ZIML are as follows:

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Dennis H. Ferro, Chief Chief Executive Officer and
Executive Officer and Director Managing Director--Equities,
1 Fleet Place ZIML
London, U.K. EC4M 7RQ
Gordon K. Johns, Director Managing Director, ZIML
1 Fleet Place
London, U.K. EC4M 7RQ
Laurence W. Cheng, Director Member of Corporate Executive
1 Fleet Place Board and Chief Investment
London, U.K. EC4M 7RQ Officer for Investments and
International Asset Management,
Zurich
Richard D. W. Hass, Director Finance Director, Compliance
1 Fleet Place Officer and Joint Secretary,
London, U.K. EC4M 7RQ ZIML
</TABLE>

27
<PAGE> 37

ZKVA. Zurich Kemper Value Advisors, Inc. ("ZKVA"), 280 Park Avenue, New York,
New York 10017, the investment manager for KVP and KSCVP and sub-adviser for
KVGP, KH20P, KH10P and KH5P, is a wholly-owned subsidiary of ZKI. The names,
addresses and principal occupations of the principal executive officer and the
directors of ZKVA are as follows:

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
George Keith, Chief Executive President and Chief Executive
Officer Officer, ZKVA
280 Park Avenue
40th Floor
New York, New York 10017
Stephen B. Timbers, Director President, Chief Executive
222 South Riverside Plaza Officer and Chief Investment
Chicago, Illinois 60606 Officer, ZKI
John E. Neal, Director President, Kemper Funds Group
222 South Riverside Plaza
Chicago, Illinois 60606
</TABLE>

UNDERWRITER. Zurich Kemper Distributors, Inc. ("ZKDI"), an affiliate of ZKI and
ZKVA, serves as distributor and principal underwriter for the Fund pursuant to
an underwriting agreement. ZKDI bears all its expenses of providing services
pursuant to the agreement. ZKDI provides for the preparation of advertising or
sales literature, and bears the cost of printing and mailing prospectuses to
persons other than shareholders and contract owners. ZKDI bears the cost of
qualifying and maintaining the qualification of the Fund shares for sale under
the securities laws of Massachusetts and the Fund bears the expense of
registering its shares with the Securities and Exchange Commission. ZKDI will
pay all fees and expenses in connection with its qualification and registration
as a broker or dealer under Federal and state laws, a portion of the toll free
telephone services and of computer terminals, and of any activity which is
primarily intended to result in the sale of shares issued by the Fund, unless a
plan pursuant to Rule 12b-1 under the 1940 Act ("12b-1 Plan") is in effect that
provides the Fund shall bear some or all of such expenses. It is expected that
ZKDI will continue to serve as the Fund's underwriter after consummation of the
Transaction.

ZKDI currently offers shares of each series of the Fund continuously to the
separate accounts of Participating Insurance Companies where permitted by
applicable law. The underwriting agreement provides that ZKDI accepts orders for
shares at net asset value as no sales commission or load is charged. ZKDI has
made no firm commitment to acquire shares of the Fund.

28
<PAGE> 38

NOTE: Although the Fund does not currently have a 12b-1 Plan and shareholder
approval would be required in order to adopt one, the underwriting agreement
provides that the Fund will also pay those fees and expenses permitted to be
paid or assumed by the Fund pursuant to a 12b-1 Plan, if any, adopted by the
Fund, notwithstanding any other provision to the contrary in the underwriting
agreement, and the Fund or a third party will pay those fees and expenses not
specifically allocated to ZKDI in the underwriting agreement.

PORTFOLIO TRANSACTIONS. ZKI and its affiliates furnish investment management
services for the Kemper Funds and other clients including affiliated insurance
companies. ZKI and its affiliates share some common research and trading
facilities. Zurich Investment Management Limited ("ZIML") is the sub-adviser for
KIP and KGIP. ZIML is the sub-adviser for other Kemper Funds as well. Zurich
Kemper Value Advisors, Inc. ("ZKVA") is the investment manager for KVP and KSCVP
and the sub-adviser for KVGP, KH20P, KH10P and KH5P. ZKVA is the investment
manager and sub-adviser for other Kemper Funds as well. (Each of ZKI, ZIML and
ZKVA are referred to as an "Adviser.") At times investment decisions may be made
to purchase or sell the same investment securities for the Fund and for one or
more of the other clients managed by an Adviser 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 and so that each
receives, to the extent practicable, the average price of such transactions.

The Advisers, in effecting purchases and sales of portfolio securities for the
account of the Fund, implement the Fund's policy of seeking best execution of
orders. The Advisers may be permitted to pay higher brokerage commissions for
research services as described below. Consistent with this policy, orders for
portfolio transactions are placed with broker-dealer firms giving consideration
to the quality, quantity and nature of each firm's professional services which
include execution, financial responsibility, responsiveness, clearance
procedures, wire service quotations and statistical and other research
information provided to the Fund and the Advisers and their affiliates. Subject
to seeking best execution of an order, brokerage is allocated on the basis of
all services provided. Any research benefits derived are available for all
clients of the Advisers and their affiliates. In selecting among firms believed
to meet the criteria for handling a particular transaction, the Advisers may
give consideration to those firms that have sold or are selling shares of other
funds managed by the Advisers and their affiliates or variable life insurance
and variable annuity contracts funded by the Fund, as well as to those firms
that provide market, statistical and other research information to the Fund and
the Advisers and their affiliates although the Advisers are

29
<PAGE> 39

not authorized to pay higher commissions to firms that provide such services,
except as described below.

The Advisers may in certain instances be permitted to pay higher brokerage
commissions solely for receipt of market, statistical and other research
services as defined in Section 28(e) of the Securities Exchange Act of 1934 and
interpretations thereunder. Such services may include, among other things:
economic, industry or company research reports or investment recommendations;
computerized databases; quotation and execution equipment and software; and
research or analytical computer software and services. Where products or
services have a "mixed use," a good faith effort is made to make a reasonable
allocation of the cost of the products or services in accordance with the
anticipated research and non-research uses, and the cost attributable to
non-research use is paid by the Adviser or one of its affiliates in cash.
Subject to Section 28(e) of the Securities Exchange Act of 1934 and procedures
adopted by the Board of the Fund, the Fund could pay a firm that provides
research services to the Advisers commissions for effecting a securities
transaction for the Fund in excess of the amount other firms would have charged
for the transaction. The Fund could do this if an Adviser determines in good
faith that the greater commission is reasonable in relation to the value of the
brokerage and research services provided by the executing firm viewed in terms
either of a particular transaction or the Adviser's overall responsibilities to
the Fund or other clients. Not all such research services may be useful or of
value in advising the Fund. Research benefits will be available for all clients
of the Advisers and their affiliates. In addition, the investment management fee
paid by the Fund to an Adviser is not reduced because the Adviser receives these
research services.

SKI. It is expected that SKI (including ZKI and ZKVA under SKI's ownership) will
implement portfolio transaction policies that are substantially similar to those
currently used by the Advisers. In addition, to the maximum extent feasible, it
is expected that SKI will place orders for portfolio transactions through
Scudder Investor Services, Inc., Two International Place, Boston, Massachusetts
02110 ("SIS") (a corporation registered as a broker/dealer and a subsidiary of
Scudder), which will in turn 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.

Set forth in Exhibit G are the total brokerage commissions paid by the Fund for
its most recently completed fiscal year, as well as the percentage of such
amounts that was allocated to broker-dealer firms on the basis of research
information.

SCUDDER. Scudder, Stevens & Clark, Inc. ("Scudder"), 345 Park Avenue, New York,
New York 10154, is one of America's oldest and largest

30
<PAGE> 40

investment management firms. It manages approximately $125 billion in assets
globally, about $50 billion of which are invested in equities and the balance in
fixed income and money market investments. Scudder manages approximately $45
billion in a variety of open-end and closed-end funds for nearly two million
shareholder accounts. The firm also provides investment services for private and
institutional clients, such as trusts, endowments, and corporate employee
benefit plans. Scudder manages more than $25 billion internationally in both
developed and emerging markets. The firm is one of the world's largest managers
of pension fund assets invested overseas.

Scudder manages two families of pure no-load mutual funds. The Scudder Family of
Funds (approximately $23 billion) comprises 53 money market, bond and equity
mutual funds. The AARP Investment Program from Scudder, a family of 15 funds
(approximately $14 billion), is designed to address the needs of the more than
33 million members of the American Association of Retired Persons. The balance
of the funds under management (approximately $5 billion) comprises offshore,
variable life insurance and other kinds of funds.

The investment companies to which Scudder renders investment management
services, and the related fees, are identified in Exhibit F.

The names, addresses and principal occupations of the principal executive
officer and the directors of Scudder are as follows:

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Daniel Pierce, Director Chairman of the Board and
Two International Place Managing Director, Scudder
Boston, Massachusetts 02110
Edmond D. Villani, Chief President, Chief Executive
Executive Officer and Director Officer and Managing Director,
345 Park Avenue Scudder
New York, New York 10154
Stephen R. Beckwith, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Lynn S. Birdsong, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Nicholas Bratt, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
</TABLE>

31
<PAGE> 41

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
E. Michael Brown, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Mark S. Casady, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Linda C. Coughlin, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Margaret D. Hadzima, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Jerard K. Hartman, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Richard A. Holt, Director Managing Director, Scudder
Two Prudential Plaza
180 North Stetson, Suite 5400
Chicago, Illinois 60601
John T. Packard, Director Managing Director, Scudder
101 California Street
San Francisco, California
94111
Kathryn L. Quirk, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Cornelia M. Small, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Stephen A. Wohler, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
</TABLE>

After consummation of the Transaction, it is anticipated that the principal
executive officer and directors of SKI will be as follows:

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Lynn Birdsong, Director Senior Executive Officer --
345 Park Avenue International Operations, SKI
New York, New York 10154
</TABLE>

32
<PAGE> 42

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Lawrence Cheng, Director Member of Corporate Executive
Mythenquai 2 Board and Chief Investment
8002 Zurich, Switzerland Officer for Investments and
International Asset Management,
Zurich
Steven Gluckstern, Director Member of Corporate Executive
Mythenquai 2 Board and responsible for
8002 Zurich, Switzerland Reinsurance, Structured Finance,
Capital Market Products and
Strategic Investments, Zurich
Rolf Hueppi, Director Chairman and Chief Executive
Mythenquai 2 Officer, Zurich; Chairman of
8002 Zurich, Switzerland Board of Directors, SKI
Markus Rohrbasser, Director Chief Financial Officer and
Mythenquai 2 Member of Corporate Executive
8002 Zurich, Switzerland Board, Zurich
Cornelia Small, Director Senior Executive Officer --
345 Park Avenue Investment Management, SKI
New York, New York 10154
Edmond Villani, Chief Chief Executive Officer, SKI
Executive Officer and Director
345 Park Avenue
New York, New York 10154
</TABLE>

MISCELLANEOUS

GENERAL

The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by ZKI, including any additional solicitation made by
letter, telephone or telegraph. In addition to solicitation by mail, certain
officers and representatives of the Funds, officers and employees of ZKI and
certain financial services firms and their representatives, who will receive no
extra compensation for their services, may solicit proxies by telephone,
telegram or personally. In addition, ZKI has retained First Data Corp. to
solicit proxies on behalf of the Fund's Board and the boards of the other Kemper
Funds, the fee for which will be borne by ZKI. A COPY OF YOUR FUND'S ANNUAL
REPORT AND ANY MORE RECENT SEMI-ANNUAL REPORT ARE AVAILABLE WITHOUT CHARGE UPON
REQUEST BY WRITING TO THE FUND, 222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS
60606 OR BY CALLING 1-800-621-1048.

33
<PAGE> 43

PROPOSALS OF SHAREHOLDERS

As a Massachusetts business trust, the Fund is not required to hold annual
shareholder meetings, but each will hold special meetings as required or deemed
desirable. Since the Fund does not hold regular meetings of shareholders, the
anticipated date of the next special shareholders meeting cannot be provided.
Any shareholder proposal that may properly be included in the proxy solicitation
material for a special shareholder meeting must be received by the Fund no later
than four months prior to the date when proxy statements are mailed to
shareholders.

OTHER MATTERS TO COME BEFORE THE MEETING

The Board is not aware of any matters that will be presented for action at the
Meeting other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote the shares as to any such other
matters in accordance with their best judgment in the interest of the Fund.

VOTING, QUORUM

Each share of the Fund is entitled to one vote on each matter submitted to a
vote of the shareholders at the Meeting; no shares have cumulative voting
rights.

Each valid proxy and contract owner voting instruction will be voted in
accordance with the instructions on the proxy and voting instruction and as the
persons named in the proxy determine on such other business as may come before
the Meeting. If no designation is given, the proxy will be voted FOR the
election of the persons who have been nominated as trustees for the Fund and FOR
Items 2, 3, 4 (if applicable), 5 (if applicable) and 6. Interests of contract
owners for which no voting instructions are received will be voted in proportion
to the instructions that are timely received. Contract owners who execute voting
instructions may revoke them at any time before they are voted, by executing and
submitting a revised voting instruction form, by writing to the Fund, or by
revoking in person at the time of the Meeting. Only a shareholder may execute or
revoke a proxy. Therefore, a contract owner who has given voting instructions
may revoke them only through the Participating Insurance Companies. Voting
instructions given by telephone or electronically transmitted instruments may be
counted if obtained pursuant to procedures designed to verify that such
instructions have been authorized.

Item 1 (election of trustees) requires a plurality vote of the shares of the
Fund. This means that the eight nominees receiving the largest number of votes
will be elected. Item 2 (ratification of selection of independent

34
<PAGE> 44

auditors) requires the affirmative vote of a majority of the shares voting on
the matter. Item 3 (approval of new investment management agreement), Item 4
(approval of new sub-advisory agreement with ZIML), and Item 5 (approval of new
sub-advisory agreement with ZKVA) require the affirmative vote of a "majority of
the outstanding voting securities" of the applicable Series. The term "majority
of the outstanding voting securities" as defined in the 1940 Act means: the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the meeting if more than 50% of the outstanding shares of the Fund
are present in person or by proxy, or (2) more than 50% of the outstanding
shares of the Fund. Item 6 (approval of an amendment to the Fund's Agreement and
Declaration of Trust) requires the affirmative vote of more than 50% of the
shares of each series of the Fund. If an Item is not approved, the Board would
consider appropriate action.

On Items 1 and 2, the Fund will vote in the aggregate and not by series. On Item
3, each series of the Fund will vote separately. On Items 4 and 5, each affected
series of the Fund will vote separately. On Item 6, each series of the Fund will
vote separately, but approval requires the approval of each series.

The Declaration of Trust of the Fund provides that the presence at a shareholder
meeting in person or by proxy of at least 30% of the shares of the Fund
constitutes a quorum. Thus, the meeting for the Fund could not take place on its
scheduled date if less than 30% of the shares of the Fund were represented. If,
by the time scheduled for the meeting, a quorum of shareholders of a Fund is not
present or if a quorum is present but sufficient votes in favor of any of the
items are not received, the persons named as proxies may propose one or more
adjournments of the meeting with respect to the Fund to permit further
soliciting of proxies from shareholders of the Fund. Any such adjournment would
require the affirmative vote of a majority of the shares of the Fund present (in
person or by proxy) at the session of the meeting to be adjourned. The persons
named as proxies will vote in favor of any such adjournment if they determine
that such adjournment and additional solicitation are reasonable and in the
interest of the respective Fund's shareholders.

In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Item 1, abstentions and broker non-votes will have no
effect; the eight nominees receiving the largest number of votes will be
elected. On Item 2, abstentions and broker non-votes will not be counted as
"votes cast" and will have no effect on the result of the vote. On Items 3, 4, 5
and 6,

35
<PAGE> 45

abstentions and broker non-votes will be considered to be both present at the
Meeting and issued and outstanding and, as a result, will have the effect of
being counted as voted against the Items.

The Board of Trustees of the Fund recommends an affirmative vote on all items.

PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.

By order of the Board of Trustees,
Philip J. Collora
Secretary

36
<PAGE> 46

EXHIBIT INDEX

<TABLE>
<CAPTION>
<S> <C>
Shareholders........................................ Exhibit A
Form of Investment Management Agreement............. Exhibit B
Form of Sub-Advisory Agreement with Zurich
Investment Management Limited..................... Exhibit C
Form of Sub-Advisory Agreement with Zurich Kemper
Value Advisors, Inc............................... Exhibit D
Kemper Funds Net Assets and Management Fees......... Exhibit E
Investment Objectives and Advisory Fees for Funds
Advised by Scudder, Stevens & Clark, Inc.......... Exhibit F
Fees and Expenses................................... Exhibit G
</TABLE>

37
<PAGE> 47

EXHIBIT A

SHAREHOLDERS

<TABLE>
<CAPTION>
NUMBER OF % OF SHARES
NUMBER OF SHARES HELD BY HELD BY
SHARES HELD BY % OF SHARES ALLMERICA ALLMERICA
KEMPER HELD BY KEMPER FINANCIAL LIFE FINANCIAL LIFE
INVESTORS LIFE INVESTORS LIFE INSURANCE AND INSURANCE AND
INSURANCE INSURANCE ANNUITY ANNUITY
COMPANY(A) COMPANY(A) COMPANY(B) COMPANY(B)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
KMMP................. 99,806,215 84.8 17,852,432 15.2
KTRP................. 269,624,769 96.8 8,858,673 3.2
KHYP................. 230,982,679 83.9 44,203,116 16.1
KGP.................. 180,469,150 95.9 7,686,406 4.1
KGSP................. 65,863,089 92.5 5,336,838 7.5
KIP.................. 104,019,296 85.1 18,241,306 14.9
KSCGP................ 55,310,249 87.6 7,833,882 12.4
KIGBP................ 4,217,194 43.0 5,601,534 57.0
KVP.................. 40,835,440 52.3 37,253,737 47.7
KSCVP................ 23,678,171 52.2 21,690,936 47.8
KVGP................. 15,391,890 46.9 17,442,115 53.1
KH20P................ 4,595,677 52.4 4,181,594 47.6
KH10P................ 6,652,539 49.5 6,779,693 50.5
KH5P................. 3,619,216 43.9 4,622,997 56.1
KBCP................. 1,098,123 15.7 5,875,748 84.3
KGIP................. 1,068,838 50.5 1,047,705 49.5
</TABLE>

- ---------------

(a) Kemper Investors Life Insurance Company is located at One Kemper Drive, Long
Grove, Illinois 60049.

(b) Allmerica Financial Life Insurance and Annuity Company is located at 440
Lincoln Street, Worchester, Massachusetts 01653.

A-1
<PAGE> 48

EXHIBIT B

FORM OF
INVESTMENT MANAGEMENT AGREEMENT

INVESTORS FUND SERIES

222 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606

, 199

Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154

INVESTMENT MANAGEMENT AGREEMENT
[NAME OF SERIES]

Ladies and Gentlemen:

Investors Fund Series (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, par value $ per share, (the "Shares") in separate
series, or funds. The Board of Trustees has authorized [name of series] (the
"Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.

The Trust, on behalf of the Fund, has selected you to act as the investment
manager of the Fund and to provide certain other services, as more fully set
forth below, and you have indicated that you are willing to act as such
investment manager and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Trust on behalf of the Fund agrees with
you as follows:

1. DELIVERY OF DOCUMENTS. The Trust engages in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Trust's 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

B-1
<PAGE> 49

authenticated of each of the following additional documents related to the Trust
and the Fund:

(a) The Declaration dated , 19 , 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 the Fund
selecting you as investment manager and approving the form of this Agreement.

(d) Establishment and Designation of Series of Shares of Beneficial Interest
dated , 19 relating to the Fund.

The Trust will furnish you from time to time with copies, properly certified or
authenticated, of all amendments of or supplements, if any, to the foregoing,
including the Prospectus, the SAI and the Registration Statement.

2. PORTFOLIO MANAGEMENT SERVICES. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 2, you shall
be entitled to receive and act upon advice of counsel to the Trust. You shall
also make available to the Trust promptly upon request all of the Fund's
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

B-2
<PAGE> 50

investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.

You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.

3. ADMINISTRATIVE SERVICES. In addition to the portfolio management services
specified above in section 2, you shall furnish at your expense for the use of
the Fund such office space and facilities in the United States as the Fund may
require for its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative services on behalf
of the Fund necessary for operating as an open end investment company and not
provided by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Fund
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Fund's transfer agent; assisting in the preparation
and filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Fund all books, records and reports and any other information required under
the 1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of the
Fund; assisting in establishing the accounting policies of the Fund; assisting
in the resolution of accounting issues that

B-3
<PAGE> 51

may arise with respect to the Fund's operations and consulting with the Fund's
independent accountants, legal counsel and the Fund's other agents as necessary
in connection therewith; establishing and monitoring the Fund's operating
expense budgets; reviewing the Fund's bills; processing the payment of bills
that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Trust as it may reasonably request in the conduct of
the Fund's business, subject to the direction and control of the Trust's Board
of Trustees. Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.

4. ALLOCATION OF CHARGES AND EXPENSES. Except as otherwise specifically provided
in this section 4, you shall pay the compensation and expenses of all Trustees,
officers and executive employees of the Trust (including the Fund's share of
payroll taxes) who are affiliated persons of you, and you shall make available,
without expense to the Fund, the services of such of your directors, officers
and employees as may duly be elected officers of the Trust, subject to their
individual consent to serve and to any limitations imposed by law. You shall
provide at your expense the portfolio management services described in section 2
hereof and the administrative services described in section 3 hereof.

You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 4. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent for which the
Trust is responsible pursuant to the terms of the Fund Accounting Services
Agreement, custodians, subcustodians, transfer agents, dividend

B-4
<PAGE> 52

disbursing agents and registrars; payment for portfolio pricing or valuation
services to pricing agents, accountants, bankers and other specialists, if any;
expenses of preparing share certificates and, except as provided below in this
section 4, other expenses in connection with the issuance, offering,
distribution, sale, redemption or repurchase of securities issued by the Fund;
expenses relating to investor and public relations; expenses and fees of
registering or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; the
compensation and all expenses (specifically including travel expenses relating
to Trust business) of Trustees, officers and employees of the Trust who are not
affiliated persons of you; brokerage commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; expenses of printing and
distributing reports, notices and dividends to shareholders; expenses of
printing and mailing Prospectuses and SAIs of the Fund and supplements thereto;
costs of stationery; any litigation expenses; indemnification of Trustees 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 the Fund if and to the extent that (i)
such expenses are required to be borne by a principal underwriter which acts as
the distributor of the Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such expenses, or (ii)
the Trust on behalf of the Fund shall have adopted a plan in conformity with
Rule 12b-1 under the 1940 Act providing that the Fund (or some other party)
shall assume some or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by the principal
underwriter pursuant to the underwriting agreement or are not permitted to be
paid by the Fund (or some other party) pursuant to such a plan.

5. MANAGEMENT FEE. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3, and 4 hereof, the Trust
on behalf of the Fund shall pay you in United States Dollars on the last day of
each month the unpaid balance of a fee equal to the excess of (a) 1/12 of
[SEE PAGE 15 OF PROXY STATEMENT FOR EACH FUND'S MANAGEMENT FEE] of 1 percent of
the average daily net assets as defined below of the Fund for such month; over
(b) any compensation waived by you from time to time (as more fully described
below). You shall be entitled to receive during any month such interim payments
of your fee hereunder as you shall request, provided that no such payment shall
exceed 75 percent of the amount of your fee then accrued on the books of the
Fund and unpaid.

The "average daily net assets" of the Fund shall mean the average of the values
placed on the Fund's net assets as of 4:00 p.m. (New York time)

B-5
<PAGE> 53

on each day on which the net asset value of the Fund is determined consistent
with the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Declaration and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 5, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 5.

You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.

6. AVOIDANCE OF INCONSISTENT POSITION; SERVICES NOT EXCLUSIVE. In connection
with purchases or sales of portfolio securities and other investments for the
account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.

Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and services to others. In acting under this Agreement, you shall be an
independent contractor and not an agent of the Trust. Whenever the Fund and one
or more other accounts or investment companies advised by you have available
funds for investment, investments suitable and appropriate for each shall be
allocated in accordance with procedures believed by you to be equitable to each
entity. Similarly, opportunities to sell securities shall be allocated in a
manner believed by you to be equitable. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund.

B-6
<PAGE> 54

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 the Fund in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect you against any liability to the Trust, the Fund
or its shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties hereunder.

8. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until , 19 , and continue in force from year to year thereafter,
but only so long as such continuance is specifically approved at least annually
(a) by the vote of a majority of the Trustees 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 the Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder and
any applicable SEC exemptive order therefrom.

This Agreement may be terminated with respect to the Fund at any time, without
the payment of any penalty, by the vote of a majority of the outstanding voting
securities of the Fund or by the Trust's 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 the Fund at any time without
the payment of any penalty by the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund in the event that it shall have
been established by a court of competent jurisdiction that you or any of your
officers or directors has taken any action which results in a breach of your
covenants set forth herein.

9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.

10. LIMITATION OF LIABILITY FOR CLAIMS. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the

B-7
<PAGE> 55

Secretary of the Commonwealth of Massachusetts, provides that the name
"Investors Fund Series" refers to the Trustees under the Declaration
collectively as Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent of the Trust,
shall be subject to claims against or obligations of the Trust or of the Fund to
any extent whatsoever, but that the Trust estate only shall be liable.

You are hereby expressly put on notice of the limitation of liability as set
forth in the Declaration and you agree that the obligations assumed by the Trust
on behalf of the Fund pursuant to this Agreement shall be limited in all cases
to the Fund and its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund or any other
series of the Trust, or from any Trustee, officer, employee or agent of the
Trust. You understand that the rights and obligations of each Fund, or series,
under the Declaration are separate and distinct from those of any and all other
series.

11. 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 the
Fund to fail to comply with the requirements of Subchapter M of the Code.

This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of the Fund.

If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return

B-8
<PAGE> 56

such counterpart to the Trust, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.

Yours very truly,

Investors Fund Series, on behalf of

Fund

By:
-----------------------------

President

The foregoing Agreement is hereby accepted as of the date hereof.

SCUDDER KEMPER INVESTMENTS, INC.

By:
-----------------------------

President

B-9
<PAGE> 57

EXHIBIT C

FORM OF SUB-ADVISORY AGREEMENT
WITH ZURICH INVESTMENT MANAGEMENT LIMITED

AGREEMENT made this day of , 199 , by and between SCUDDER KEMPER
INVESTMENTS, INC., a Delaware corporation (the "Adviser") and ZURICH INVESTMENT
MANAGEMENT LIMITED, an English corporation (the "Sub-Adviser").

WHEREAS, Investors Fund Series, a Massachusetts business trust (the "Fund") is a
management investment company registered under the Investment Company Act of
1940;

WHEREAS, the Fund is authorized to issue Shares in separate series with each
representing the interests in a separate portfolio of securities and other
assets;

WHEREAS, the Fund has retained the Adviser to render to it investment advisory
and management services with regard to the series of the Fund known as [name of
series] (the "initial series") pursuant to an Investment Management Agreement
(the "Management Agreement"); and

WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to render
investment advisory and management services with respect to that portion of the
portfolio of the Fund's initial series allocated to the Sub-Adviser by the
Adviser for management, including services related to foreign securities,
foreign currency transactions and related investments, and the Sub-Adviser is
willing to render such services;

NOW THEREFORE, in consideration of the mutual covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:

1. The Adviser hereby employs the Sub-Adviser to manage the investment and
reinvestment of the assets of the initial series of the Fund allocated by the
Adviser in its sole discretion to the Sub-Adviser for management, including
services related to foreign securities, foreign currency transactions and
related investments, in accordance with the applicable investment objectives,
policies and limitations and subject to the supervision of the Adviser and the
Board of Trustees of the Fund for the period and upon the terms herein set
forth, and to place orders for the purchase or sale of portfolio securities for
the Fund's account with brokers or dealers selected by the Sub-Adviser; and, in
connection therewith, the Sub-Adviser is authorized as the agent of the Fund to
give instructions to the Custodian of the Fund as to the deliveries of
securities and payments of cash for the account of the Fund. In connection with
the selection of such brokers or dealers and the placing of such orders, the

C-1
<PAGE> 58

Sub-Adviser is directed to seek for the Fund best execution of orders. Subject
to such policies as the Board of Trustees of the Fund determines and subject to
satisfying the requirements of Section 28(e) of the Securities Exchange Act of
1934, the Sub-Adviser shall not be deemed to have acted unlawfully or to have
breached any duty, created by this Agreement or otherwise, solely by reason of
its having caused the Fund to pay a broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the Sub-
Adviser determined in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such
broker or dealer viewed in terms of either that particular transaction or the
Sub-Adviser's overall responsibilities with respect to the clients of the
Sub-Adviser as to which the Sub-Adviser exercises investment discretion. The
Adviser recognizes that all research services and research that the Sub-Adviser
receives are available for all clients of the Sub-Adviser, and that the Fund and
other clients of the Sub-Adviser may benefit thereby. The investment of funds
shall be subject to all applicable restrictions of the Agreement and Declaration
of Trust and By-Laws of the Fund as may from time to time be in force.

The Sub-Adviser accepts such employment and agrees during such period to render
such investment management services, to furnish related office facilities and
equipment and clerical, bookkeeping and administrative services for the Fund, to
permit any of its officers or employees to serve without compensation as
trustees or officers of the Fund if elected to such positions and to assume the
obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund or the Adviser in any
way or otherwise be deemed an agent of the Fund or the Adviser. It is understood
and agreed that the Sub-Adviser, by separate agreements with the Fund, may also
serve the Fund in other capacities.

The Sub-Adviser will keep the Fund and the Adviser informed of developments
materially affecting the Fund and shall, on the Sub-Adviser's own initiative and
as reasonably requested by the Adviser or the Fund, furnish to the Fund and the
Adviser from time to time whatever information the Adviser reasonably believes
appropriate for this purpose.

The Sub-Adviser agrees that, in the performance of the duties required of it by
this Agreement, it will comply with the Investment Advisers Act of 1940 and the
Investment Company Act of 1940, and all rules and regulations thereunder, and
all applicable laws and regulations and with any applicable procedures adopted
by the Fund's Board of Trustees and identified in writing to the Sub-Adviser.

C-2
<PAGE> 59

The Sub-Adviser shall provide the Adviser with such investment portfolio
accounting and shall maintain and provide such detailed records and reports as
the Adviser may from time to time reasonably request, including without
limitation, daily processing of investment transactions and cash positions,
periodic valuations of investment portfolio positions as required by the
Adviser, monthly reports of the investment portfolio and all investment
transactions and the preparation of such reports and compilation of such data as
may be required by the Adviser to comply with the obligations imposed upon it
under Management Agreement.

The Sub-Adviser shall provide adequate security with respect to all materials,
records, documents and data relating to any of its responsibilities pursuant to
this Agreement including any means for the effecting of securities transactions.

The Sub-Adviser agrees that it will make available to the Adviser and the Fund
promptly upon their request copies of all of its investment records and ledgers
with respect to the Fund to assist the Adviser and the Fund in monitoring
compliance with the Investment Company Act of 1940 and the Investment Advisers
Act of 1940, as well as other applicable laws. The Sub-Adviser will furnish the
Fund's Board of Trustees such periodic and special reports with respect to the
Fund's portfolio as the Adviser or the Board of Trustees may reasonably request.

In compliance with the requirements of Rule 31a-3 under the Investment Company
Act of 1940, the Sub-Adviser hereby agrees that any records that it maintains
for the Fund are the property of the Fund and further agrees to surrender
promptly to the Fund copies of any such records upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the Investment Company Act of 1940 any records with respect to the
Sub-Adviser's duties hereunder required to be maintained by Rule 31a-1 under
such Act to the extent that the Sub-Adviser prepares and maintains such records
pursuant to this Agreement and to preserve the records required by Rule 204-2
under the Investment Advisers Act of 1940 for the period specified in that Rule.

The Sub-Adviser agrees that it will immediately notify the Adviser and the Fund
in the event that the Sub-Adviser: (i) becomes subject to a statutory
disqualification that prevents the Sub-Adviser from serving as an investment
adviser pursuant to this Agreement; or (ii) is or expects to become the subject
of an administrative proceeding or enforcement action by the United States
Securities and Exchange Commission, the Investment Management Regulatory
Organization ("IMRO") or other regulatory authority.

The Sub-Adviser represents that it is an investment adviser registered under the
Investment Advisers Act of 1940 and other applicable laws and it is regulated by
IMRO and will treat the Fund as a Non-Private

C-3
<PAGE> 60

Customer as defined by IMRO. The Sub-Adviser agrees to maintain the completeness
and accuracy of its registration on Form ADV in accordance with all legal
requirements relating to that Form. The Sub-Adviser acknowledges that it is an
"investment adviser" to the Fund within the meaning of the Investment Company
Act of 1940 and the Investment Advisers Act of 1940.

The Sub-Adviser shall be responsible for maintaining an appropriate compliance
program to ensure that the services provided by it under this Agreement are
performed in a manner consistent with applicable laws and the terms of this
Agreement. Furthermore, the Sub-Adviser shall maintain and enforce a Code of
Ethics that is in form and substance satisfactory to the Adviser. Sub-Adviser
agrees to provide such reports and certifications regarding its compliance
program as the Adviser or the Fund shall reasonably request from time to time.

2. In the event that there are, from time to time, one or more additional series
of the Fund with respect to which the Adviser desires to retain the Sub-Adviser
to render investment advisory and management services hereunder, the Adviser
shall notify the Sub-Adviser in writing. If the Sub-Adviser is willing to render
such services, it shall notify the Adviser in writing whereupon such additional
series shall become subject to this Agreement.

3. For the services and facilities described in Section 1, the Adviser will pay
to the Sub-Adviser, at the end of each calendar month, a sub-advisory fee
computed at an annual rate of [SEE PAGE 17 OF THE PROXY STATEMENT FOR EACH
FUND'S SUB-ADVISORY FEE] of that portion of the average daily net assets of the
initial series of the Fund that is allocated by the Adviser to the Sub-Adviser
for management.

For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively.

4. The services of the Sub-Adviser under this Agreement are not to be deemed
exclusive, and the Sub-Adviser shall be free to render similar services or other
services to others so long as its services hereunder are not impaired thereby.

5. The Sub-Adviser shall arrange, if desired by the Fund, for officers or
employees of the Sub-Adviser to serve, without compensation from the Fund, as
trustees, officers or agents of the Fund if duly elected or appointed to such
positions and subject to their individual consent and to any limitations imposed
by law.

6. The net asset value for each series of the Fund subject to this Agreement
shall be calculated as the Board of Trustees of the Fund may

C-4
<PAGE> 61

determine from time to time in accordance with the provisions of the Investment
Company Act of 1940. On each day when net asset value is not calculated, the net
asset value of a series shall be deemed to be the net asset value of such series
as of the close of business on the last day on which such calculation was made
for the purpose of the foregoing computations.

7. Subject to applicable statutes and regulations, it is understood that certain
trustees, officers or agents of the Fund are or may be interested in the
Sub-Adviser as officers, directors, agents, shareholders or otherwise, and that
the officers, directors, shareholders and agents of the Sub-Adviser may be
interested in the Fund otherwise than as a trustee, officer or agent.

8. The Sub-Adviser shall not be liable for any error of judgment or of law or
for any loss suffered by the Fund or the Adviser in connection with the matters
to which this Agreement relates, except loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Sub-Adviser in the performance
of its obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.

9. This Agreement shall become effective with respect to the initial series of
the Fund on the date hereof and shall remain in full force until
, 199 , unless sooner terminated as hereinafter provided.
This Agreement shall continue in force from year to year thereafter with respect
to each such series, but only as long as such continuance is specifically
approved for each series at least annually in the manner required by the
Investment Company Act of 1940 and the rules and regulations thereunder;
provided, however, that if the continuation of this Agreement is not approved
for a series, the Sub-Adviser may continue to serve in such capacity for such
series in the manner and to the extent permitted by the Investment Company Act
of 1940 and the rules and regulations thereunder.

This Agreement shall automatically terminate in the event of its assignment or
in the event of the termination of the Management Agreement and may be
terminated at any time with respect to any series subject to this Agreement
without the payment of any penalty by the Adviser or by the Sub-Adviser on sixty
(60) days written notice to the other party. The Fund may effect termination
with respect to any such series without payment of any penalty by action of the
Board of Trustees or by vote of a majority of the outstanding voting securities
of such series on sixty (60) days written notice to the Adviser and the
Sub-Adviser.

This Agreement may be terminated with respect to any series at any time without
the payment of any penalty by the Board of Trustees of the Fund, by vote of a
majority of the outstanding voting securities of such series or by the Adviser
in the event that it shall have been established by a court of competent
jurisdiction that the Sub-Adviser or any officer or director of

C-5
<PAGE> 62

the Sub-Adviser has taken any action which results in a breach of the covenants
of the Sub-Adviser set forth herein.

The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.

Termination of this Agreement shall not affect the right of the Sub-Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.

10. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.

11. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.

12. This Agreement shall be construed in accordance with applicable federal law
and the laws of the Commonwealth of Massachusetts.

13. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.

IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.

SCUDDER KEMPER INVESTMENTS, INC.

By:
----------------------------

Title:
-------------------------
ZURICH INVESTMENT MANAGEMENT LIMITED

By:
----------------------------

Title:
-------------------------

C-6
<PAGE> 63

EXHIBIT D

FORM OF SUB-ADVISORY AGREEMENT
WITH ZURICH KEMPER VALUE ADVISORS, INC.

AGREEMENT made this day of , 199 , by and between
SCUDDER KEMPER INVESTMENTS, INC., a Delaware corporation (the "Adviser") and
ZURICH KEMPER VALUE ADVISORS, INC., a Delaware corporation (the "Sub-Adviser").

WHEREAS, INVESTORS FUND SERIES, a Massachusetts business trust (the "Fund") is
an open-end management investment company registered under the Investment
Company Act of 1940, the shares of beneficial interest ("Shares") of each series
of which are registered under the Securities Act of 1933;

WHEREAS, the Fund has retained the Adviser to render to it investment advisory
and management services pursuant to an Investment Management Agreement, dated
, 199 (the "Management Agreement"); and

WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to render
investment advisory and management services with respect to that portion of the
portfolio of four series of the Fund allocated to the Sub-Adviser by the Adviser
for management and the Sub-Adviser is willing to render such services, such
series being the Value+Growth Portfolio, the Horizon 20+ Portfolio, the Horizon
10+ Portfolio, and the Horizon 5 Portfolio (collectively, the "initial series");

NOW THEREFORE, in consideration of the mutual covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:

1. The Adviser hereby employs the Sub-Adviser to manage the investment and
reinvestment of the assets of the Fund allocated by the Adviser in its sole
discretion to the Sub-Adviser for management in accordance with the applicable
investment objectives and policies and limitations and subject to the
supervision of the Adviser and the Board of Trustees of the Fund for the period
and upon the terms herein set forth, and to place orders for the purchase or
sale of portfolio securities for the Fund's account with brokers or dealers
selected by the Sub-Adviser, and, in connection therewith, the Sub-Adviser is
authorized as the agent of the Fund to give instructions to the Custodian of the
Fund as to the deliveries of securities and payments of cash for the account of
the Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, the Sub-Adviser is directed to seek for the Fund best
execution of orders. Subject to such policies as the Board of Trustees of the
Fund determines, the Sub-Adviser shall not be deemed to have acted

D-1
<PAGE> 64

unlawfully or to have breached any duty, created by this Agreement or otherwise,
solely by reason of its having caused the Fund to pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Sub-Adviser determined in good faith that such amount
of commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer viewed in terms of either
that particular transaction or the Sub-Adviser's overall responsibilities with
respect to the clients of the Sub-Adviser as to which the Sub-Adviser exercises
investment discretion. The Adviser recognizes that all research services and
research that the Sub-Adviser receives or generates are available for all
clients of the Sub-Adviser, and that the Fund and other clients of the
Sub-Adviser may benefit thereby. The investment of funds shall be subject to all
applicable restrictions of the Agreement and Declaration of Trust and By-Laws of
the Fund as may from time to time be in force.

3. For the services and facilities described in Section 1, the Adviser will pay
to the Sub-Adviser at the end of each calendar month, a sub-advisory fee
computed at an annual rate of .25 of 1% [OF THE AVERAGE DAILY NET ASSETS OF
KVGP] [OF THE PORTION OF THE AVERAGE DAILY NET ASSETS OF EACH OF KH20P, KH10P
AND KH5P, RESPECTIVELY, ALLOCATED BY THE ADVISER TO THE SUB-ADVISER FOR
MANAGEMENT.]

The fee as computed above shall be computed separately for, and charged as an
expense of, each series of the Fund based upon the average daily net

D-2
<PAGE> 65

assets of such series. For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration on the basis of
the number of days that the Agreement is in effect during the month and year,
respectively.

6. The net asset value for each series of the Fund shall be calculated in
accordance with the provisions of the Fund's prospectus or as the trustees may
determine in accordance with the provisions of the Investment Company Act of
1940. On each day when net asset value is not calculated, the net asset value of
a series shall be deemed to be the net asset value of such series as of the
close of business on the last day on which such calculation was made for the
purpose of the foregoing computations.

9. This Agreement shall become effective with respect to the initial series of
the Fund on the date hereof and shall remain in full force until
, 199 , unless sooner terminated as hereinafter provided.
This Agreement shall continue in force from year to year thereafter with respect
to each series, but only as long as such continuance is specifically approved
for each series at least annually in the manner required by the Investment
Company Act of 1940 and the rules and regulations thereunder; provided, however,
that if the continuation of this Agreement is not approved for a series, the
Sub-Adviser may continue to serve in such capacity for such Portfolio in the
manner and to the extent

D-3
<PAGE> 66

permitted by the Investment Company Act of 1940 and the rules and regulations
thereunder.

This Agreement shall automatically terminate in the event of its assignment or
in the event of the termination of the Management Agreement and may be
terminated at any time with respect to any series without the payment of any
penalty by the Adviser or by the Sub-Adviser on sixty (60) days written notice
to the other party. The Fund may effect termination with respect to any series
without payment of any penalty by action of the Board of Trustees or by vote of
a majority of the outstanding voting securities of such series on sixty (60)
days written notice to the Adviser and the Sub-Adviser.

The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.

Termination of this Agreement shall not affect the right of the Sub-Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.

10. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.

11. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepared, to the other party at such address as such other
party may designate for the receipt of such notice.

12. This Agreement shall be construed in accordance with applicable federal law
and the laws of the Commonwealth of Massachusetts.

13. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.

D-4
<PAGE> 67

IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.

SCUDDER KEMPER
INVESTMENTS, INC.

By:
------------------------------

Title:
--------------------------

ATTEST:

- --------------------------------

Title:
- --------------------------------

ZURICH KEMPER VALUE
ADVISORS, INC.

By:
------------------------------

Title:
--------------------------

ATTEST:

- --------------------------------

Title:
- --------------------------------

D-5
<PAGE> 68

EXHIBIT E

KEMPER FUNDS NET ASSETS AND MANAGEMENT FEES

<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Kemper Technology Fund................ $ 1,063 A
Kemper Total Return Fund.............. 3,021 A
Kemper Growth Fund.................... 2,738 A
Kemper Small Capitalization Equity
Fund................................ 934 F
Kemper Income and Capital Preservation
Fund................................ 573 B
Kemper National Tax-Free Income Series
1. Kemper Municipal Bond Fund....... 3,322 C
2. Kemper Intermediate Municipal
Bond Fund........................ 22 B
Kemper Diversified Income Fund........ 779 A
Kemper High Yield Series
1. Kemper High Yield Fund........... 4,097 A
2. Kemper High Yield Opportunity
Fund............................. -- L
Kemper U.S. Government Securities
Fund................................ 4,163 C
Kemper International Fund............. 472 D
Kemper International Bond Fund........ 26 D
Kemper State Tax-Free Income Series
1. Kemper California Tax-Free Income
Fund............................. 1,008 B
2. Kemper New York Tax-Free Income
Fund............................. 286 B
3. Kemper Florida Tax-Free Income
Fund............................. 104 B
4. Kemper Texas Tax-Free Income
Fund............................. 12 B
5. Kemper Ohio Tax-Free Income
Fund............................. 39 B
6. Kemper Michigan Tax-Free Income
Fund............................. 3 B
7. Kemper New Jersey Tax-Free Income
Fund............................. 5 B
8. Kemper Pennsylvania Tax-Free
Income Fund...................... 6 B
</TABLE>

E-1
<PAGE> 69

<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Kemper Portfolios
1. Kemper Cash Reserves Fund........ $ 208 E
2. Kemper U.S. Mortgage Fund........ 2,960 B
3. Kemper Short-Intermediate
Government Fund.................. 204 B
Kemper Value Fund, Inc.
1. Kemper Contrarian Fund........... 78 D
2. Kemper-Dreman High Return Equity
Fund............................. 738 D
3. Kemper Small Cap Value Fund...... 273 D
Kemper Adjustable Rate U.S. Government
Fund................................ 82 B
Kemper Blue Chip Fund................. 256 A
Kemper Global Income Fund............. 132 D
Kemper Value+Growth Fund.............. 39 I
Kemper Quantitative Equity Fund....... 5 A
Kemper Asian Growth Fund.............. 2 J
Kemper Europe Fund.................... 4 D
Kemper Aggressive Growth Fund......... -- F
Zurich Money Funds
1. Zurich Money Market Fund......... 4,362 G
2. Zurich Government Money Fund..... 671 G
3. Zurich Tax-Free Money Fund....... 771 G
Zurich YieldWise Money Fund........... 245 G
Cash Equivalent Fund
1. Money Market Portfolio........... 971 H
2. Government Securities
Portfolio........................ 404 H
3. Tax-Exempt Portfolio............. 445 H
Tax-Exempt California Money Market
Fund................................ 119 H
Cash Account Trust
1. Money Market Portfolio........... 585 H
2. Government Securities
Portfolio........................ 545 H
3. Tax-Exempt Portfolio............. 221 H
Investors Cash Trust
1. Government Securities
Portfolio........................ 169 K
2. Treasury Portfolio............... 63 K
</TABLE>

E-2
<PAGE> 70

<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
- -------------------------------------- ----------------- ----------
<S> <C> <C>
Investors Municipal Cash Fund
1. Investors Florida Municipal Cash
Fund............................ -- H
2. Investors New Jersey Municipal
Cash Fund....................... -- H
3. Investors Pennsylvania Municipal
Cash Fund....................... -- H
4. Tax-Exempt New York Money Market
Fund............................ 61 H
Kemper High Income Trust.............. 215 0.85%
Kemper Intermediate Government
Trust............................... 269 0.80%
Kemper Municipal Income Trust......... 466 0.55%
Kemper Multi-Market Income Trust...... 220 0.85%
Kemper Strategic Municipal Income
Trust............................... 128 0.60%
The Growth Fund of Spain, Inc......... 264 1.00%
Kemper Strategic Income Fund.......... 53 0.85%
Kemper Horizon Fund
1. Kemper Horizon 20+ Portfolio.... 63 A
2. Kemper Horizon 10+ Portfolio.... 63 A
3. Kemper Horizon 5 Portfolio...... 31 A
Investors Fund Series
1. Kemper Money Market Portfolio... 71 0.50%
2. Kemper Total Return Portfolio... 697 0.55%
3. Kemper High Yield Portfolio..... 289 0.60%
4. Kemper Growth Portfolio......... 487 0.60%
5. Kemper Government Securities
Portfolio....................... 84 0.55%
6. Kemper International
Portfolio....................... 163 0.75%
7. Kemper Small Cap Growth
Portfolio....................... 69 0.65%
8. Kemper Investment Grade Bond
Portfolio....................... 2 0.60%
9. Kemper Value Portfolio.......... 21 0.75%
10. Kemper Small Cap Value
Portfolio........................ 13 0.75%
11. Kemper Value+Growth Portfolio... 10 0.75%
12. Kemper Horizon 20+ Portfolio.... 4 0.60%
13. Kemper Horizon 10+ Portfolio.... 6 0.60%
14. Kemper Horizon 5 Portfolio...... 3 0.60%
15. Kemper Blue Chip Portfolio...... -- 0.65%
16. Kemper Global Income
Portfolio........................ -- 0.75%
</TABLE>

E-3
<PAGE> 71

<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Kemper Target Equity Fund
1. Kemper Retirement Fund Series
I................................ 117 0.50%
2. Kemper Retirement Fund Series
II............................... 173 0.50%
3. Kemper Retirement Fund Series
III.............................. 127 0.50%
4. Kemper Retirement Fund Series
IV............................... 136 0.50%
5. Kemper Retirement Fund Series
V................................ 137 0.50%
6. Kemper Retirement Fund Series
VI............................... 73 0.50%
7. Kemper Retirement Fund Series
VII.............................. 5 0.50%
8. Kemper Worldwide 2004 Fund...... 36 0.60%
</TABLE>

- ---------------

* Total Net Assets, in millions, as of the most recent fiscal year end.

** Scheduled annual management fees payable to ZKI and its affiliates as a
percentage of average daily net assets.

(A) .58 of 1% of the first $250 million, .55 of 1% of the next $750 million, .53
of 1% of the next $1.5 billion, .51 of 1% of the next $2.5 billion, .48 of
1% of the next $2.5 billion, .46 of 1% of the next $2.5 billion, .44 of 1%
of the next $2.5 billion and .42 of 1% thereafter.

(B) .55 of 1% of the first $250 million, .52 of 1% of the next $750 million,
.50 of 1% of the next $1.5 billion, .48 of 1% of the next $2.5 billion, .45
of 1% of the next $2.5 billion, .43 of 1% of the next $2.5 billion, .41 of
1% of the next $2.5 billion and .40 of 1% thereafter. ZKI has agreed to
temporarily reduce its management fee and reimburse or pay certain
operating expenses of the Intermediate Municipal, Michigan, New Jersey and
Pennsylvania Funds.

(C) .45 of 1% of the first $250 million, .43 of 1% of the next $750 million, .41
of 1% of the next $1.5 billion, .40 of 1% of the next $2.5 billion, .38 of
1% of the next $2.5 billion, .36 of 1% of the next $2.5 billion, .34 of 1%
of the next $2.5 billion and .32 of 1% thereafter.

(D) .75 of 1% of the first $250 million, .72 of 1% of the next $750 million, .70
of 1% of the next $1.5 billion, .68 of 1% of the next $2.5 billion, .65 of
1% of the next $2.5 billion, .64 of 1% of the next $2.5 billion, .63 of 1%
of the next $2.5 billion and .62 of 1% thereafter.

(E) .40 of 1% of the first $250 million, .38 of 1% of the next $750 million,
.35 of 1% of the next $1.5 billion, .32 of 1% of the next $2.5 billion, .30
of 1% of the next $2.5 billion, .28 of 1% of the next $2.5 billion, .26 of
1% of the next $2.5 billion and .25 of 1% thereafter.

E-4
<PAGE> 72

(F) Base investment management fee of .65 of 1% of average daily net assets
plus or minus an incentive fee based upon the investment performance of the
fund as compared with the performance of the Standard & Poor's 500 Stock
Index, which may result in a total fee ranging from .35 of 1% to .95 of 1%
for the Small Capitalization Equity Fund, or .45 of 1% to .85 of 1% for the
Aggressive Growth Fund.

(G) .50% of the first $215 million; .375% of the next $335 million; .30% of
the next $250 million; .25% thereafter (on all of the series of Zurich
Money Funds in the aggregate). ZKI has agreed to temporarily reduce its
management fee to 0% for the Zurich YieldWise Money Fund and reimburse or
pay 100% of the Fund's other operating expenses for a period of at least
six months from April 17, 1997.

(H) .22% of the first $500 million; .20% of the next $500 million; .175% of the
next $1 billion; .16% of the next $1 billion; .15% thereafter (in the case
of Cash Equivalent Fund, on the Money Market and Government Securities
Portfolios in the aggregate and on the Tax-Exempt Portfolio individually,
and, in the case of Cash Account Trust, on all of the series in the
aggregate). ZKI has agreed to temporarily absorb operating expenses of the
Cash Account Trust portfolios to the extent, if any, that such expenses
exceed the following percentages of average daily net assets: Money Market
Portfolio (1.00%), Government Securities Portfolio (1.00%) and Tax-Exempt
Portfolio (0.95%). In addition, from time to time, ZKI may voluntarily
absorb certain additional expenses of the Cash Account Trust portfolios.
Also, ZKI has agreed to temporarily waive its management fee and reimburse
or pay operating expenses for the current fiscal year to the extent, if
any, that total operating expenses exceed .80% of average daily net
assets of the New York Fund and .90% of each of the Florida, New Jersey
and Pennsylvania Funds.

(I) .72 of 1% of the first $250 million, .69 of 1% of the next $750 million,
.66 of 1% of the next $1.5 billion, .64 of 1% of the next $2.5 billion, .60
of 1% of the next $2.5 billion, .58 of 1% of the next $2.5 billion, .56 of
1% of the next $2.5 billion, and .54 of 1% thereafter.

(J) .85 of 1% of the first $250 million, .82 of 1% of the next $750 million,
.80 of 1% of the next $1.5 billion, .78 of 1% of the next $2.5 billion, .75
of 1% of the next $2.5 billion, .74 of 1% of the next $2.5 billion, .73 of
1% of the next $2.5 billion, and .72 of 1% thereafter. ZKI has agreed to a
reduction of its management fee by .25% until the earlier of May 1, 1997 or
the date the Fund's net assets reach $100 million.

E-5
<PAGE> 73

(K) .15% of average daily net assets. ZKI has agreed to temporarily waive its
management fee and reimburse or pay operating expenses of each portfolio to
the extent that such expense exceeds .25% of average daily net assets of
the portfolio.

(L) .65 of 1% of the first $250 million, .62 of 1% of the next $750 million,
.60 of 1% of the next $1.5 billion, .58 of 1% of the next $2.5 billion, .55
of 1% of the next $2.5 billion, .53 of 1% of the next $2.5 billion, .51 of
1% of the next $2.5 billion and .49 of 1% thereafter.

E-6
<PAGE> 74

EXHIBIT F

INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
MONEY MARKET
Scudder U.S. Treasury Money Safety, liquidity, and 0.500% of $ 398,597,054
Fund stability of capital net assets+
and, consistent
therewith, current
income.
Scudder Cash Investment Stability of capital 0.500% to $1,430,623,516
Trust while maintaining $250 million
liquidity of capital 0.450% next
and providing current $250 million
income from money 0.400% next
market securities. $500 million
0.350%
thereafter+
Scudder Money Market Series High level of current 0.250% of $ 384,509,425**
income consistent with net assets
preservation of
capital and liquidity
by investing in a
broad range of
short-term money
market instruments.
Scudder Government Money High level of current 0.250% of $ 36,794,563**
Market Series income consistent with net assets
preservation of
capital and liquidity
by investing
exclusively in
obligations issued or
guaranteed by the U.S.
Government or its
agencies or
instrumentalities and
in certain repurchase
agreements.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund Income exempt from 0.500% to $ 220,245,241
regular federal income $500 million
taxes and stability of 0.480%
principal through thereafter+
investments in
municipal securities.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
** Program assets as of 7/31/97.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-1
<PAGE> 75

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Tax Free Money High level of current 0.250% of $ 79,695,218**
Market Series income, consistent net assets
with preservation of
capital and liquidity,
exempt from federal
income tax by
investing primarily in
high quality municipal
obligations.
Scudder California Tax Free Stability of capital 0.500% of $ 68,695,680
Money Fund and the maintenance of net assets+
a constant net asset
value of $1.00 per
share while providing
California tax payers
income exempt from
both California state
personal and regular
federal income tax
through investment in
high quality, short-
term tax-exempt
California municipal
securities.
Scudder New York Tax Free Stability of capital 0.500% of $ 59,538,652
Money Fund and income exempt from net assets+
New York state and New
York City personal
income taxes and
regular federal income
tax through investment
in high quality,
short-term municipal
securities in New
York.
TAX FREE
Scudder Limited Term Tax High level of income 0.600% of $ 123,660,431
Free Fund exempt from regular net assets+
federal income tax
consistent with a high
degree of principal
stability.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
** Program asset as of 7/31/97.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-2
<PAGE> 76

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Medium Term Tax Free High level of income 0.600% to $ 650,504,081
Fund exempt from regular $500 million
federal income tax and 0.500% thereafter
limited principal
fluctuation through
investment primarily
in high grade
intermediate term
municipal securities.
Scudder Managed Municipal Income exempt from 0.550% to $ 737,422,861
Bonds regular federal income $200 million
tax primarily through 0.500% next
investments in high- $500 million
grade long-term 0.475% thereafter
municipal securities.
Scudder High Yield Tax Free High level of income, 0.650% to $ 293,101,021
Fund exempt from regular $300 million
federal income tax, 0.600% thereafter
from an actively
managed portfolio
consisting primarily
of investment grade
municipal securities.
Scudder California Tax Free Income exempt from 0.625% to $ 288,576,041
Fund both California state $200 million
personal income tax 0.600% thereafter
and regular federal
income tax primarily
through investment
grade municipal
securities.
Scudder Massachusetts A high level of income 0.600% of $ 65,505,088
Limited Term Tax Free Fund exempt from both net assets+
Massachusetts personal
income tax and regular
federal income tax as
is consistent with a
high degree of price
stability.
Scudder Massachusetts Tax A high level of income 0.600% of $ 329,842,169
Free Fund exempt from both net assets
Massachusetts personal
income tax and regular
federal income tax
through investment
primarily in long-term
investment-grade
municipal securities
in Massachusetts.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-3
<PAGE> 77

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder New York Tax Free Income exempt from New 0.625% to $ 180,647,157
Fund York state and New $200 million
York City personal 0.600% thereafter
income taxes and
regular federal income
tax through investment
primarily in long-term
investment-grade
municipal securities
in New York.
Scudder Ohio Tax Free Fund Income exempt from 0.600% of $ 84,109,009
Ohio personal income net assets+
tax and regular
federal income tax
through investment
primarily in
investment-grade
municipal securities
in Ohio.
Scudder Pennsylvania Tax Income exempt from 0.600% of $ 74,177,997
Free Fund Pennsylvania personal net assets+
income tax and regular
federal income tax
through investment
primarily in
investment-grade
municipal securities
in Pennsylvania.
U.S. INCOME
Scudder Short Term Bond Fund High level of income 0.600% to $1,468,170,885
consistent with a high $500 million
degree of principal 0.500% next
stability through $500 million
investments primarily 0.450% next
in high quality $500 million
short-term bonds. 0.400% next
$500 million
0.375% next
$1 billion
0.350% thereafter
Scudder Zero Coupon 2000 High investment 0.600% of $ 25,440,414
Fund returns over a net assets+
selected period as is
consistent with
investment in U.S.
Government securities
and the minimization
of reinvestment risk.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-4
<PAGE> 78

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder GNMA Fund High current income 0.650% to $ 383,008,164
and safety of $200 million
principal primarily 0.600% next
from investment in $300 million
U.S. Government 0.550% thereafter
guaranteed
mortgage-backed GNMA
securities.
Scudder Income Fund A high level of 0.650% to $ 578,519,502
income, consistent $200 million
with the prudent 0.600% next
investment of capital, $300 million
through a flexible 0.550% thereafter
investment program
emphasizing high-grade
bonds.
Scudder High Yield Bond Fund A high level of 0.700% of $ 73,523,094
current income and net assets
capital appreciation
through investment
primarily in below
investment-grade
domestic debt
securities.
GLOBAL INCOME
Scudder Global Bond Fund Total return with an 0.750% to $ 217,403,907
emphasis on current $1 billion
income by investing 0.700%
primarily in thereafter+
high-grade bonds
denominated in foreign
currencies and the
U.S. dollar.
Scudder International Bond Income primarily by 0.850% to $ 235,993,183
Fund investing in $1 billion
high-grade 0.800% thereafter
international bonds
and protection and
possible enhancement
of principal value by
actively managing
currency, bond market
and maturity exposure
and by security
selection.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-5
<PAGE> 79

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Emerging Markets High current income 1.000% of $ 304,607,984
Income Fund and, secondarily, net assets
long- term capital
appreciation by
investing primarily in
high-yielding debt
securities issued in
emerging markets.
ASSET ALLOCATION
Scudder Pathway Conservative Current income and, There will be no $ 13,928,759***
Portfolio secondarily, long-term fee as the Manager
growth of capital by will receive a fee
investing from the underlying
substantially in funds.
Scudder bond mutual
funds, but will have
some exposure to
Scudder equity mutual
funds.
Scudder Pathway Balanced Balance of growth and There will be no $ 167,721,722***
Portfolio income by investing in fee as the Manager
a mix of Scudder money will receive a fee
market, bond and from the underlying
equity mutual funds. funds.
Scudder Pathway Growth Long-term growth of There will be no $ 42,234,535***
Portfolio capital by investing fee as the Manager
predominantly in will receive a fee
Scudder equity mutual from the underlying
funds designed to funds.
provide long-term
growth.
Scudder Pathway Maximize total return There will be no $ 8,983,598***
International Portfolio by investing in a fee as the Manager
select mix of will receive a fee
established from the underlying
international and funds.
global Scudder Funds.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
*** Program assets as of 6/30/97.
</TABLE>

F-6
<PAGE> 80

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
U.S. GROWTH AND INCOME
Scudder Balanced Fund A balance of growth 0.700% of $ 109,541,542
and income from a net assets+
diversified portfolio
of equity and fixed
income securities and
long-term preservation
of capital through a
quality oriented
investment approach
designed to reduce
risk.
Scudder Growth and Income Long-term growth of 0.600% to $4,186,481,205
Fund capital, current $500 million
income and growth of 0.550% next
income primarily from $500 million
common stocks, 0.500% next
preferred stocks and $500 million
securities convertible 0.475% next
into common stocks. $500 million
0.450% next
$1 billion
0.425% next
$1.5 billion
0.405% thereafter
U.S. GROWTH
Scudder Large Company Value Maximize long-term 0.750% to $1,651,459,797
Fund (formerly Scudder capital appreciation $500 million
Capital Growth Fund) through a value driven 0.650% next
investment program $500 million
emphasizing common 0.600% next
stocks and preferred $500 million
stocks. 0.550% thereafter
Scudder Value Fund Long-term growth of 0.700% of $ 88,874,292
capital through net assets
investment in
undervalued equity
securities.
Scudder Small Company Value Long-term growth of 0.750% of $ 41,187,186
Fund capital by investing net assets+
primarily in
undervalued equity
securities of small
U.S. companies.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-7
<PAGE> 81

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Micro Cap Fund Long-term growth of 0.750% of $ 72,048,339***
capital by investing net assets+
primarily in a
diversified portfolio
of U.S. micro- cap
common stocks.
Scudder Classic Growth Fund Long-term growth of 0.700% of $ 33,867,066
capital while keeping net assets+
the value of its
shares more stable
than other growth
mutual funds.
Scudder Large Company Growth Long-term growth of 0.700% of $ 221,253,633
Fund (formerly Scudder capital through net assets
Quality Growth Fund) investment primarily
in the equity
securities of
seasoned, financially
strong U.S. growth
companies.
Scudder Development Fund Long-term growth of 1.000% to $ 861,564,138
capital by investing $500 million
primarily in equity 0.950% next
securities of emerging $500 million
growth companies. 0.900% thereafter
Scudder 21st Century Growth Long-term growth of 1.000% of $ 20,942,531***
Fund capital by investing net assets+
primarily in the
securities of emerging
growth companies
poised to be leaders
in the 21st century.
GLOBAL GROWTH
Scudder Global Fund Long-term growth of 1.000% to $1,604,465,769
capital through $500 million
investment in a 0.950% next
diversified portfolio $500 million
of marketable foreign 0.900% thereafter
and domestic
securities, primarily
equity securities.
Institutional International Long-term growth of 0.900% of $ 17,897,508
Equity Portfolio capital primarily net assets+
through a diversified
portfolio of
marketable foreign
equity securities.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-8

<PAGE> 82

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder International Growth Long-term growth of 1.000% of $ 25,631,898***
and Income Fund capital and current net assets+
income primarily from
foreign equity
securities
Scudder International Fund Long-term growth of 0.900% to $2,583,030,686
capital primarily $500 million
through a diversified 0.850% next
portfolio of $500 million
marketable foreign 0.800% next
equity securities. $1 billion
0.750% next
$1 billion
0.700% thereafter
Scudder Global Discovery Above-average capital 1.100% of $ 350,829,980
Fund appreciation over the net assets
long-term by investing
primarily in the
equity securities of
small companies
located throughout the
world.
Scudder Emerging Markets Long-term growth of 1.25% of $ 75,793,693
Growth Fund capital primarily net assets+
through equity
investments in
emerging markets
around the globe.
Scudder Gold Fund Maximum return 1.000% of $ 163,932,814
consistent with net assets
investing in a
portfolio of gold-
related equity
securities and gold.
Scudder Greater Europe Long-term growth of 1.000% of $ 120,300,058
Growth Fund capital through net assets
investment primarily
in the equity
securities of European
companies.
Scudder Pacific Long-term growth of 1.100% of $ 329,391,540
Opportunities Fund capital primarily net assets
through investment in
the equity securities
of Pacific Basin
companies, excluding
Japan.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-9
<PAGE> 83

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Latin America Fund Long-term capital Effective 9/11/97: $ 621,914,690
appreciation through 1.250% to
investment primarily $1 billion
in the securities of 1.150% thereafter
Latin American
issuers.
The Japan Fund, Inc. Long-term capital 0.850% to $ 385,963,962
appreciation through $100 million
investment primarily 0.750% next
in equity securities $200 million
of Japanese companies. 0.700% next
$300 million
0.650% thereafter
CLOSED-END FUNDS
The Argentina Fund, Inc. Long-term capital Adviser: $ 117,596,046
appreciation through Effective 11/1/97:
investment primarily 1.100% of
in equity securities net assets
of Argentine issuers. Sub-Adviser:
Paid by Adviser.
0.160% of
net assets
The Brazil Fund, Inc. Long-term capital 1.200% to $ 417,981,869
appreciation through $150 million
investment primarily 1.050% next
in equity securities $150 million
of Brazilian issuers. 1.000% thereafter
Effective 10/29/97:
1.200% to
$150 million
1.050% next
$150 million
1.000% next
$200 million
0.900% thereafter
Administrator:
Receives an annual
fee of $50,000
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
</TABLE>

F-10
<PAGE> 84

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
The Korea Fund, Inc. Long-term capital Advisor: $ 661,690,073
appreciation through 1.150% to
investment primarily $50 million
in equity securities 1.100% next
of Korean companies. $50 million
1.000% next
$250 million
0.950% next
$400 million
0.900% thereafter
Sub-Adviser -
Daewoo:
Paid by Adviser.
0.2875% to
$50 million
0.275% next
$50 million
0.250% next
$250 million
0.2375% next
$400 million
0.225% thereafter
The Latin America Dollar High level of current 1.200% of $ 94,748,606
Income Fund, Inc. income and, net assets
secondarily, capital
appreciation through
investment principally
in dollar-denominated
Latin American debt
instruments.
Montgomery Street Income High level of current 0.500% to $ 198,465,822
Securities, Inc. income consistent with $150 million
prudent investment 0.450% next
risks through a $50 million
diversified portfolio 0.400% thereafter
primarily of debt
securities.
Scudder New Asia Fund, Inc. Long-term capital 1.250% to $ 133,363,686
appreciation through $75 million
investment primarily 1.150% next
in equity securities $125 million
of Asian companies. 1.100% thereafter
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
</TABLE>

F-11
<PAGE> 85

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder New Europe Fund, Long-term capital 1.250% to $ 266,418,730
Inc. appreciation through $75 million
investment primarily 1.150% next
in equity securities $125 million
of companies traded on 1.100% thereafter
smaller or emerging
European markets and
companies that are
viewed as likely to
benefit from changes
and developments
throughout Europe.
Scudder Spain and Portugal Long-term capital Adviser: $ 75,127,194
Fund, Inc. appreciation through 1.000% of
investment primarily net assets
in equity securities Administrator:
of Spanish & 0.200% of
Portuguese issuers. net assets
Scudder World Income High income and, 1.200% of $ 54,488,637
Opportunities Fund, Inc. consistent therewith, net assets
capital appreciation.
INSURANCE PRODUCTS
Balanced Portfolio Balance of growth and 0.475% of $ 88,342,837
income consistent with net assets
long-term preservation
of capital through a
diversified portfolio
of equity and fixed
income securities.
Bond Portfolio High level of income 0.475% of $ 65,769,421
consistent with a high net assets
quality portfolio of
debt securities.
Capital Growth Portfolio Long-term capital 0.475% to $ 440,481,308
growth from a $500 million
portfolio consisting 0.450% thereafter
primarily of equity
securities.
Global Discovery Portfolio Above-average capital 0.975% of $ 16,757,264
appreciation over the net assets+
long-term by investing
primarily in the
equity securities of
small companies
located throughout the
world.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-12
<PAGE> 86

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
Growth and Income Portfolio Long-term growth of 0.475% of $ 91,091,547
capital, current net assets
income and growth of
income.
International Portfolio Long-term growth of 0.875% to $ 726,038,527
capital primarily $500 million
through diversified 0.775% thereafter
holdings of marketable
foreign equity
investments.
Money Market Portfolio Stability of capital 0.370% of $ 97,785,626
and current income net assets
from a portfolio of
money market
instruments.
AARP FUNDS
AARP High Quality Money Fund Current income and 0.350% to $ 412,126,193
liquidity, consistent $2 billion
with maintaining 0.330% next
stability and safety $2 billion
of principal, through 0.300% next
investment in high $2 billion
quality securities. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of
net assets
AARP Balanced Stock and Bond Long-term growth of 0.350% to $ 403,179,939
Fund capital and income, $2 billion
consistent with a 0.330% next
stable share price, $2 billion
through investment in 0.300% next
a combination of $2 billion
stocks, bonds and cash 0.280% next
reserves. $2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
</TABLE>

F-13
<PAGE> 87

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
AARP Capital Growth Fund Long-term capital 0.350% to $ 826,136,713
growth, consistent $2 billion
with a share price 0.330% next
more stable than other $2 billion
capital growth funds, 0.300% next
through investment $2 billion
primarily in common 0.280% next
stocks and securities $2 billion
convertible into 0.260% next
common stocks. $3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.320% of
net assets
AARP Global Growth Fund Long-term growth of 0.350% to $ 77,651,978
capital, consistent $2 billion
with a share price 0.330% next
more stable than other $2 billion
global equity funds, 0.300% next
through investment $2 billion
primarily in a 0.280% next
diversified portfolio $2 billion
of equity securities 0.260% next
of corporations $3 billion
worldwide. 0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.550% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-14
<PAGE> 88

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
AARP Growth and Income Fund Long-term growth of 0.350% to $4,218,983,398
capital and income, $2 billion
consistent with a 0.330% next
stable share price, $2 billion
through investment 0.300% next
primarily in common $2 billion
stocks and securities 0.280% next
convertible into $2 billion
common stocks. 0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
AARP International Stock Long-term growth of 0.350% to $ 12,699,109***
Fund capital, consistent $2 billion
with a share price 0.330% next
more stable than other $2 billion
international equity 0.300% next
funds, through $2 billion
investment primarily 0.280% next
in a diversified $2 billion
portfolio of foreign 0.260% next
equity securities. $3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.600% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-15
<PAGE> 89

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
AARP Small Company Stock Long-term growth of 0.350% to $ 25,425,137***
Fund capital, consistent $2 billion
with a share price 0.330% next
more stable than other $2 billion
small company stock 0.300% next
funds, through $2 billion
investment primarily 0.280% next
in stocks of small $2 billion
U.S. companies. 0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.550% of
net assets
AARP U.S. Stock Index Fund Long-term capital 0.350% to $ 23,917,674***
growth and income, $2 billion
consistent with 0.330% next
greater share price $2 billion
stability than a S&P 0.300% next
500 index fund, by $2 billion
taking an indexing 0.280% next
approach to investing $2 billion
in common stocks, 0.260% next
emphasizing higher $3 billion
dividend stocks while 0.250% next
maintaining investment $3 billion
characteristics 0.240%
otherwise similar to thereafter+
the S&P 500 index. INDIVIDUAL FUND FEE
0.000% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-16
<PAGE> 90

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
AARP Bond Fund for Income High level of current 0.350% to $ 34,951,973***
income, consistent $2 billion
with greater share 0.330% next
price stability than a $2 billion
long term bond, 0.300% next
through investment $2 billion
primarily in 0.280% next
investment-grade debt $2 billion
securities. 0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.280% of
net assets
AARP GNMA and U.S. Treasury High level of current 0.350% to $4,904,439,844
Fund income, consistent $2 billion
with greater share 0.330% next
price stability than a $2 billion
long-term bond, 0.300% next
through investment $2 billion
principally in U.S. 0.280% next
Government-guaranteed $2 billion
GNMA securities and 0.260% next
U.S. Treasury $3 billion
obligations. 0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.120% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
*** Program assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>

F-17
<PAGE> 91

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
AARP High Quality Bond Fund High level of income, 0.350% to $ 511,905,166
consistent with $2 billion
greater share price 0.330% next
stability than a $2 billion
long-term bond, 0.300% next
through investment $2 billion
primarily in a 0.280% next
portfolio of high $2 billion
quality securities 0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
AARP Diversified Growth Long-term growth of There will be no $ 36,411,938***
Portfolio capital through fee as the manager
investment primarily will receive a fee
in AARP stock mutual from the underlying
funds. funds.
AARP Diversified Income Current income with There will be no $ 34,230,023***
Portfolio modest long-term fee as the manager
appreciation through will receive a fee
investment primarily from the underlying
in AARP bond mutual funds.
funds.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
*** Program assets as of 6/30/97.
</TABLE>

F-18
<PAGE> 92

<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- ---------------------- ------------------- --------------
<S> <C> <C> <C>
AARP High Quality Tax Free Current income free 0.350% to $ 111,264,728
Money Fund from federal income $2 billion
taxes and liquidity, 0.330% next
consistent with $2 billion
maintaining stability 0.300% next
and safety of $2 billion
principal, through 0.280% next
investment in $2 billion
high-quality municipal 0.260% next
securities. $3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of
net assets
AARP Insured Tax Free High level of income 0.350% to $1,755,412,222
General Bond Fund free from federal $2 billion
income taxes, 0.330% next
consistent with $2 billion
greater share price 0.300% next
stability than a long- $2 billion
term municipal bond, 0.280% next
through investment $2 billion
primarily in municipal 0.260% next
securities covered by $3 billion
insurance. 0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless otherwise
indicated.
</TABLE>

F-19
<PAGE> 93

EXHIBIT G

FEES AND EXPENSES

<TABLE>
<CAPTION>
ITEM KMMP KTRP KHYP KGP KGSP KIP KSCGP KIGBP
---- ---- ---- ---- --- ---- --- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year End................ 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96(a)
Management Fees Paid to ZKI or
ZKVA.......................... $376,000 3,691,000 1,565,000 2,658,000 485,000 1,174,000 340,000 4,000
Effective Management Fee
Rate.......................... .50% .55 .60 .60 .55 .75 .65 .60
Brokerage Commissions Paid by
Fund.......................... $ 0 1,562,000 2,567,000 1,782,000 20,000 936,000 787,000 6,000
Percent of Brokerage
Commissions Paid by Fund
Allocated on Basis of
Research...................... 0% 72 0 94 0 90 69 0

<CAPTION>
ITEM KVP KSCVP KVGP KH20P KH10P KH5P
---- --- ----- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year End................ 12/31/96(a) 12/31/96(a) 12/31/96(a) 12/31/96(a) 12/31/96(a) 12/31/96(a)
Management Fees Paid to ZKI or
ZKVA.......................... 44,000 33,000 22,000 6,000 11,000 5,000
Effective Management Fee
Rate.......................... .75 .75 .75 .60 .60 .60
Brokerage Commissions Paid by
Fund.......................... 26,000 50,000 15,000 5,000 6,000 2,000
Percent of Brokerage
Commissions Paid by Fund
Allocated on Basis of
Research...................... 0 0 98 94 92 96
</TABLE>

- ---------------

(a) Commencement of operations was May 1, 1996. ZKI absorbed certain operating
expenses (other than the management fee) for this Fund.

G-1
<PAGE> 94

Thank you

for mailing your proxy card promptly!

================================================================================

WE APPRECIATE YOUR
CONTINUING SUPPORT AND
LOOK FORWARD TO SERVING
YOUR FUTURE INVESTMENT NEEDS.

<PAGE> 95

KEMPER FUNDS
================================================================================

INVESTORS FUND SERIES

- - Kemper Money Market Portfolio
- - Kemper Total Return Portfolio
- - Kemper High Yield Portfolio
- - Kemper Growth Portfolio
- - Kemper Government Securities Portfolio
- - Kemper International Portfolio
- - Kemper Small Cap Growth Portfolio
- - Kemper Investment Grade Bond Portfolio
- - Kemper Value Portfolio
- - Kemper Small Cap Value Portfolio

- - Kemper Value+Growth Portfolio

- - Kemper Horizon 20+ Portfolio
- - Kemper Horizon 10+ Portfolio
- - Kemper Horizon 5 Portfolio
- - Kemper Blue Chip Portfolio
- - Kemper Global Income Portfolio

Group G
Kilico
(LOGO)Printed on recycled paper

<PAGE> 96

[KEMPER FUNDS LOGO]

PLEASE VOTE PROMPTLY!

Your vote is needed! Please vote on the reverse side of this form and sign in
the space provided below. Return your completed proxy in the enclosed envelope
today.

You may receive additional proxies for your other accounts. These are not
duplicates; you should sign and return each proxy card in order for your votes
to be counted. Please return them as soon as possible to help save the cost of
additional mailings.

- PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING. -

INVESTORS FUND SERIES FOR THE SPECIAL MEETING
OF SHAREHOLDERS
DECEMBER 3, 1997

THE SIGNERS OF THIS PROXY HEREBY APPOINT ARTHUR R. GOTTSCHALK AND STEPHEN B.
TIMBERS AND EACH OF THEM, ATTORNEYS AND PROXIES, WITH POWER OF SUBSTITUTION IN
EACH, TO VOTE ALL SHARES FOR THE SIGNERS AT THE JOINT SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD DECEMBER 3, 1997, AND AT ANY ADJOURNMENTS THEREOF, AS
SPECIFIED HEREIN, AND IN ACCORDANCE WITH THEIR BEST JUDGEMENT, ON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THIS MEETING.

Dated ___________________, 1997

Signature(s) (All registered owners of accounts
shown to the left must sign. If signing for a
corporation, estate or trust, please indicate
your capacity or title.)

_______________________________________________
Signature(s) GROUP G

- --------------------------------------------------------------------------------

PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE PROXY CARD BELOW. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.

- PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING. -

IF NO SPECIFICATION IS MADE HEREIN, ALL SHARES WILL BE VOTED "FOR" THE
PROPOSALS SET FORTH ON THIS PROXY.

THE PROXY IS SOLICITED BY THE BOARD OF THE FUND WHICH RECOMMENDS A VOTE "FOR"
ALL ITEMS.

TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS: /X/

<TABLE>
<S><C>
1. To elect the following as trustees For Withhold For All
All All Except
/ / / / / /

01) James B. Akins, 02) Arthur R. Gottschalk, 03) Frederick T. Kelsey,
04) Daniel Pierce, 05) Fred B. Renwick, 06) John B. Tingleff,
07) Edmond D. Villani, 08) John G. Weithers

------------------------------------------------------------------------------------------------
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), PLEASE WRITE THAT NOMINEE'S NAME OR
NUMBER ON THE LINE ABOVE.

2. To ratify the selection of Ernst & Young LLP
as independent auditors for the For Against Abstain
current fiscal year. / / / / / /

3. To approve a new investment management
agreement with Scudder Kemper Investments,
Inc. ("SKI") (or with Zurich Kemper
Investments, Inc., transferable to SKI or
with Zurich Kemper Value Advisors, Inc., For Against Abstain
transferable to SKI). / / / / / /

4. For Kemper International Portfolio and Kemper
Global Income Portfolio, to approve a new
sub-advisory agreement with Zurich Investment
Management Limited (including approval of a For Against Abstain
subsequent assignment). / / / / / /

5. For Kemper Value + Growth Portfolio, Kemper
Horizon 20+ Portfolio, Kemper Horizon 10+
Portfolio and Kemper Horizon 5 Portfolio, to
approve a new sub-advisory agreement with For Against Abstain
Zurich Kemper Value Advisors, Inc. / / / / / /

6. To approve an amendment to the Fund's Agreement For Against Abstain
and Declaration of Trust. / / / / / /
</TABLE>

THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" ALL ITEMS.